1-The transition

Most firms begin as domestic corporations. Their operations are geographically limited to the
boundaries of their own home market, and they serve the customers of their home country. A
saturated domestic market and intense local competition cause many firms to resort to export to
compensate for leveling off or decreased earnings.

The firm often becomes more willing to expand abroad as it becomes more familiar with foreign
markets and the procedures of exportation. It starts by establishing branches, offices, and production
facilities in foreign countries in an attempt to better serve those markets and take advantage of
foreign market opportunities

such a firm would recognize the need for a long-term commitment to host countries and their
economic aspirations. As the markets in host countries expand, the firm prospers, grows, and gets
more involved with the host countries’ institutions and people. This is how the firm integrates with
its host countries, which leads to the discovery that cultural and political diversity do not imply
limitations and restrictions for business opportunities

the firm is exclusively devoted to serving the home country market. At this position, the firm’s
business philosophy and mission reflect its home country environment. Because its managers and
employees share the predominant culture of the country, few problems arise from cultural
misunderstandings.

, managing the corporation becomes much more difficult and demanding. The firm may face periods
of deteriorating performance due to the cultural diversity among its host countries and the lack of
effective organizational policies to deal with such problems.

The company find it self obligated to develops its corporate culture and establishes its basic HRM
policies to blend with market s culture

Because MNCs operate in a culturally diverse environment, their management practices, such as
employee selection, career planning, performance appraisal, and compensation policies, should be
adapted to fit specific countries and their cultures. For example, in some cultures, such as in the
United States, career management systems represent formal, long-term human resource plans.
Central to such a position is the assumption that human beings control the environment and nature.
In cultures that believe human control over the environment is minimal, like in some Asian countries,
such an approach is less effective. Common appraisal methods in the United States are based on
employee performance and accomplishments. Such systems are ineffective in South American or the
Middle Eastern countries, where lineal and personal relationships are more important than individual
achievements.

2-Recruitment Philosophy
Most international staffing decisions are supposed to be based on objective criteria. Research has
shown, however, that these decisions are strongly influenced by the attitudes of the top executives
toward the people of the host cultures. Managers’ opinions and attitudes determine whether
expatriates are selected for management positions in foreign subsidiaries (expatriate managers are
home country managers on assignment to host countries). According to Heenan [6], the underlying
motivation behind these key decisions is the MNC’s level of trust in the host country nationals and
managerial perceptions of their competence (pp. 5–9). MNCs may follow any of four recruitment
approaches: home country, host country, regional, or global

Home Country Approach. Managers using the home country approach tend to staff all key
positions, at the home office and abroad, with home country executives. They feel that this group is
the most intelligent, capable, and reliable. This decision, however, may not be based on prejudice;
the decision-maker may lack knowledge of and experience with foreign persons and cultures
MNCs are also more inclined to use expatriate managers where the political power of the host
country is seen as a threat. The aim is to ensure that the objectives of the firm are not subordinate to
those of the host country

Host Country Approach. Managers using a host country approach believe that the management
and staffing of subsidiary firms should be left to host country nationals because they think that
natives will be better able to understand the requirements of the assignment. To the MNC
executives, the foreign operation is a mysterious undertaking best left to foreign executives. As long
as the firm remains profitable and the objectives are achieved, host country executives are allowed
to operate the organization in any way they feel appropriate.

Regional Approach. Managers who use the regional approach believe that the global market
should be handled regionally. For example, all European markets would be coordinated through a
headquarters in France, all markets in North and South America through a headquarters in the
United States, and so on. Consequently, personnel selection is carried out regionally

Global Approach. This approach is characterized by a global systems approach to management.

Managers with this perspective believe that top qualified people can come from any background and
culture. They also believe that the whole world is their market. Therefore, resource allocation,
staffing, manufacturing, and marketing should be done within the framework of the global economy

2-Selection Criteria
The success or failure of an operation hinges on the quality of home country managers assigned to
foreign business operations.

To host country personnel, these managers represent the MNC and the home country. The image
they create lasts long after the initial assignment is over and they have gone home. Therefore, only
the best-qualified managers should be sent abroad

In the past, it was quite common for firms to use only managerial and technical expertise as criteria
for the selection of expatriate managers. These criteria, however, are not enough for today’s
international assignments, and the selection of managers based only on technical and managerial
expertise could result in disappointing outcomes. MNCs must work to make the expatriate
assignment a positive experience for both the company and the manager. To do this, it is imperative
that the selection criteria for foreign managers encompass all aspects of work and respond to the
social, political, and cultural situation.
Technical and Managerial Skills [11]. Basic technical and managerial skills are very crucial for a
manager assigned to a foreign operation. In foreign assignments, managers will need all the
technical, administrative, and managerial skills that make them succeed at home. While past
performance is usually a good indication of a person’s abilities and skills, not all managers who are
successful at home do equally well on foreign assignments é (Technical and managerial skills
Maturity and emotional stability Initiative and creativity Communication skills Family support
Motives and desire Social skills, flexibility, and adaptability Language skills Diplomatic skills Locally
contingent factors, e.g., age and gender)

Motives and Desire. Individuals who possess a genuine interest in foreign countries, their people,
and their cultures are ideal candidates for a position abroad. Those who seek the assignment solely
for extra money, added prestige, or the “boost” such an assignment might give to their careers are
not as likely to be successful in expatriate situations [14]. A good indication of a manager’s interest is
past experience. If a manager knows foreign languages, has taken international business courses, and
has traveled extensively or lived abroad, he or she is obviously interested in foreign countries and
cultures

A person socially skilled in a domestic operation is a person who has learned the rules and norms for
developing and maintaining relationships with people and knows the proper behavior for various
circumstances. managers should be flexible, adaptable, and able to accept the unfamiliar. In some
cultures, relationships between individuals typically develop slowly and cautiously over time

Diplomatic Skills. On foreign assignments, international managers interact with business

associates, governmental agencies, and political leaders. In most developing countries, the
government assumes a larger role in business and trade than is customary in the United States.
Diplomatic skills are needed to relate to government officials properly and to conduct business
transactions under unfamiliar conditions.

Maturity and Stability. Venturing into a strange environment, facing unfamiliar conditions, and
dealing with unexpected situations are all part of going abroad and conducting business transactions
in a foreign country. Emotionally and intellectually mature persons more readily handle the burden
of foreign assignments. They recognize their own assumptions, values, motives, needs, and
shortcomings. Consequently, they are in a better position to understand the attitudes and behaviors
of other people, appreciate cultural differences for what they are, and be able to suspend judgment
when there is insufficient understanding of circumstances.

Family Factors. When evaluating candidates for foreign assignments, it is very important to review
both the candidate and the family. including premature returns and job performance slumps [19].
While the expatriate manager has the relative security of a familiar work and office routine, the
family must cope with an unfamiliar environment every day. To prevent failures due to family
difficulties, MNCs have to address family-related issues. Ford Motor, Minnesota Mining and
Manufacturing, and Exxon include spouses in their screening process for foreign assignments and/or
offer educational and pre-departure preparation assistance [

Locally Contingent Attributes. For assignments to certain countries, attributes such as the
candidate’s age and gender must also be considered. Older people are respected, and seniority is
emphasized in many countries, such as Asia and Africa. In these cultures, young representatives may
have a great deal of difficulty in gaining access to important personnel and key decision-makers [20].
In some countries, women encounter a great deal of resistance from superiors, subordinates,
colleagues, and clients. Many high-level officials refuse to work with women and do not promote
them to key decision-making positions

3-Personnel Selection Options

As it prepares to staff its foreign-based offices, the multinational firm must decide if it will fill
managerial positions with expatriate, host country, or third-country managers. We discussed earlier
that the attitudes of top executives toward the people of other cultures influence personnel
selection. Often, at the early stages of internationalization, the firm follows a home country approach
in making staffing decisions. As the firm gains international experience and learns about other
cultures, it may move through the host country and regional approaches to personnel selection and
finally arrive at the global approach in staffing. The selection and hiring process of MNCs is a very
complex and difficult task. Each foreign office has different staffing requirements and needs. There
are a multitude of other factors, such as local laws and contractual obligations, that have to be
considered

The Expatriate Manager. The MNC may choose expatriates to fill managerial positions in its
foreign offices. The selection of expatriates for foreign assignments is influenced by the ethnocentric
attitudes and philosophy of the MNC’s top executives. It may also be determined by operational
needs. For example, home country managers may have a long history of service with the parent
company. They possess an in-depth knowledge and understanding of the policies and procedures of
the firm and are familiar with the business and industry. They may also have technical training or
possess functional expertise that local managers lack. Sometimes, due to a shortage of well-trained
local managers, expatriates are the only logical choice [23, p. 156]. MNCs may also select expatriates
to fill foreign positions as part of their corporate managerial training program. Many MNCs view
foreign-duty assignments as an indispensable part of an executive’s “global” development training [5,
p. 240]. General Electric, for example, is now sending its brightest stars abroad rather than the run-
of-the-mill managers it once picked for foreign posts [24]. The advantages and disadvantages of
selection for assignments abroad are summarized in Table

The Host Country National Manager. In the past, many multinational firms displayed an
ethnocentric view, staffing foreign offices almost exclusively with expatriate personnel. As MNCs
have evolved and assumed a more global perspective, their policies for staffing foreign managerial
positions have also undergone an evolutionary progression. Today, many MNCs are selecting more
host country and third-country nationals to fill managerial positions in their foreign subsidiaries. This
is due to the increasing costs and the high failure rate of expatriate assignments.

The Third-Country National Manager. Sometimes, local managers do not have enough
managerial expertise or do not wish to work for the MNC. In those situations, third-country
managers may provide a viable staffing alternative. For example, because of the political tensions in
Iran during the early 1980s, American firms doing business in Iran often used British or Canadian
personnel to represent their interests in Iran

4-International Management and Intercultural Training

and Preparation

5-Pre-departure Preparations
Pre-departure preparations serve to reduce the cultural shock that foreigners experience when
entering a new culture. In particular, spouses and families ben efit from participating in workshops
that introduce them to the host culture. The families need more attention because they experience
more cultural shock. The impact of cultural shock on managers is typically less severe than on their
fami lies because the work environment, even in a foreign country, is familiar to man agers and they
spend most of their time working at first. It is usually up to the spouse to find the grocery store, the
doctor, the dentists, and the church, do the shopping,

Pre-departure workshops may include language training and typically provide information on
practical considerations such as health, safety, and medical needs, as well as information on how to
handle and manage the daily routine of a household, including grocery shopping, transportation,
international mail, and communication. Such information reduces pre-departure apprehension and
eases the entry into a new environment. Providing employment information and helping career-
oriented spouses to secure a meaningful job has an enormously positive impact on the family.
Instead of viewing them as the employee’s aggravating chattel, spouses should be consid ered as an
unexpected bonus for the company. As a resource, they should be utilized to the benefit of both the
employee and the MNC. For example, some MNCs emu late governments and universities and
establish preferential employment policies for spouses

6-International and Intercultural Training

The attitudes and behaviors of managers are influenced by their culture. This influ ence quite often
creates cultural biases. To overcome these cultural biases and achieve a truly global perspective,
international managers should receive interna tional and intercultural management training. Such
training helps managers develop the skills they need to function in a variety of cultural settings and
geo graphic locations. International management education and intercultural training may also help
managers develop global perspectives and be more receptive to and have empathy toward the
cultures and customs of other nations. They also learn not to blindly accept their own cultural norms
as universal standards. Such training can provide 363 International Management and Intercultural
Training and Preparation these managers with the understanding that no one culture, or method of
managing, can consistently produce superior solutions to international managerial problems. They
could also learn how to adapt their management styles to fit the many cultural situations they may
encounter. The purpose of international management education and training is to provide MNC
managers with an awareness of the diversity of management practices around the world and to
improve their understanding of the business and manage ment philosophies and practices that exist
in different countries and cultures.

Intercultural training aims to develop a set of skills that will be useful to international managers [41].
These skills are listed below: • Self-awareness: The recognition of personal assumptions, values,
needs, strengths, and limitations and the understanding of personal response in different cultural
settings • Culture reading: The ability to discover and understand the inherent logic of cultural norms
and expectations • Multiple perspectives: The ability to suspend judgment about other cultures and
appreciate others’ perspectives • Intercultural communication: The skill to send and receive verbal
and nonverbal messages accurately in different cultures • Cultural flexibility: The ability to adjust and
change expectations and plans in accordance with the host country’s cultural requirements • Cultural
resilience: The ability to handle culture shock and recover and rebound from setbacks arising from
cultural differences • Skills in building interpersonal relationships: The ability to develop and main
tain interpersonal relations with host country people • Intercultural facilitation skills: The ability to
manage cultural differences and us e these differences constructivel.

ICS
ICSs attempt to provide the learners with extensive information about a target culture in a 2–6-h
time span. The information chosen for the ICS portrays the very important and significant differences
between the two cultures. In other words, the ICS focuses on critical problems and key differences.
The basic requirement for constructing an ICS is to identify two situations or critical prob lems and
provide the learners with an active experience from which they can learn the behavior, norms,
perspectives, attributes, values, and customs of the other culture

Training Host Country or Third-Country Nationals

the new employees are introduced to, and educated about, the general aspects of the corporation’s
operations. They are instructed about the firm’s overall purpose and mission, its management
policies and philosophies, its marketing/sales strategies and tactics, and its financial management
practices. 366 11 International Human Resource Management The second phase of the training
process consists of a combination of social ization and indoctrination programs. The purpose is to
make the new employees a part of the MNC by introducing them to the norms and values of the
firm’s corporate culture [23, p. 113]. How successful the MNC will be at implanting its “view of the
world” in its new employees depends on several factors. Formal and informal organizational
practices, such as salary increases, promotions, job assignments, and superior-subordinate
relationships, are the most conspicuous organizational factors.

Training host countrie nonmanagerial posts

The pressure from host countries is forcing MNCs to hire and train an increasing number of local
people. While the MNCs may be able to manage their foreign operations with few or even no local
managers, it is impossible for them to run their foreign subsidiaries without local labor. Often, in
developing countries, training shop-floor employees is equivalent to managing technology transfer.
Successful technology transfer requires a major commitment to train the local labor force in the use
of equipment and machinery. In training local labor, a few issues require careful consideration. First,
most developing countries are short in skilled labor. An adequately trained employee may be lured
away by other MNCs or by host country employers. Training employees without adequate measures
to maintain them is a waste of time and resources. Second, MNCs should take into account cultural
factors and differences in reli gion. Training a supervisor from one ethnic group to oversee the work
of another ethnic group may not be a wise choice. In India, for example, Muslims may not be willing
to work for a Hindu supervisor. Third, training methods that are useful in technologically advanced
countries may require extensive modifications to make them fit the needs of developing 367
Repatriation Problems countries. Where most local labor is illiterate, training should take the form of
coaching. In such situations, instead of printed material and written instructions, videos, films, and
personal demonstrations should be used. Fourth, the trainer should be aware of the cultural
idiosyncrasies of training. Whereas a frank confession of personal limitations or an admission of gaps
in knowledge may be appreciated by Americans, such admissions in some cultures result in loss of
respect and diminish the authority of the trainer. Finally, the teacher-student and trainer-trainee
roles are not universal. While Americans are comfortable with active learning by participating in the
learning pro cess and by expressing personal opinions, the people of some other cultures are more
comfortable with passive learning.

Repatriation Problems
When expatriates return home, they face problems and cultural shock similar to what they had
encountered on the assignment abroad. This is particularly true after a prolonged stay abroad. Not
many expatriates are prepared to deal with reentry difficulties. Repatriation issues are quite often
ignored by MNCs [45]. It is assumed that coming back to the home country environment should be a
very easy task that does not require much preparation. Contrary to this assumption, expatri ates not
only may find themselves feeling like foreigners in their own country, but they may also face many
unpleasant surprises at work. They have to adjust and adapt to changes that have taken place during
their absence. There are many factors that cause anxiety and stress for expatriate managers
returning home. The most important concern of the returning expatriate is career and job
assignments. Many find that they have been left out of promotion oppor tunities and are treated as
outsiders. To their surprise, the experience and exper tise gained on international assignments may
not be valued at the home office. On their return, even if they are promoted, they may experience a
loss of autonomy and feel a sense of status loss. The worst case is if they have been unsuccessful in
their foreign assignments. Although foreign assignments are much more dif f icult and challenging, to
most firms, a failure is a failure, and it is unacceptable. Expatriates returning home may face financial
difficulties because of the cost-of living differences and also because the extra benefits granted to
them on their foreign assignment had made living abroad much more comfortable. These problems,
of course, could be minimized by a well-planned pre-departure strategy. For example, the financial
burden could be eased by special agreements on real estate. Job, position, and status issues should
be addressed and agreed to in advance. Symbolic events such as holding board of directors meetings
abroad or arranging frequent meetings among expatriates and home office executives could reduce
job-related problems

Compensation