Cross-Border Staff Mobility

A Comparative Study of Profit and Non-Profit Organisations

C. Adick, M. Maletzky, L. Pries, B. Gandlgruber, C. Adick, M. Maletzky, L. Pries, B. Gandlgruber

• Publisher: Palgrave Macmillan
• Year: 2014
• Print ISBN:
  9781137404398
• eBook ISBN:
  9781137404411
• Topic: Business
• Subtopic: Business Strategy
• Index: Business

The book addresses several research gaps in the study of organisations and rarely analysed areas such as the non-profit sector (NPOs). It combines approaches from HRM, business studies and organisation research, and incorporates micro- and macro-perspectives on organisations and institutions by using situational and neo-institutionalist frames.

1

Cross-Border Mobility: Not Only Goods and Information, Also People

Christel Adick, Bruno Gandlgruber, Martina Maletzky, and Ludger Pries

Globalisation leads not only to denser networks of value chains and information flows, but also to increasing flows of people. The spatial mobility of people is increasing in volume and becoming differentiated in terms of patterns and functions. This trend affects almost all levels of society – from the lower classes, who migrate as undocumented workers, to the jet set, which includes top managers, politicians and cosmopolitan artists. At an intermediate level, organisations are increasingly fostering the cross-border mobility of a variety of experts and specialists as expatriates and business travellers (Collings et al., 2007; Reiche and Harzing, 2011).

This rise in the global mobility of people in general is accompanied by a rise in the cross-border mobility of organisation-related staff, which has become an important and critical mechanism for coordinating and communicating among cross-border organisational units (Harzing, 1999). Expatriates are essential to these processes and represent certain values and norms important for the organisation, thus potentially increasing its reputation and legitimation (Caligiuri, 1997; Aldrich and Herker, 1977). High failure rates of foreign assignments are reported in the literature.¹ Diversification of mobility forms is described as a chance to overcome the limitations of the traditional (ethnocentric) long-term mobility of staff (such as expatriates). In addition to the traditional use of parent-country nationals (PCNs) who move from the headquarters overseas, organisations draw on different global staffing strategies, such as increasing the share of local specialists – the so-called inpatriates – who move from foreign subsidiaries to a company’s country of origin; contracting staff as assignees from other countries as local employees; and employing third-country nationals (TCNs) who move between two foreign subsidiaries. Each of these strategies appears to have specific advantages and disadvantages, as well as particular implications for the coordination and legitimation of organisations (Collings et al., 2007) (see Section 1.2).

1.1 Why cross-border mobility is important?

This book focuses on the intra-organisational flows of people across borders and their role in coordinating organisations transnationally. The constantly rising rates of foreign direct investment (FDI) are an indicator of the demand for overseas managers and internationally mobile employees in for-profit organisations (FPOs). Since 1990, FDI has sextupled, and many reports, such as the Brookfield Global Relocation Trends Surveys (2011, 2012, 2013), emphasise the steady growth in the number of expatriates and the importance of staff mobility within companies in general. In 2012 and 2013, more than half of the selected FPOs indicated that their cross-border mobile staff had increased and will be increasing further.² Similarly, the number of internationally active non-profit organisations (NPOs) has grown in recent years. According to the Yearbook of International Organizations, 176 internationally active NPOs were registered in 1909; by 2011, this number had increased to 56,834.³ The internationalisation of FPOs and NPOs not only involved movements from the North to the South, but also took place in the emerging markets and countries of the South in general. The growing importance of the South in global markets is reflected in the changing composition of the global outflows of FDI. FDI outflows from emerging and developing countries increased from 9 per cent in 2000 (UNCTAD, 2001) to a record 31 per cent of the world total in 2012. Of the top 20 investor economies, Mexico ranks number 15. Also in 2012 – for the first time ever – developing economies absorbed more FDI than developed countries (accounting for 52 per cent of global FDI flows). Despite the global downturn, transnational corporations (TNCs) from developing countries continued their expansion abroad (UNCTAD, 2013). The proportion of multinationals in developing and transition economies compared to developed countries rose from 8 per cent in 1992 to 28 per cent in 2010. This means that in 2008, 28 per cent of all MNCs were rooted in a developing economy (UNCTAD, 2010). In 1990, companies in the South made up only 4 per cent of the Fortune Global 500 ranking of the world’s biggest corporations; in 2011, their share was 22 per cent. Today, one in four TNCs is based in the South (UNDP, 2013).

In the case of FPOs, the movement from the North to the South was motivated mainly by wage differentials and by strategies for access to direct markets and raw materials (Mortimore, 2006), but expanding the organisational activities into emerging markets is particularly challenging with regard to quality standards and the availability of well-trained experts and employees, as well as to the cultural differences that face the mobile staff (Brookfield, 2012). The number of NPOs or non-governmental organisations (NGOs) in the South increased. This occurred, for instance, in areas such as education and capacity building when official donor agencies (international organisations, governments of the North) provided direct funding to local organisations or civil society movements in the South (Kajimbwa, 2006; Ulleberg, 2009). This might challenge the established dominance of northern NGOs (Reddy, 2006) and might also further increase South–South cooperation (Chisholm and Steiner-Khamsi, 2009), owing mainly to changes in foreign aid opportunities.

Although long-distance information and communication technologies have been revolutionised in recent decades – for example, emailing did not exist until the 1990s – cross-border staff mobility still appears to be an important mode of coordinating internationally active organisations. On the basis of a number of surveys, interviews and data analyses, a consultant report concluded that

in the wake of a foreseeable upturn, the winners and losers of the next decade will be defined by those who are able to attract, retain, and deploy their key talent globally. The sentiments outlined above are well aligned with the key findings of this report: Our data reveals [sic] that assignee levels have increased by 25% over the last decade; we predict a further 50% growth in assignments by 2020. (PWC, 2010: 4)

But why is staff mobility so important? Will it actually increase in volume and significance, despite the corresponding high costs and the ever-improving real-time and high-resolution display techniques of telecommunication? These crucial questions are not easily answered. Technological advancements led to the hypothesis – and the dream – of increasing virtualisation of long-distance activities; because the physical cross-border mobility of personnel is both time-consuming and highly expensive and limits the number of people in other places, the idea of improving long-distance communication and cooperation by expanding the extent of telephoning, emailing and video-conferencing would seem to be attractive. Are organisations actually replacing global staffing by virtualisation? Is cross-border mobility considered necessary mainly because it allows for better technical and/or financial control, or the more effective transfer of culture and norms or of knowledge and experience? Which kinds of persons (functional experts, middle management, directors/top management) are sent from which functional areas (Research and Development [R&D], Engineering, Purchasing, Production, Quality Management, Marketing/Sales, Customer Relations, Public Relations) and for what period of time (business trips up to three months, short-term assignments up to one or two years, longer-term assignments)? In addition, in internationally active organisations, from what locale to what locale do the most frequent and prominent streams of staff mobility occur? Are the corresponding patterns of cross-border staff mobility (according to functional group, education and status position, time period, geographic direction) changing over time (and if so, why), and what will be the most important patterns of staff mobility in the future? To what extent do the host country and the home country influence these mobility patterns? What are the characteristics of the German–Mexican mobility patterns?

All such questions are crucial not only for multinational companies (MNCs) such as FPOs, but also for NPOs (which, by the way, are a neglected topic in the research on staff mobility and expatriates), as well as for those personnel who are affected and for communities and societies in general. There are many reasons to suggest that the success and sustainability of internationally active organisations greatly depend on these organisations’ ability to develop strategies and means of cross-border staff mobility that are actually adapted to their corresponding – and diverging – goals and environments (see, e.g., Festing et al., 2011; Gong, 2003; Chang et al., 2011). In an increasingly knowledge-based world, organisations must not only develop strategic competences but also be able to circulate and adapt their knowledge and norms throughout the world (see, e.g., Chang et al., 2011). But the patterns of cross-border staff mobility not only affect organisations as collective or corporate actors, but also define the living conditions and life chances of hundreds of thousands of mobile persons and families. For internationally mobile staff, certain conditions can make a crucial difference: whether the labour contract follows home or host conditions, whether family members can accompany the expert or expatriate or are even offered a dual-career opportunity, how conditions for returning are defined and whether there is a body that will represent their collective interests and be responsible for and engage with them. Finally, due to the weight and possible influence of internationally active organisations, local communities and even national societies are affected by the cross-border mobility strategies of large organisations. Localisation strategies, for example, may enrich local knowledge pools and induce the dynamics of regional development, whereas organisational strategies that concentrate knowledge and power in one place (i.e., the headquarters) may oblige local subsidiaries in other countries to be dependent on a unidirectional staff rotation from the headquarters.

In summary, cross-border staff mobility may not be as conspicuous as the construction of a new plant abroad nor as tangible as launching a new product in a certain subsidiary of a given organisation, yet the specific patterns of staff mobility might be the most significant factor for the success of the organisation itself, for the working conditions and opportunities of employees and for the local and regional environment. Therefore, some additional questions arise: What factors have the greatest influence on the patterns of cross-border staff mobility? Is it mainly the type of organisation in the sense of FPO versus NPO that marks the difference in these patterns, the configuration of an organisation or the sector of activities? What influence does the country of origin have on the organisations and their embeddedness in different institutional settings?

This book attempts to address all these questions, even though not all of them can be answered in an exhaustive way that would be representative of all countries, all types of organisations or all sectors. The chapters that follow summarise empirical findings from case studies of internationally active organisations, in both the for-profit and non-profit sectors, with staff mobility between Germany and Mexico. The research relied on a theoretical framework that focused on cross-border mobility patterns and explained the factors involved in these patterns, characterised as theory-guided explorative research. This approach claims to be innovative in at least four respects. First, it integrates conceptual perspectives of both business studies and organisational research, mainly the sociology of organisations. Second, it combines the analysis and comparative study of FPOs and NPOs. Third, by considering organisations headquartered in Germany and in Mexico, it goes beyond the traditional scope of analysing organisations headquartered solely in highly industrialised countries (e.g., Thite et al., 2012). Finally, the study was carried out by an international and interdisciplinary research team composed of sociologists and experts from the fields of business studies, economics, geography, political science and comparative educational research from both Germany and Mexico.

1.2 What do we know about transnational staff mobility?

During the past two–three decades, globalisation studies have focused on such things as global value chains and the mobility of capital and goods, of ideas and culture and of information and communication channels. However, the crucial topic of global mobility of persons has received less attention in globalisation studies and (organisational) sociology (see, e.g., Mense-Petermann, 2009).

Research on the mobility of personnel has been conducted mainly in the disciplines of international human resource management (IHRM), cross-cultural management studies and cross-cultural psychology.⁴ Consequently, most studies are organised around the human resource management (HRM) process for expatriate managers in MNCs, such as identification, selection, training and development, compensation, performance appraisal, retention, turnover, succession planning and repatriation (Harvey and Moeller, 2009). Within the cross-border context of MNCs, all these HRM processes display an additional degree of complexity. For example, compensation and equity issues can no longer be analysed only from a local perspective, since fair compensation in a local context due to wage differentials turns out to be unfair or difficult in a multinational context (e.g., Bonache, 2006). The main interest of studies has been to identify variables or factors that predict and explain expatriate success or failure in FPOs (Harvey and Moeller, 2009), and the focus has been on either the individual level (expatriates) or the organisational level. Fewer studies have concentrated on certain aspects of the organisational environment, but in such cases the researchers have analysed mainly culture as it affects certain aspects of staff mobility, such as the efficiency of foreign assignments (see, e.g., Claus et al., 2011). In contrast, other aspects of the organisational environment, such as social institutions or the inter-individual level and staff mobility in NPOs, are studied less frequently. The following is a brief overview of the studies that have been conducted at the individual level and the organisational level, respectively.

1.2.1 Research at the individual level

At the individual level, studies are mainly embedded in quantitative psychological research and theoretical models, focusing, for example, on the following factors: (1) Motives for accepting a foreign assignment (e.g., Dickmann et al., 2008; Froese, 2012; Hippler, 2009; Haines et al., 2008; Dickmann et al., 2011), such as employer initiative, sense of duty, rewards of previous international work experience, general dissatisfaction with working in the parent company, poor employment situation, broadening one’s horizon and personal(ity) development or interest in foreign country and internationalism; (2) Job and salary satisfaction (see, e.g., Bonache, 2005; Bonache et al., 2009; Bhuian et al., 1996; Downes et al., 2002; Shaffer et al., 2013; Suutari and Tornikoski, 2001; Chen et al., 2011; Lyons, 1971; Naumann, 1993); (3) Payment practices (see, e.g., Bonache, 2006; Bonache and Fernandez, 1997; Rahim, 2012); (4) Individual antecedents and outcomes of cross-cultural adjustment (see, e.g., Malek and Budhwar, 2013; Haslberger et al., 2013; Hemmasi and Downes, 2013; for an overview, see Maletzky, 2010; Festing and Maletzky, 2011; Takeuchi and Chen, 2013; Dunbar, 1992); (5) Antecedents for successful assignments (comprising the Big Five personality traits,⁵ technical competence, cultural adaptability, previous cultural adjustments and former extensive foreign travel), as compared with the early return home of assignees due, for example, to family issues, an unwillingness to be relocated, dual-career issues, a lack of commitment to the assignment, a lack of language capabilities or inadequate support (for the employee or the family) (Harvey and Moeller, 2009); (6) Influences of foreign assignments on the individual, such as cognitive complexity (see, e.g., Fee et al., 2013), psychological stress (see, e.g., Black, 1990), career advancement (see, e.g., Kraimer et al., 2009) or trailing spouse and family issues (see, e.g., Brookfield, 2012; Gupta et al., 2012; McNulty, 2012; Rosenbusch and Cseh, 2012; Vanderbroeck, 1992; Harvey, 1998).

The studies have focused on different types of expatriates, such as expatriates of different nationalities (see, e.g., Wang et al., 2013; Shimoda, 2013), gender-specific aspects of expatriates (see, e.g., Adler, 1984b, 1984c, 1987, 2002; Altman and Shortland, 2008; Berthoin and Izraeli, 1993; Caligiuri and Lazarova, 2002; Izraeli et al., 1980), self-initiated expatriates (for an extensive review, see Doherty, 2013), flexpatriates (see, e.g., Mayrhofer et al., 2004a, 2004b, 2010...

Table of contents

• Cover
• Title
• 1  Cross-Border Mobility: Not Only Goods and Information, Also People
• 2  Cross-Border Staff Mobility in German and Mexican Profit Organisations
• 3  Cross-Border Staff Mobility in German and Mexican Non-Profit Organisations
• 4  Staff Mobility between Germany and Mexico: Findings from Our Case Studies and Research Perspectives
• References
• Index