10 Nov Expatriate adjustment to the cross-cultural environment can be viewed as having three primary dimensions: degree, mode, and facet The process of adaptation can be explained using the theo
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Question 1 : Read the attached chapter 2 Expatriate Adjustment and Expatriate Learning which summarizes all three theories. (Read only p. 7 – 26)
This week we learned that:
a. Expatriate adjustment to the cross-cultural environment can be viewed as having three primary dimensions: degree, mode, and facet.
b. The process of adaptation can be explained using the theory of the U-curve and social learning theory.
c. The factors that inﬂuence expatriate adjustment have four aspects: individual factors, job-related factors, organizational factors, and non-work factors.
The management team at Holiday Villas is interested in understanding a bit more about the theoretical foundations behind international HR.
Choose ONE of the three theories and explain it clearly and in detail, IN YOUR OWN WORDS. Make sure to reference the book chapter with page numbers as needed. Do NOT use outside sources,
Include at least 2 references and include in-text citations from the class materials ONLY
Question 2: Read the attached file named Global Compensation
Companies can take one of four approaches to compensation. Which do you think is the best approach? Why?
Frame your post as an argument.
· The home-country-based approach. The objective of a home-based compensation program is to equalize the employee to a standard of living enjoyed in his or her home country. The 2016 Cartus Global Mobility Policy & Practices Survey found that 76 percent of long-term assignments and 75 percent of short-term assignments use a home country pay structure.1 Under this system, the employee's base salary is broken down into four general categories: taxes, housing, goods and services, and discretionary income.
· The host-country-based approach. With this approach, the expatriate employee's compensation is based on local national rates. Many companies continue to cover the employee in its defined contribution or defined benefit pension schemes and provide housing allowances. Only 14 percent of long-term assignments and 5 percent of short-term assignments base pay on local rates, according to the Cartus survey.2
· The headquarters-based approach. This approach assumes that all assignees, regardless of location, are in one country (i.e., a U.S. company pays all assignees a U.S.-based salary, regardless of geography). Cartus found that a small percentage of companies use headquarters-based approaches for long-term assignments (4 percent) and short-term assignments (5 percent).3
· Balance sheet approach. In this scenario, the compensation is calculated using the home-country-based approach with all allowances, deductions and reimbursements. After the net salary has been determined, it is then converted to the host country's currency. Since one of the primary goals of an international compensation management program is to maintain the expatriate's current standard of living, developing an equitable and functional compensation plan that combines balance and flexibility is extremely challenging for multinational companies. To this end, many companies adopt a balance sheet approach. This approach guarantees that employees in international assignments maintain the same standard of living they enjoyed in their home country. A worksheet lists the costs of major expenses in the home and host countries, and any differences are used to increase or decrease the compensation to keep it in balance.
· Source: https://www.shrm.org/resourcesandtools/tools-and-samples/toolkits/pages/designingglobalcompensation.aspx (Note that this source requires a paid subscription to SHRM to view the full article.)
Include at least 2 references and include in-text citations from the class materials ONLY
Chapter 2 Expatriate Adjustment and Expatriate Learning
2.1 International Assignments
2.1.1 Definition and Classification of International Assignments
International work experience is one of the major requirements for promotion to higher-level managerial positions. International assignments are a powerful mech- anism through which managers acquire new business skill sets, international per- spectives, and basic cross-cultural assumptions (Furuya et al. 2009). The topic of international assignments (IAs) has an established pedigree in the international management literature and has in particular dominated the research agenda of international human resource management (IHRM) for over three decades (Collings et al. 2007; Stahl and Bjorkman 2006). It has been argued that entrepreneurs have recognised the importance of physically relocating managers to foreign locations where business operations are based since approximately 1900 B.C. (Collings et al. 2007). Owners of international organisations realised the benefits of utilising people known to them and socialised into the organisation in minimising the agency problems associated with managing spatially diverse organisations from an early stage. This is because these individuals had built a level of trust with their superiors and thus were considered to be more likely to act in the best interests of the organisation, relative to local managers from the host country who were largely an unknown quantity. Thus, international assignments were used as a means of addressing agency issues as a result of the separation of ownership and management and their amplification through distance.
The most widely recognized and long-standing typology of international assignments is that of Edstrom and Galbraith (1977). Edstrom and Galbraith (1977) proposed a distinctive three-fold subdivision of international assignments based on assignment purposes: fill positions, develop organization, and develop managers.
© Springer Science+Business Media Singapore 2016 Y. Li, Expatriate Manager’s Adaption and Knowledge Acquisition, DOI 10.1007/978-981-10-0053-9_2
Firstly, fill positions refers to when suitably qualified host country nationals were not available. Secondly, as a means of organisational development, aim at increasing knowledge transfer within the MNC and modifying and sustaining organizational structure and decision processes. Thirdly, as a means of management development, aim at developing the competence of the individual manager. Although it is important to note that assignments generally have more than one rationale (Sparrow et al. 2004), Edstrom and Galbraith’s (1977) typology provides a useful point of departure for the consideration of why MNCs use international assignments and expatriates. Hocking et al. (2004) argue that Edstrom and Galbraith (1977)’ classification of international assignments lack a strong concep- tual framework to explain the underlying strategic significance of the categories and their relationships. They reclassify the principal strategic purpose of international assignments and present the underlying relationships. According to Hocking et al. (2004, 2007), international assignments’ principal purposes comprise three cate- gories: business applications, organization applications, and expatriate learning. In particular, expatriate learning refers to either business- or organization-related knowledge acquisition by the expatriate, which equivalent to the two knowledge application categories: business applications and organization applications.
Alongside the conventional international assignment (usually more than one year and involving the relocation of the expatriate), there is the emergence of a portfolio of alternatives to the traditional international assignment, referred to as a non-standard international assignment including: short-term assignments (SIAs); commuter assignments; international business travel; and virtual assignments (Brookfield Global Relocation Trends 2005; Collings et al. 2007). Research sug- gests there is little evidence of a significant decline in the use of long-term (tra- ditional) international assignments but does identify the growing use of alternative forms of international assignments (Collings et al. 2007). A recent survey by Brookfield Global Relocation Trends (2005) reported that 62 % of respondents suggested that their organizations were seeking alternatives to long-term assign- ments. This suggests that what is happening is the emergence of a portfolio of international assignments within the MNC (Roberts et al. 1998).
The most popular form of non-standard assignments appears to be the short-term international assignment (SIA). Compared to traditional assignments, SIA has three key advantages: flexibility; simplicity; and cost effectiveness. Long-term IAs had uncertain benefits and potential drawbacks. Many expatriates felt that they had to work harder to preserve the home network and their social capital suffered through the traditional IAs. Short-term international assignment seems to be a better choice (Tharenou and Harvey 2008). Managers can be assigned to some challenging tasks in a foreign country. They are not away from the headquarters for a long period of time and can be assigned to several different countries before they are appointed to some important managerial position. Such an approach optimizes the economic efficiency of human resources—providing required skills and developing interna- tional capabilities simultaneously (Tharenou and Harvey 2008). However, Yamazaki and Kayes (2007) claim that if MNCs expect their expatriates to perform successfully within their assignment periods, they may need to provide the
8 2 Expatriate Adjustment and Expatriate Learning
expatriates with at least a three-year tenure. Therefore, this study adopts a pseudo longitudinal research method that examines expatriates with different lengths of assignment tenure to investigate whether short-term international assignments are as effective for expatriate adjustment and learning as traditional long-term interna- tional assignments.
2.1.2 Expatriates and International Assignments
An expatriate is the person that MNCs assign to an international assignment. Expatriates usually are home country nationals or third country nationals. Edstrom and Galbraith (1977) define expatriates as individuals who, irrespective of their national origin, are transferred outside their native country to another country specifically for employment purposes. Expatriates are usually classified into three broad categories based on their national origin relative to that of the parent com- pany (Shaffer et al. 1999). Parent country nationals (PCNs) are expatriates who are from the home country of the MNC; third country nationals are non-PCN immi- grants in the host country (e.g., those transferred between foreign subsidiaries); inpatriates are employees from foreign subsidiaries who are assigned to work in the parent country. There are several reasons why MNCs select various types of expatriates. For example, parent country nationals facilitate communication between corporate and foreign offices, while third country nationals tend to be more sensitive to cultural and political issues.
Harzing (2001) identified three specific control roles of expatriates, namely: the bear, the bumble-bee, and the spider. Bears act as a means of replacing the cen- tralisation of decision-making in MNC and provide a direct means of surveillance over subsidiary operations. The title highlights the degree of dominance these assignees have over subsidiary operations. Bumble bees fly ‘from plant to plant’ and create cross-pollination between the various ‘offshoots’ (Harzing 2001:369). These expatriates can be used to control subsidiaries through socialisation of host employees and the development of informal communication networks. Finally spiders, as the name suggests control through the weaving of informal communi- cation networks within the MNC. Significantly, Harzing (2001) argues that although expatriates generally appear to perform their role as bears regardless of the situation, the study suggests that their roles as spiders and bumble bees tend to be more contexts specific. Specifically, the bumble bee and spider roles appeared to be more significant in longer established subsidiaries (longer than 50 years) while the bumble bee role appeared to be important in newly established subsidiaries also. Besides, the level of localization of subsidiary operations and further lower levels of international integration (the subsidiary was not greatly reliant on the headquarters for sales and purchases) were positively related to the likelihood of expatriates performing the bumble bee and spider roles.
2.1 International Assignments 9
2.1.3 Cultural Differences Between Nations
126.96.36.199 High-Context Versus Low-Context Cultures
Hall (1977) claims a cultural classification of high-context culture and low-context culture based on how, in each individual, identity rests on total communication frameworks. In high-context cultures, surrounding situations, external physical environments, and non-verbal behaviours are all important for its members to determine the meanings of messages conveyed in communication. Covert clues in these contexts make differences to the members and are used to search for a real meaning beyond verbal messages. In a high-context culture, its members tend to be related to each other in relatively long lasting relationships. For their effective communications, high-context culture requires its members to become sensitive to immediate environments through feelings. Yamazaki (2005) contends that the communication patterns in high-context cultures are conceptually associated with the Concrete Experience learning mode. Chinese, French, Japanese, and Arabic countries are classified as high-context cultures (Hall 1977).
In a low-context culture, on the other hand, surrounding situations, external physical environments, and non-verbal behaviours are relatively less important in generating and interpreting meanings, whereas explicit verbal messages are crucial in communication (Hall 1977). Most information is conveyed in explicit codes and therefore, explicit communicative styles in logical forms are placed with high importance. In low-context culture, interpersonal relationships last for a relatively shorter period. The communication patterns of low-context cultures focus less on interpersonal relationships while more on rationally detached analyses. Yamazaki (2005) contends that the communicative traits of low-context culture are consonant with the characteristics of the Abstract Conceptualization learning mode and thereby, individuals in low-context culture are likely to learn by logical thinking and analytical cognition. The United States, the United Kingdom, Canada, Australia, Germany, and Switzerland are classified as low-context cultures (Hall 1977). In the present research, the sample of western expatriates constitutes: 35.5 % of the sample comes from the United Kingdom, 29.8 % from the United States, 21.5 % from Canada, 9.1 % from Australia, and 4.1 % from other countries. Basically, western expatriate managers participated in this research are assigned from countries with low-context cultures to a country with high-context culture, China.
188.8.131.52 Collectivism Versus Individualism Cultures
Hofstede (1997) proposes five dimensions of cultural differences: individualism versus collectivism, masculinity versus feminity, long-term orientation versus short-term orientation, power distance, and uncertainty avoidance (see Fig. 2.1). This section begins with a discussion of the dimension collectivism versus individualism.
10 2 Expatriate Adjustment and Expatriate Learning
Hofstede (1997) defines the collectivism and individualism cultural dimension as ‘the degree to which a society reinforces individual or collective achievement and interpersonal relationships’. The fundamental issue addressed by this dimension is the degree of interdependence a society maintains among its members. It has to do with whether people’s self-image is defined in terms of ‘I’ or ‘we’. A high score on individualism indicates that individuality and individual rights are paramount within the society. In individualistic cultures, individuals tend to form a large number of looser relationships and they are supposed to look after themselves and their direct family only (Hofstede 2010). On the other hand, a low score on indi- vidualism, or a high score on collectivism, indicates that the society has a more collectivist nature with close ties between individuals. In collectivist cultures, the society reinforces extended families and collectives and everyone takes responsi- bility for fellow members of their group. Markus and Kitayama (1991) examined the culturally different self-construal and proposed two classifications: interdependent-self and independent-self, each of whose attributes differs among cultures. Interdependent-self is represented as the self-construal of people in Asian, African, Latin American, and many southern European cultures, while independent-self is exemplified as the self-construal of those in American culture as well as many western European cultures (Markus and Kitayama 1991). Triandis (1995) and Hofstede (1997) categorized this cultural dimension of interdependent-self versus independent-self as analogous to that of collectivism versus Individualism. Anderson (1988) supports this cultural dimension from a cognitive perspective. He illustrates that Eastern cultures are holistic, relational, and field-dependent, while Western cultures are analytical and field-independent.
People with collectivism cultures have the strong sense of belongingness to social contexts and relationships (Hofstede 1997). Markus and Kitayama (1991) claim that individuals with interdependent-self tend to base the relationship with others as a crucial and functional unit of conscious reflection and, they have a strong tendency to seek information about others’ perception about self in the relationship. In contrast, independent-self, the American and western European
Individualism vs. collectivism
Masculinity vs. feminity
Fig. 2.1 Hofstede’s 5 cultural dimension model
2.1 International Assignments 11
notion of self, is seen as separate from context (Markus and Kitayama 1991). There is a widespread belief that people are inherently detached and distinct in individ- ualistic cultures where the cultural norm is to become independent from others and to express one’s uniqueness. Collectivistic cultures, such as the cultures of most Asian countries, emphasize a communication style in which ‘most of the infor- mation is either in the physical context or internalized in the person’ (Hall 1976: 79), whereas individualistic cultures, such as those of the United States, Germany, and the United Kingdom, use a ‘low-context’ communication style (Hall 1976). Chinese and Japanese are classified with high collectivist culture, while the North American and most western European countries are classified with individualistic cultures (Hofstede 2010). According to the national culture comparisons of Hofstede (2010), China is a highly collectivist culture where people act in the interest of the group and not necessarily of themselves. In-group considerations affect hiring and promotions with closer in-groups (such as family) are getting preferential treatment. Whereas relationships with colleagues are cooperative for in-groups, they are cold or even hostile to out-groups. In China, personal rela- tionships prevail over task and organization (Hofstede 2010).
In the present research, western expatriate managers are assigned from countries with individualistic cultures to a country with a high collectivist culture, China. As we can see, the collectivists’ cultural characteristics of China may present a major obstacle for western expatriates. The researcher suggests that an awareness of the history, culture, and behaviour of Chinese people would reduce expatriates level of frustration, anxiety, and concern.
184.108.40.206 Power Distance
Hofstede (1997) defines power distance as ‘the degree of equality, or inequality, between people in the country’s society’. Power distance refers to ‘the extent to which the less powerful members of institutions and organisations within a country expect and accept that power is distributed unequally’ (Hofstede 1997). High scores on a Power distance index indicate that inequalities of power and wealth have been allowed to grow within the society. These societies are more likely to follow a caste system that does not allow significant upward mobility of its citizens. Low scores on a Power distance index, on the other hand, indicate that the society deempha- sizes the differences between citizen’s power and wealth. In these societies, equality and opportunity for everyone is stressed.
According to the national culture comparisons in Hofstede centre (Hofstede 2010), China sits in the higher rankings of his Power Distance Index, i.e. a society that believes that inequalities amongst people are acceptable. The subordinate-superior relationship tends to be polarized and there is no defense against power abuse by superiors. Individuals are influenced by formal authority and sanctions and are in general optimistic about people’s capacity for leadership and initiative. People should not have aspirations beyond their rank. On the other hand, the United State, the United Kingdom, and most western European countries
12 2 Expatriate Adjustment and Expatriate Learning
are classified with low power distance cultures (Hofstede 2010). Within organi- zations in low power distance societies, hierarchy is established for convenience, superiors are always accessible and managers rely on individual employees and teams for their expertise. Both managers and employees expect to be consulted and information is shared frequently. At the same time, the communication is informal, direct, and participative. In the present research, western expatriate managers are assigned from countries with lower power distance cultures to a country with a high power distance culture, China.
220.127.116.11 Strong Uncertainty Avoidance Versus Weak Uncertainty Avoidance Cultures
Hofstede (1997) defines uncertainty avoidance as ‘the extent to which the members of a culture feel threatened by uncertain or unknown situations’. Furthermore, uncertainty avoidance index refers to the level of tolerance for uncertainty and ambiguity. High scores on uncertainty avoidance index indicates that the country has a low tolerance for uncertainty and ambiguity and is a rule-oriented society that institutes laws, rules, regulations, and controls in order to reduce the amount of uncertainty. On the other hand, a low score on the uncertainty avoidance index indicates that the country has less concern about ambiguity and uncertainty and has more tolerance for a variety of opinions. A society with weak uncertainty avoidance culture is less rule-oriented and more readily accepts change. The characteristics of strong uncertainty avoidance are reflected in Chinese culture (Hoppe 1990). The main concern of the society is to control everything in order to eliminate or avoid the unexpected. As a result, the society does not readily accept change and is risk adverse.
Organizational members in strong uncertainty avoidance countries have a feeling of anxiety or fear when encountering unfamiliar risks, deviant ideas, or conflicts in their work place. Those members need to take time for action until they acquire enough knowledge and information to reduce or resolve unclear and unstructured situations. In contrast, organizational members in weak uncertainty avoidance countries tend to feel less uncomfortable in unclear and unstructured circumstances and are more likely to take risks in unfamiliar situations when encountering deviant or innovative ideas and behaviours (Hofstede 1997). Self-actualization in a weak uncertainty-avoidance work place functions as a great motivational factor, while no failure is the main concern in a strong uncertainty-avoidance work place. Hoppe (1990) tested the relationship between the strong/weak uncertainty avoidance cul- tural dimension and Kolb’s (1986) learning styles. He examined a sample of 1544 adults from 19 countries: 17 European countries (Great Britain, Germany, France, Italy, and so on), the US, and Turkey. His results showed that people from strong uncertainty avoidance cultures tend to learn through the reflective observation learning mode, while those from weak uncertainty-avoidance cultures tend to learn through the active experimentation learning mode.
2.1 International Assignments 13
Japanese, South Korea, and Germany are classified with strong uncertainty avoidance cultures; Chinese is classified with medium to strong uncertainty avoidance culture; the United State, the United Kingdom, Australia, and Denmark are classified with weak uncertainty avoidance cultures (Hofstede 2010). In the present research, western expatriate managers are assigned from countries with weak uncertainty avoidance cultures to a country with a medium to strong uncer- tainty avoidance culture, China.
18.104.22.168 Long-Term Orientation
Hofstede (1997) defines Long-term orientation as ‘the degree to which a society embraces, or does not embrace, long-term devotion to traditional, forward thinking values’. High scores on a Long-term orientation index indicate that the country prescribes to the values of long-term commitments and respect for tradition. This is thought to support a strong work ethic where long-term rewards are expected as a result of today’s hard work. In a society with a long-term orientation, businesses may take longer to develop, particularly for an ‘outsider’. Low scores on a Long-term orientation index, on the other hand, indicate that the country does not reinforce the concept of long-term, traditional orientation. In a society with this culture, change can occur more rapidly as long-term traditions and commitments do not become impediments to change.
According to the national culture comparisons in Hofstede centre (Hofstede 2010), China is a highly long-term oriented society in which persistence and per- severance are normal. Resources and investment tend to be in long-term projects, such as real estate. The United States, on the other hand, is classified as a short-term culture. American businesses tend to measure their performance on a short-term basis, with profit and loss statements being issued on a quarterly basis. This also drives its people to strive for quick results within the work place. In the present research, western expatriate managers are assigned from countries with relatively short-term orientation cultures to a country with a highly long-term oriented culture, China.
22.214.171.124 Masculinity Versus Feminity
Hofstede (1997) defines the Masculinity/Feminity cultural dimension as ‘the degree to which a society reinforces, or does not reinforce, the traditional masculine work role model of male achievement, control, and power’. High scores on the Masculinity index indicate that the country experiences a high degree of gender differentiation. Males dominate a significant portion of the society and power structure, with females being controlled by male domination. On the other hand, low scores on the Masculinity index indicate that the country has a low level of differentiation and discrimination between genders. Females are treated equally to males in all aspects of the society. In the present research, western expatriate
14 2 Expatriate Adjustment and Expatriate Learning
managers are assigned to a country with a slight Masculinity oriented culture, China.
In summary, Chinese culture is highly contrasted with western (American and Western Europe) cultures. China is distinct different from most other countries. From a western perspective, China ‘is seen as the most foreign of all foreign places. Its culture, institutions, and people appear completely baffling—a matter of absolute difference’ (Chen 2001: 17). Also, co
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