According to the empirical evidence from Edstrim and Galbraith study, they classified the company motive to send out their expatriates into three elements: position filling, management development and organization development. The first element, position filling is mention to transferring of technical knowledge. There is especially focuses on developing countries which often lack of proficient local nations employees. The second element, management development refers the way of expatriates to inquire their international.
Likewise, the way how expatriates adapt and develop themselves for future role in overseas subsidiaries as well as in their headquarter companies. Finally, organization development is related to transfers for changing, renovating, and maintaining in decision process and policy of organization. This factor concerns on coordination and control strategy which consists of two components. The socialization of both expatriate and local employees in term of corporate culture and transfers the verbal information network between subsidiaries and parent company Edstrim and Galbraith, 1997).
Role of expatriates From a review of relevant literature of Petison and Johri 2008, the Role of expatriates had been classified into three categories. The first significant role of expatriates is “controller” the expatriates are responsible to control the subsidiary’s strategy and operations. Due to cultural difference, they need to make sure that the subsidiary works according to the headquarters’ policy The second role is “coordinator”, according to this role; expatriates have duty to coordinate between parent company and subsidiaries.
Under a coordinator role, expatriates must act as the middlemen who bring Headquarter firm and subsidiaries to achieve the strategic goal. Moreover Petison and Johri 2008 also quotes the study of Edstrim and Galbraith (1997) which mentioned that expatriates frequently combine both roles of controller and coordinator, especially when they were sent to help the subsidiaries develop and improve their strategies and operations. The last role, expatriates are act as developer” and “transferor”.
The major responsibility of expatriates in this role is helping parent companies to develop the skilled of local employees as well as transferring expertise knowledge and professional skilled to the local workers of subsidiaries. Hence, it is absolutely clear that all of these researchers are describing the same role: to develop local employees’ skill through knowledge transfer. (Bennet et al. , 2000; Kimmo and Vesa, 2004 and Torbiorn, 1994)
As the role of international knowledge transfer, expatriates played the major role in developing and transferring knowledge within globalizing organizations as well as control international subsidiaries of multinational companies (Sparrow at al, 2004). Knowledge-based asset is the vast significant intangible resource which leads international companies and MNCS obtain competitive advantage and dominate over their rivals (Caves, 1996). Hence, many MNCs used expatriates to transfer their distinctive knowledge assets to their subsidiaries.
Multinational firms used expatriates as control mechanism. With regard to control mechanisms, there are distinguished to four types: personal centralized control, formal bureaucratic control, out put control and socialization and networks control (Harzing, 1994). Due to global knowledge management strategy that used by MNCs, they tend to focused on personal centralized strategy by assigning expatriates to transfer knowledge through person-to-person contact.
For instance, Japan and German MNCs were well- known for their more personal approach toward control while the USA and UK MNCS tend to relied on a more impersonal bureaucratic type of control (Ferner and Varul, 1989; Negandhi and Welge, 1984; Egelhoff, 1988). Moreover, Ferner 1995 mentioned that there were high percentages on staffing parent -country nationals in Japan and German Japanese companies which mostly relied on informal face-to- face control processes to transfer professional skilled, knowledge, and strategic management to their subsidiaries (Ferner 1995).
Furthermore, expatriates played the important role of global team in HR practices. Sparrow et al, (2002 p. 98) quotes Harvey and Novicevic as mentioned that “global team defined as semi-permanent groups who were assembled to facilitate cooperation and communications between headquarters and subsidiaries”). Expatriates in global team helped transfer professional knowledge inter-unit learning, trust, commitment and coordination between parent companies and subsidiaries (Ghoshal and Bartlett, 1995). Conclusion As the international markets became importance more and more, there are rapid increases in multinational companies around the world.
Moreover global competitions also continue to intensify. From this reason MNCs need to find the distinctive strategy to con troll over their oversea subsidiaries to maintain their competitive advantage and make their organizations dominant over their rivals. From this reason, expatriation is one alternative for MNCs to gain a powerful control over their subsidiaries and make their subsidiaries follows to headquarters policy. There are many reasons why MNCs employ expatriates. Firstly, by MNCs that follow the Ethnocentric Staffing Policy would hire staffs from the same nation as headquarters so- called parent- country national (PCNs).
They employed these staffs as expatriates to work in oversea subsidiaries. Secondly, multinational companies preferred expatriates to work in significant department such as head of finances. Moreover, they decided to use expatriates in top management positions or under certain circumstances for example, in the early stage of establishing new subsidies and when there was the shortage of professional skills in the host country because they trust them to protect their own shareholder’s interests more than host-country national.
Thirdly, they believed that these expatriates were more willing to follow the head office policies and look after the interests of parent organization. Furthermore, expatriates are considered as the loyalty staffs to look after the benefits of parent organizations rather than host. Moreover, it was difficult for MNCs to find the suitable host-country national who had professional skilled and knowledge to work in subsidiaries. Some multination firms hired expatriates to maintain and transfer cultural standard values in organizations.
Besides, most of parent companies send their expatriates to the host country as a commitment to guarantee that offer up-to-date technology management ability and technical training as well as convinced the customers that parent company paid attention to continue and develop the relationship with them. There are classified to three factors which cause MNCs send out their expatriates into three elements: position filling, management development and organization development.
According to role of expatriates, they were distinguished to three categories. Expatriates were play the significant role as controller, coordinator, and finally was developer and transferor. The most important role of expatriates is developing and transferring knowledge from headquarters to subsidiaries as well as control international subsidiaries. Most of MNCs tend to focused on personal centralized strategy by assigning expatriates to transfer knowledge through face-to-face process.
Moreover, expatriates played the major role of global team in HR practices by assembling facilitate cooperation and communications between headquarters and subsidiaries Based on literature, it showed that most of multinational organizations relied heavily on expatriates although it was very expensive process. However, although there are constantly increasing in staffing expatriates in many MNCs, there still lack of empirical evidences and researches to guarantee that MNCs would gain the competitive advantage from this expatriation process.