International Business People

Sent by employers to work and live temporarily abroad

Similar Psychologically to the Sojourn

• Work has finite limit• Clear assignments that they are expected to

finish• Must be able to interact successfully with local

counterparts to achieve goals• Will experience dislocation associated with

unfamiliar cultural settings• Career path may be affected by assignment

The expatriate experience--studies managerial/professional roles

• Provide human link in international trade• Effectiveness has a direct link to

international commerce• Sojourn group most likely to receive pre-

departure training, cultural orientation• Undergo psychological assessments as

part of selection process

Topics specific to expat experience

• Work-related cognitive styles/responses (negotiations, influencing, leading)

• Managerial practices do not easily cross cultural boundaries

• Role of the spouse• Re-entry process, reintegration • Problems specific to female expats• Inpatriation

Cultural Distance

• Role is evident in ABC components• Affects how people feel about life

and work abroad• Adeptness in realizing

personal/professional goals• Work-related perceptions and

decisions

Principle problems derived from North American practices and assumptions

• Flexible working hours• Consultative leadership style• Egalitarian interpersonal relationships• Emphasis on task achievement• Direct performance feedback• Reliance on written rules• rewards

Principle problems (cont.)

• Negotiation practices (rational vs emotional appeals)

• Selection, recruitment and advancement based on merit

• Psychological contracts and formal relationships, ‘a fair days work for a fair day’s pay’

• Right of worker and employer to break contract

“Nobody can think globally.” (Hofstede, 1998)

• Problematic for expat managers who are expected to put into effect company-wide policies and practices that may be lost on subsidiaries, changes to accommodate may dilute corporate culture/centralization

Heterogeneous work groups

• More cultural distance among workers has adverse affects on group performance, more difficult to manage

• Less interpersonal harmony, increased stress and turnover

• Advantages include more creativity (learning how to manage diverse groups may provide competitive advantage)

“Would you trust your foreign manager?”

• Trust between managers and supervisors was greater in homogeneous than heterogeneous work settings (Banai & Reisel, 1999)• Increases with more cultural distance

Leadership Style

• Authoritarian/autocratic vs participative/democratic (leaders make all decisions vs share power with subordinates)

• Task-oriented vs people-oriented styles (structure vs consideration)

• Contingency theories (ignores characteristics or personality of the leader)

Transactional vs Transformational Leadership (Bass, 1997)

• Makes explicit reference to characteristics of the leader and leader-follower relationship

• Transactional leadership based on exchange principle (rewards for compliance)

• Transformational leadership based on ability of a leader to motivate followers to work for goals that go beyond self-interest for benefit of the group, inspire followers

Transformational Leaders

• According to Bass, transformational leaders are more effective than leaders who follow contingent-reward strategy

• Advantageous across cultures• Transcends organizational boundaries

Collectivist Values

• Some evidence that transformational leadership is consistent with collectivist values, whereas individualist values are more in line with transactional approach

• High power distance makes employees more likely to accept their leaders’ vision

• Some studies support the idea that individualists respond better to styles that are consistent with cultural orientations

Work performance and Satisfaction

• Recent study by Eylon and Au (1999) looked at high power distance (Asian) and low power distance (Northern European, Canadian) among ‘empowered’ workers

• All participants were more ‘satisfied’ when working under empowered circumstances, but high-power distance empowered workers performed less well than empowered, low power-distance workers

Self-managing teams

• Western idea that workers who are given more freedom in decision-making will increase productivity and satisfaction

• Similar to another modern trend, ‘semi-autonomous work groups’ (organizational structures with flattened hierarchies)—highly effective in the right circumstances, but may be counterproductive in some cultures

Joint ventures in China

• ‘China fever,’ many joint ventures have been failures in financial terms (only 44% report meeting profit targets)

• Cultural differences play a major role in exacerbating market-related difficulties such as guanxi relationships that are based on mutual trust and willingness to enter into long term commercial relationships

Guanxi

• Key element for successful commercial transactions in China

• Westerners regard a business relationship as short-term transactions where each party tries to maximize its benefits

• Even if guanxi is accounted for, ‘outsider status of Western companies may affect success

Selecting International Managers

• Psychological literature emphasizes interpersonal and cross-cultural skills as key determinants of success, but technical ability and job performance continue to be major selection criteria

• ‘Coffee-machine system’ refers to candidates being selected based on personal recommendations

Motivation to undertake expat assignments

• The decision to send executives abroad is often made on an ad-hoc basis dictated by market forces rather than staff career development, motives of sojourners are largely ignored, and their willingness to go abroad taken for granted (Spiess and Wittmann, 1999)

Expatriate Adjustment

• Cultural distance• Extent of social support • Actual or perceived treatment by host

society• Extent of sojourn experience

contributing to career advancement

Cultural Distance

• Western expats based in Europe experience fewer difficulties than those working in Africa

• German managers in U.S. report greater cultural awareness, knowledge and work satisfaction than their American counterparts in Japan

• Mangers posted to similar cultures are less sensitive to differences that do exist and may attribute problems to personal deficiencies

Host Attitudes

• Greater perceived host ethnocentrism (measured by items reflecting perceived cultural superiority and intolerance) was negatively associated with work adjustment and commitment to the local branch of the organization (Florkowski and Fogel, 1999)

Expats Abroad

• Between 20 and 50% return prematurely, a financial burden on companies

• ‘realistic job interview’ or preview, meant to alert applicants to negative and positive aspects of the job are not in regular use with respect to international assignments

Expatriate Women

• Women are under-represented in expat assignments due to myths that inhibit women from being offered overseas assignments such as assumptions by managers that women do not want to work overseas (Adler, 1977)

• Studies show a reluctance by both men and women when cultural distance is high (women reluctant to accept assignments in Vietnam, Saudi Arabia and Indonesia) Kogut and Singh, 1988

Expatriate Women

• Both men and women are equally successful but adjustment is to some extent affected by the work values of host culture

• Married females are better adjusted than single females

• Company support has significant effect• Women in higher level positions report more

positive experiences

Repatriation

• Up to 80% of expats suffer culture shock during repatriation. Adler (1977) found that 1 in 5 employees want to leave organization after returning; less than half receive promotions; two-thirds feel sojourn had an adverse affect on careers; nearly half believe their re-entry position is less satisfying than overseas assignment

• Expectations and outcomes strongly linked

Inpatriation

• Employing inpatriate managers is advantageous based on their knowledge of local business; can serve as informal mentors to expat managers; provide local perspectives on business plans; better position to communicate with local suppliers and government officials; less expensive

• MNC reluctant to hire foreign managers based on desire to maintain tight control, but the future will see steady growth of inpatriation