Expatriate Managers from Emerging Economy Firms

Abstract

In this study we focus on the specifics that expatriate managers from emerging economy firms face during their foreign assignment. Drawing on previous research, we corroborate the expatriate management literature by theorizing about the particular mechanisms that foster or threaten expatriates’ task performance of emerging economy multinational companies. Specifically, we elaborate on the asymmetries between emerging economy and developed country expatriate managers and investigate the resulting advantages and challenges for expatriate managers from emerging economies when they perform foreign assignments. In doing so, we articulate comparative disadvantage mechanisms (liabilities of emergingness, liabilities of country of origin and lacking HRM practices) as well as comparative advantage mechanisms (diaspora networks, adaptability to hostile environments, and being proactive in knowledge acquisition).

Keywords

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North American Perspective

Expatriate Managers from Emerging Economy Firms

• Carol Reade 

1. School of Global Innovation and Leadership, College of Business, San José State University, San José, CA, USA

   Carol Reade

New in Town? Assessing the Role of Diasporas for EE Expatriates

The study by Abrashi-Smajli and Baum gets at the heart of what expatriate managers from emerging economy (EE) firms are likely to experience when operating outside their country of origin. Much of the extant expatriate literature focuses on the experience of managers from firms based in developed Western economies, even though EE firms and their expatriate managers are a growing phenomenon. Taking a resource-based view, the authors propose relative disadvantages and advantages for expatriate managers from EE firms compared to their developed economy (DE) counterparts.

The disadvantages revolve around a ‘liability of emergingness.’ This is characterized by resource constraints, a general lack of international experience, and relatively less developed and/or more particularistic HRM practices (read: non-Western) that, among other factors, translate to a less positive brand image for the country, firm, and its expatriates. Certainly, these factors make it challenging for EE expatriates to recruit and retain local talent and to otherwise successfully manage their subsidiary toward optimal performance. We must bear in mind, however, that some of these challenges are not exclusive to expatriates from EE countries. Consider Japan, a developed economy with particularistic, non-Western HRM practices that are well-known for creating recruitment and retention challenges for Japanese expatriates in both developed and emerging economy countries. This continues despite Japanese firms having decades of international experience. Perhaps the significant divide is between Western and non-Western management practices while the global management norm remains Western.

On the other side of the ledger are resources thought to provide a comparative advantage for EE expatriates, notably the ability to adapt to uncertain and hostile environments and the capacity to draw on diasporic networks for support. Emerging economies are characterized by institutional voids, low market openness, low labor flexibility, and in some cases ongoing political conflict. In fact, most protracted conflicts in the world occur in emerging and developing countries. It has been proposed that EE expatriates may be better equipped than DE expatriates to manage in difficult environments because such environments are closer to what they experience in their home countries. While sources, types, and levels of uncertainty or even political conflict may be comparable between two EE countries, the resources for managing them will be to some extent culturally and socially bound. Navigating institutional voids, for instance, generally requires a reliance on local relationships for getting things done (some may rely on bribery.) An EE expatriate may be very familiar with institutional voids but may not have a network of relationships in the host country, beyond subsidiary office staff, to overcome the associated challenges. Unless, of course, he or she has access to a diaspora in the host country that can provide the necessary relationships.

One area for future research could be the differential roles a diaspora might play for EE expatriates in EE versus DE markets. Diasporas provide information and other support to newcomers from the home country as they attempt to navigate unfamiliar cultural and institutional realities in the host country. In EE markets, as alluded to above, diasporas can help to ‘fill’ institutional voids by utilizing the right diasporic relationships to get things done. In DE markets, a diaspora might serve to help the newcomer to understand how an institution functions, rather than on how to circumvent a non-functioning one or how to substitute for its function. To further this line of inquiry, it is necessary to consider the relationship between diasporas and investment patterns. Do diasporas exist in all areas of the world where an EE firm wishes to invest? Does the composition of the diaspora matter? Is the role of diasporas evolving? These questions must be addressed in order to ascertain the generalizability of the diasporic advantage for EE firms and expatriates.

Much of the EE expatriate research has focused on China and other large EEs. These countries also have large diasporas. India now has the world’s largest diaspora at 16 million people, followed by Mexico (12 million), and China (10 million) (United Nations, 2016). Diasporas from some countries of origin tend to concentrate in certain countries of destination, like Mexican immigrants in the USA and Algerian immigrants in France. Other diasporas, including Indian and Russian diasporas, are more evenly distributed across several destination countries. The Chinese diaspora is prevalent in Asian countries as well as in the West. Further, there are different kinds of diaspora in terms of composition such as long-established and historical diaspora, brain drain diaspora, low-skilled migrant diaspora, and refugee diaspora. In other words, there is lack of comparability between migrant populations, or diaspora, due not only to size and composition but because of national variation in who is considered an immigrant. This has implications for EE expatriates in terms of the role diaspora might play. A well-established diaspora is likely to be more useful for navigating institutional voids than a diaspora comprised of low-skilled workers or refugees. As noted by Brubaker (2005), we need to get behind the total number of diaspora members to understand the composition of diaspora and how they are actually functioning and changing.

Diasporas have evolved over time with regard to their role. People tend to migrate to countries with higher economic development for the educational and work opportunity offered. In Silicon Valley, for instance, the large and highly educated Chinese and Indian diasporas have generated much of the entrepreneurial activity in the Valley and their members have founded large, successful firms. A recent trend is for members of these diasporas to return to their home countries to start or extend their businesses, given the relatively high economic growth rates and opportunity there. This trend, combined with increased global mobility, underscores the complexity of migration patterns and calls into question the notion of permanency that has been a hallmark of migrants that form diasporas. The ease of obtaining information from the internet and other sources, particularly in developed countries, has contributed to a lessening of the traditional role for diasporas as a hub for information and broker of opportunity. While diasporas remain important, an educated EE newcomer, particularly in a developed country, can leverage a variety of information sources and relational networks beyond the diaspora.

In sum, the differential roles diasporas might play for EE expatriates in EE and DE countries appear to matter, taking into consideration global mobility trends and the composition and evolving nature of diasporas.