Introduction
The appointment of overseas, or expatriate, managers for a company’s foreign subsidiaries is a highly challenging yet vital task. If a company intends to expand its business into new countries, it needs to choose an executive who will agree to the job and guarantee the success of the new enterprise in an unfamiliar market. The task demands a variety of valuable competencies from the candidate, such as personal skills, cultural awareness, independence, experience in macro and micromanagement, and flexibility. This research will investigate the factors desired from expatriate candidates by large multinational companies as well as their global expansion strategies regarding personnel.
Global Expansion Strategies
International expansion is a valid strategy for the growth of a company that does not expect to secure a more substantial portion of the local market shortly or a company that deals in transportation or data processing and is therefore naturally inclined to expand its activities. Cahen and Stal (2017) note that the results of studies of the effects of internationalization on performance are controversial but add that numerous multinational companies have achieved significant success using the approach. They suggest that the outcome of the expansion is dependent on the company’s perception of the enterprise and its degree of preparation.
A company may expand into new markets under its brand name, or it may create a new subsidiary brand for the purpose and begin promoting it in the new locale. According to the research conducted by Fujimoto and Kubo (2015), the selling power of an established brand is superior to that of a new one, even if the latter is adapted to the specifics of the market in question. The brand is associated with its country of origin regardless of its name, but customers tend to trust products that are the same as those offered in the company’s primary area of operations, assigning them greater legitimacy.
New markets, particularly emerging ones, are an attractive source of revenue and growth, as the company may enter an unclaimed field or introduce new and unexplored approaches into an established one. However, according to Lin, Lee, Kao, and Wu (2014), the lack of infrastructure and operating ability as well as government policies serve as limiting factors for such an expansion. A competent executive’s assessment and decision-making are necessary to assist the subsidiary’s growth. However, as it is unlikely that the company will be able to recruit a qualified local manager, the appointment of an expatriate executive who will oversee the growth of the new branch becomes necessary.
Hyundai serves as an example of a company that has successfully expanded globally through the effective use of expatriate staff. According to Tomiyama and Shioji (2015), the company can quickly identify local needs and develop appropriate products due to their significant number of overseas assignments that allow for quick and efficient information gathering as well as their focus on the foreign sales team and its needs. The combination of data gathering and specialized project teams with high authority, as well as the marketing orientation of the company and its focus on the customer, allow the company to quickly establish itself in foreign markets and successfully expand its business.
Primary Overseas Manager Competencies
An ideal overseas manager should possess a wide variety of skills and abilities, but a given company has a limited selection of qualified executive staff to choose for the task. Jovcheska and Popovski (2015) identify the critical factors in the performance of an international manager as the ability to adapt the company’s business strategy to global trends, incorporate company policies into local practices, and proficiency in multiple foreign languages including English.
However, it should be noted that the study only concerns international expansions within the European Union, where the cultures are not radically different and regulations are mostly unified, and so places lesser importance on some of the aspects of the assignment.
Large companies expect their expatriate managers to be capable of adapting to the political and legal situations and improving the organization’s productivity under changing regulations. According to Ogasavara, Moreira, and Arruda (2016), multinational enterprises would send more executives to their subsidiaries in emerging markets when government policy related to regulatory quality and political stability changed. The companies also expect their expatriates to conduct training of local staff, adjusting the numbers of personnel they dispatch based on the education levels of the subsidiary’s employees. Furthermore, larger subsidiaries represent a more significant investment by the parent firm and usually have more expatriate managers to facilitate communication between the organizations.
An expatriate manager should exhibit a significant amount of independence and display the ability to handle economic crises on his or her own. According to Cordeiro, Ogasavara, and Masiero (2016), the economic market is unpredictable during a recession, and a successful subsidiary manager should adopt and successfully implement a business strategy to maintain competitiveness. The exact approach depends on the executive in question, and as such, he or she should be competent in the implementation of at least one pattern, such as sales growth or productivity increases. Proficiency in multiple strategies improves the flexibility of the manager and of the organization he or she leads, improving their eligibility for expatriate assignments.
Aside from selecting the course of the subsidiary, overseas managers also have to navigate issues on the micro-level and bring the subsidiary up to the central company’s standards. Haynes (2018) identifies the roles the manager has to play in micro-level situations like those of “a translator, mentor, apprentice, coordinator, investigator, internal negotiator, fire-fighter, ambassador, and networker” (p. 15). He or she adapts the company’s policies to the circumstances and teaches others, but he or she also learns and improves their skills as a manager. Furthermore, he or she should actively look for sources of improvement and promote the company in the local market by establishing contacts with potential customers and business partners.
A multinational enterprise should consider the personal qualities of a potential expatriate manager as well. Gordon (2015) lists the essential characteristics as communication skills (although she notes that it is unrealistic to expect the candidate to know the local language beforehand), personality traits such as flexibility and cultural empathy, motivation, and family circumstances. The last two are particularly important, as the manager will be leaving their familiar environment for a significant length of time, and he or she needs a strong reason to tolerate the new environment. Furthermore, a spouse that accompanies the manager will help him, or she adapts to the situation faster and avoids experiencing loneliness.
Lastly, an expatriate manager should aim to improve the sustainability of the organization he or she is leading. The task includes creating a favorable climate for the company’s performance, which can be achieved by observing ethical and environmental guidelines. According to Kumar, Dangi, Rashmi, and Singh (2015), most Fortune 100 companies contribute to disaster relief, designing infrastructure, and contributing money and services, notably collecting $9,452,500 for the 2013 Oklahoma tornadoes relief. Imiołczyk (2018) describes the strategies used by Volkswagen to reduce pollution and improve the company’s image by implementing corporate social responsibility practices.
The policies serve to combat environmental issues and improve the ethical image of the companies in question, improving their sustainability as a result. The development of new infrastructure also leads to technological advances, further benefiting the companies.
Cross-Cultural Competencies
Culture adaptation is the primary difficulty for an expatriate manager, as he or she has to adapt the company policy to the circumstances to succeed. According to Chmielecki, Sułkowski, Rozkwitalska, and Przytuła (2014), people from different cultural backgrounds struggle to negotiate with each other. As such, it is necessary for an expatriate manager candidate to study various cultures and expand his or her worldview. A broader perspective, especially the knowledge of the native language of one’s negotiation partners and awareness of their formal and informal customs, may enable a more beneficial experience for both parties. Furthermore, the knowledge will help the expatriate adapt to their new circumstances faster, reducing his or her stress.
The statement is particularly true for complex and unfamiliar cultures that can be overwhelming if encountered without proper preparation. Tahir and Ertek (2018) describe a study in which they discovered that none of the twenty-five inspected European companies that sent employees to the UAE provided any form of cultural training before the expatriates’ departure. Furthermore, most of the workers received no support during the period of their assignment. The UAE is a multi-cultural environment with many unique customs, and the employees experienced a severe cultural shock as a result. Proper training would have improved their productivity and satisfaction with the work as well as their overall happiness and adjustment speed.
At the same time, not all expatriate managers believe cross-cultural education is necessary. According to Yadav (2014), some of them assign a lesser significance to personal skills compared to action, analytical, and information abilities, claiming that establishing informal relationships and learning the local language and culture are matters of personal choice that do not significantly affect one’s work output. However, the study is limited by its sampling frame, which mostly concerned English-speaking expatriates in India, where English is commonly spoken. Furthermore, the majority of the respondents displayed high competencies in all four categories. In addition, some of them chose to stay in India, and several found spouses in the country.
Conclusion
Expatriate managers are responsible for the success of a company’s foreign expansion, and their selection is a highly important process. An overseas employee should possess a variety of competencies, such as cultural awareness, communication skills, and adaptability.
Large multinational companies also expect their expatriates to be independent and handle crises and legislation concerns. Lastly, overseas managers are expected to handle arising concerns on both the micro and the micro-level, educating employees while learning themselves and establishing relationships with local customers and partners. He or she should have the motivation to stay in a foreign land for extended periods of time, and a spouse that would accompany him or she is a desirable factor. Lastly, he or she should receive cultural training to avoid shock and improve productivity.
References
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