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INTRODUCTION Globalization is the system of interaction among the countries of the world in order to develop the global economy. Globalization refers to the integration of economics and societies all over the world. Because of globalization, the number of countries where products can be sold or purchased has increased dramatically. Globalization also cause an increasing influence of Multinational Companies (MNC). An example is a car company whose head office is based in Japan. This company has branches in different countries.
While the head office controls the subsidiaries, the subsidiaries decide on production. The subsidiaries are tasked to increase the production and profits. They are able to do it because they have already penetrated the local markets. Globalization has a lot to do with the rise of multinational corporations. (Hubpages, 2009) Investorwords (n. d. ) state that, in general, as economies become more connected to other economies, they have increased opportunity but also increased competition.
The impact of globalization on the proliferation of Expatriates Managers are, in today’s global economy, companies establish foreign-owned subsidiaries and enter into joint ventures and strategic alliances to create a presence in foreign markets and to exploit advantageous production resources. One of the challenges of the globalisation process are companies might have lack of qualified local candidates. Companies have to build development of individual employees for international mobility (Peltonen, 1993; Anfuso, 1994) as cited in (Leslie et al. 2004). Maintaining home office control (Boyacigiller, 1990; Nohria and Ghoshal, 1994) as cited in (Leslie et al. ,2004), improving coordination, knowledge transfer, and consistency of corporate strategy are also become company’s challenges for them to be involved in globalisation process (Edstrom and Galbraith, 1977; Tallman and Fladmoe-Lindquist, 1994) as cited in (Leslie et al. ,2004). All of this opportunities and challenges create the need for expatriates.
For example, companies need to locate managers and skilled workers in foreign country. Employee satisfaction with expatriation and repatriation is critical to the success of global companies because these employees often play a pivotal role in managing and coordinating the operations of the extended enterprise. (Leslie et al. ,2004) CULTURE AND CROSS CULTURAL MANAGEMENT Cross-cultural issues are the most central and most persistent factors that influence international business activity.
When companies operate internationally they face such cross-cultural challenges as understanding the differences in communication patterns and styles, preferences for leadership approach and style, different principles and notations of hierarchy and organisational structures and different systems of decision making. (Koivisto, 1998) A primary source of misunderstanding among cultures is the differences in values and priorities. Language is one of the factors that affect intercultural relationships.
All cultures use verbal and nonverbal communication systems or languages, and each culture’s vocabulary reflects its primary values and composition. For instance, Eskimos use many words and expressions for snow and its components. Although words themselves have no meaning, managers should observe and respect the role and composition of languages and other subtle cultural cues. (Rose, 1989) The other factors that affect intercultural relationship is religion. Religion is the dominant force in the daily lives of some peoples, such as Arabs.
Arab life revolves around prayer times, holidays, and daily events, and many occurrences are justified in the name of religion. Successful foreign businesses operating in cultures where religion governs business and social practices are those who respect and deal with their hosts’ customs, such as prayer requirements and dietary restrictions. (Rose, 1989) When a company or an expatriates step into a foreign culture they will find that things are different. Using Hofstede’s Cultural Dimensions, they can evaluate their approach, decisions, and actions based on a general sense of how the society might think and react to them.
The model can be of great use when it comes to analyzing a country’s culture. There are five dimensions of culture in this model, power distance, individualism, masculinity, uncertainty avoidance and long term orientation. Power distance refers to the degree of inequality that exists and accepted among people with and without power. A high power distance score indicates that society accepts an unequal distribution of power and people understand “their place” in the system. Low power distance means that power is shared and well dispersed.
For example, Malaysia is a country that score high power distance, expatriates would probably send reports only to top management and have closed door meetings where only a select few, powerful leaders were in attendance. (Mindtools, 2009) Individualism refer to the strength of the ties people have to others within the community. A high individualism score indicates a loose connection with people. In countries with a high individualism score there is a lack of interpersonal connection and little sharing of responsibility, beyond family and perhaps a few close friends.
In a society with a very low individualism score such as Central American countries of Panama and Guatemala, an expatriates must be able to respect traditions and introduce change slowly. (Mindtools, 2009) Next cultural dimension is masculinity. This dimension refers to how much a society sticks with, and values, traditional male and female roles. High masculinity scores are found in countries where men are expected to be tough and strong. Low masculinity scores do not reverse the gender roles. In a low masculinity society, the roles are simply blurred.
We will see women and men working together equally across many professions. According to Hofstede’s analysis, if companies want to open an office in Japan, they might have greater success if they appointed a male employee to lead the team. (Mindtools, 2009) Uncertainty avoidance relates to the degree of anxiety society members feel when in uncertain situations. High uncertainty avoidance scoring nations try to avoid ambiguous situations whenever possible. Low uncertainty avoidance scores indicate the society enjoys novel events and values differences.
For example, if an expatriates have to when discuss any project with people in Belgium, they should investigate the various options and then present a limited number of choices, but have very detailed information available on your contingency and risk plans. (Mindtools, 2009) The last dimensions of cultural is long term orientation. This refers to how much society values long-standing, as opposed to short term traditions and values. In countries with a high long term orientation score, delivering on social obligations and avoiding any shamed are considered very important.
Example, people in the United States and United Kingdom have low long term orientation scores. In this culture, companys might expect a creative expression and novel ideas. People in the US and UK do not value tradition as much as many others, and are therefore likely to be willing to help the company execute the most innovative plans as long as they get to participate fully. (Mindtools, 2009) Expatriate adjustment and performance An expatriate is an employee who is working and temporarily residing in a foreign country.
Sometimes they also called as international assignees. (Peter et al. ,2008) An expatriate will be ready or willing to take on a period of operation abroad if they has the right attitudes or frame of mind, not necessarily specific qualifications of global managerial attributes (Baruch, 2002) as cited in (Yehuda et al. , 2002). The reasons can vary, starting with the will to be exposed to different experiences and enriched life style, through a willingness to relocate, either as a stage of an internal career path or to gain higher external marketability. Yehuda et al. , 2002) Traditionally, expatriation has been associated with an ethnocentric approach and indicated the practice of using parent-country nationals for staffing key positions in foreign-owned subsidiaries. Consequently, the primary goal of expatriation was explicit and well-defined control and coordination: by relocating expatriates, parent organizations have been able to exert control and achieve global integration across subsidiaries have explicitly addressed the transfer of managers as a coordination and control strategy in MNCs. Black et al. , 1992; Schuler et al. , 1993; Tung, 1993; Evans et al. , 2002). Edstrom and Galbraith (1977) as cited in (Dana and Snejina, 2004). Harzing (2001) as cited in as cited in (Dana and Snejina, 2004) stated that expatriates are used to effect control, in both a direct and indirect manner. The importance of expatriates in international business is now well recognised due to their central role as controllers, co-ordinators and knowledge transferrers within multinational and global firms (Bonache et al. n. d. ) as cited in (Vesa and David, 2001). Due to the increasing globalisation of business it is becoming more and more usual for careers of business managers to include both short and long-term international assignments. It may even be required that international experience should be a prequisite for higher-level management positions in international companies, but on the other hand there is a lack of competent global leaders within companies. (Gregersen et al. , 1998; Harvey et al. 1999) as cited in (Vesa and David, 2001). Black (1990) as cited in (Jonna and Ingmar, 2005) stated that personal characteristics of successful expatriates can be evaluate based on their ability to acquire such knowledge and using it to guide their own behaviour reduces uncertainty and promotes adjustment, which has been assumed to lead to better job performance. Repatriation, or re-entry, is the transition from a foreign country back to one’s own after living overseas for a significant period of time.
There is an increase in the willingness of international companies to devote time and resources to providing their returning staff, and their families, with some form of assistance in re-establishing themselves back home through a repatriation programme. Marks & Spencer is a good example of this trend where the company has shown much concern for valued staff on their return and has attempted to ease their period of adjustment, and their redundancy. (Brian, 1999) Failure rates among expatriates can reach staggering proportions and be quite costly.
Beyond the costs incurred in transferring an employee and their family abroad, due to ineffectiveness of its employees a company’s foreign operations may stagnate. The productivity of the foreign operations may go down, the ability to control indigenous employees may be lessened, then, the company may lose its market share to competitors and also damage its reputation among clients. Failures can have profound effects on the expatriates themselves by ruining their careers, causing personal blows to their self-esteem and ego, and may be taxing on their family life both physically and psychologically.
Mendenhall and Oddou (1985) as cited in (Ugur and Muzaffer, 1999). Worse yet, employees who fail in their overseas assignments have difficulty in adjusting to the corporate structure once they return (Ugur and Muzaffer, 1999). Repatriates might be facing reverse culture shock, which is experienced on return, is generally unanticipated by both the individual and the organisation. It is accentuated by the expectation of those returning that life in the home country will be the same as when they left.
Repatriates expect to be able to move back into the community and renew the previous friendships. Reality may be very different, as they come back to a totally new environment which is neither the world they knew, nor the world they were expecting. Friends may have moved and people are not at all interested in what the repatriates have experienced overseas. (Brian, 1999) Brian (1999) also said that, there is also a tendency for repatriates to confine to a lower social standing in their organisations.
If the repatriates arrive in the home country and find that there is apparently no real job for them, they might experienced loss of self-esteem. Repatriates also can experienced alienation which means negative feelings about the home culture on return. They often discover that, for example, traffic congestion, litter, crime and the pace of life are all accentuated and the climate is not so pleasant as earlier remembered. Repatriates might be experienced reversion. This is a result of culture shock.
In reality, home has changed and the returnee has changed, having travelled much, probably learned a foreign language and become more cross-culturally fluent. The role of the company in repatriation is important due to helps repatriates live as a normal person as before. Company can debrief the repatriates regarding their overseas experience and identifying areas where skills have been developed. This will provide an opportunity for the repatriates to articulate evidence of success and any problem areas. Brian, 1999) Cross Cultural Training and Development Hamill (1989) as cited in (Anne-wil, 1995) states that, in US multinationals, at least 25 and 40 percent of all foreign assignments ending in failure. That is an extremely high failure rate amongst expatriates. The difficulties related to expatriation including high costs, adjustment difficulties, premature returns, repatriation difficulties and career management problems are also widely noticed. (Black et al. 1991) as cited in (Vesa and David, 2001). From these standpoints, it has been stressed that the training of employees for their international careers is a very important HRM challenge . (Vesa and David, 2001). Mendenhall and Oddou (1985) have suggested that in adjusting to the cross-cultural aspects of an international assignment, three personal abilities are important. The major benefits of specialized cross-cultural training such as pre-departure training for expatriates are hortening their learning curve, adjusting management style to harmonise with local work practices and help expatriates to build cross-competency skills, such as the ability to tolerate ambiguity, establishing empathy, flexibility and managing transitional stress. (Brian, 2007) Predeparture training programs administered by the parent company can ease the transition of the expatriates and facilitate their adjustment to amenities, general living conditions and social interactions. (Ugur and Muzaffer, 1999) Cross-cultural awareness includes general cultural sensitization.
Expatriates will learn to dealing with ambiguity and culture shock and developing appropriate coping strategies. This part of pre-departure training can be particularly beneficial to the accompanying partner and other members of the family. Cross-cultural communication skills help expatriates to understand someone from another culture and covers the key research by the cultural model and dimensions such as Hofstede. Training should explore the barriers to effective cross-cultural communication and examine key aspects of cultural diversity in the areas of visible behaviour.
The most in-depth part of any pre-departure briefing is provide a specific country or region briefing. It should cover geography, history, economics, politics, foreign relations as well as the infrastructure, communications and the working environment. Insight should be provided into local customs, taboos, religious practices, social conventions and, where appropriate, possible conflict between local, traditional and western values, including the expatriate community, should also be covered, particularly as these are of interest to families. Brian, 2007) Brian (2007) have stated that learning the skills to be effective in doing business locally are other phases of training. There should be a frank examination of such ethical aspects as bribery and corruption. A major problem experienced by international business managers is operating in countries where the attitude to time is very different. This is particularly apparent where one culture is monochronic and the other polychromic. For example, North America and Middle East.
Other key areas that should be covered include knowledge of religious holidays and their effect on business, the importance of hierarchy, status and seniority. International negotiating skills will help expatriates to develop the appropriate skills in cross-cultural communication for success in the target culture and also for application in the wider global market-place. Skills such as setting agenda, running meetings, reaching agreement and the best use of interpreters and translators are covered.
Negotiating training allows participants to practise and experiment with the communication style necessary for their new environment. The skills of multi-cultural team building are important because many expatriates will find themselves members of committees, task forces, project teams, taking part in joint ventures and meetings with managers from different cultures. The skills of establishing a climate of mutual trust and professional respect across cultures is essential, with the overall aim of maximizing cultural synergy.
Language training is also important for an expatriates. If a high degree of language’s fluency is desired and formal, language training must begin well before the departure date and, if necessary, continue on arrival. As such training is expensive and time-consuming, it is essential to carry out a rigorous needs analysis. Other than that, ensuring the successful transfer of skills and knowledge from one culture to another is of direct relevance in particular to project managers, technical experts, those involved in trade missions and managers in international joint ventures.
Successful transfer relies on sensitive awareness of the host culture and the importance of building a relationship of trust, understanding the local customs and working practices which may influence the way in which skills are transferred. (Brian, 2007) Last, repatriation training should be planned well in advance of the return date and should cover such sensitive areas as redundancy, or possible demotion. For expatriates who decide to leave the company, “exit interviews” should be carried out to discover why they decide to leave. Hill (2005) as cited in (Brian, 2007)