Knowledge Transfer Through Expatriation: The U-curve Approach To Overseas Staffing.

It should be noted that Fortune 500 firms in the two sets of industries studied here do not represent the youngest of subsidiaries. For instance, in expecting a negative curvilinear relationship between country experience and the use of expatriates in that country, data for the upward slope (or the left side of the curve) were not actually collected. This would have been captured by subsidiary ages close to zero.

Expatriation and Firm DOI

H2 stated that there will be a curvilinear relationship between overall firm degree of internationalization and the proportion of expatriates in the firm as a whole. Again, a quadratic function did fit the data, as shown in Table 2, and thus H2 is supported. The proportion of expatriates in the firm, expressed by the following function, produced an adjusted Rsquare of .313 (F=5.706).

prop total exp = J([b.sub.0]..ind[b.sub.1]..doi[b.sub.2]..doi2[b.sub.3]..e)

This model was significant at the .001 level of confidence and indicated that a negative curvilinear relationship exists. Therefore, firms with limited international experience, as well as those with the most extensive experience abroad, employ the lowest proportion of expatriates. It is those firms with moderate experience abroad that engage most heavily in an expatriation strategy. Splitting the data by industry, we again find a similar relationship for petroleum/chemicals firms but not for those in computers/office equipment. Findings within industry, however, are interpreted with caution, given the limited number of observations for H2.

DISCUSSION AND IMPLICATIONS

The purpose of this study was to investigate the relationship between international experience and the proportion of expatriates, both at the overall firm level and at the subsidiary level. A significant relationship between expatriation and country experience allows for an advancement in the field of International Human Resource Management (IHRM) by providing a theoretical explanation for why expatriation prevails as a staffing practice among MNCs. The inclusion of organizational learning, a theory which is embedded in the literatures in both strategy and internationalization, represents a logical step in legitimizing the practice of expatriation from a theoretical perspective.

The model specified here combines two distinct streams of research. This study is the first of its kind, integrating paradigms from the organizational development and international human resource management disciplines into a cohesive platform for understanding how relationships can change given different sets of circumstances. While the body of literature in several disciplines has incorporated longitudinal dimensions, as well as other contingencies, into theoretical models, the potential role played by internationalization has been largely overlooked.

Based on the findings, young subsidiaries have proportionately larger expatriate populations than do those which have been up and running for many years. This pattern is consistent with the organizational objectives behind expatriating--to transfer tangible as well as tacit resources to the overseas affiliate through the expatriates and to pull back on the use of expatriate assignments as these transfers are completed. In addition to an overall reduction in expatriate managers over the life of the subsidiary, results indicated that the drop is quite pronounced almost immediately, but that the strategy of expatriating picks up slightly as subsidiaries become much older. It is likely that a renewed practice of expatriation is either the result of technological advancements and/or product and service innovations, which may render some previous knowledge obsolete and perhaps dictate updates in subsidiary learning. It is also possible that expatriate rotations overlap more in mature subsidiaries since organizatio nal initiatives are often in place abroad to facilitate the transfer back home. However, findings indicate that subsidiaries of petroleum/chemicals firms experience a decline in the use of expatriates even as subsidiaries become quite mature.

When considering the expatriate practices of the firm as a whole, it appears that expatriate populations worldwide are heaviest for firms just beginning to internationalize as well as for those with extensive international experience. At some point in between, however, firms pull back on the use of expatriates in favor of local nationals in their various markets.

While there is a strong theoretical foundation to suggest that an increase and subsequent decrease in the use of expatriates is the result of successful bi-directional knowledge transfers, it is possible that this relationship is industry-specific. The pattern of expatriation in the petroleum/chemicals industry, for example, may be consistent with research and development patterns in the industry. R & D intensity may necessitate an expatriation strategy in order to ensure successful knowledge transfer while reducing the probability of information leakage. Firms may also engage more heavily in expatriation in politically risky environments, since the bargaining power of host governments to insist on local employment is limited. It is also possible that firms expatriate more often to host countries that are culturally similar to that of the parent country, as expatriate adjustment may not be as difficult.

Limitations and Suggestions for Future Research

The way in which "professional-level employees" was defined deserves a word of caution. HR managers in each participating organization determined which of its employees were considered "professional-level" and thus there may be some variability in the sampling. Characteristics of the expatriates in the participating firms, however, indicated a high percentage with at least a bachelor's degree and holding at least the tide of "manager" or "director" or "supervisor."

While this study represents an attempt to balance both internal and external validity, by selecting two sets of related industries, generalizability remains somewhat limited. Subsequent research on patterns of expatriation may be well-served to study other sets of industries, both for comparative purposes and to assess the generalizability of the current findings. For those studies pursuing the role of internationalization, it may be helpful to pre-select firms and subsidiaries based on the variance they represent on international experience, both at the overall firm level and at the subsidiary level. And, at the subsidiary level, it is recommended that experience be assessed at the point of initial presence in a given country in order to get an accurate account of the firm's country-level familiarity. Efforts to improve the internal validity may include examining expatriate strategies of a more homogeneous set of companies (such as those in only one industry) and subsidiaries (such as those located in count ries characterized by similar levels of economic development or political risk). It may also be interesting to ascertain whether firms prefer to expatriate home-country nationals to lesser-developed countries (LDCs) as opposed to the more industrialized locations. In addressing these issues, future research endeavors may include more qualitative components for capturing the dynamics behind the use of expatriates.

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