HRM

Cultural context impact on recruitment and selection

Low on in group collectivism: individual achievements represent important selection criteria High on in group collectivism: emphasis in recruiting process more on team related skills than individual competencies

Traits for ineffective cross-cultural integration

Low tolerance for ambiguity or high uncertainty avoidance, closed-minded, inflexible, task-oriented, high need for individual achievement

Regiocentric approach

MNC utilizes wider pool of managers in limited way. Staff can move, but only within certain region. Regional managers may not promote to HQ, but get regional autonomy in decision making. Ex: Europe, Americas, and Asia regions. Transfer throughout Europe region, but rare to transfer to America or Asia regions

Organizational development in international experiences

MNE accumulates knowledge, abilities. MNE and individuals get a global mindset. MNE gets direct control and socialization which helps with knowledge transfer and helps transfer competence.

Geocentric approach

MNE has global approach to operations, recognize each part makes unique contribution, worldwide integrated business, nationality less important than ability

Geocentric pros

MNE has international team - global perspective and labor. Overcomes independent units problem of polycentric approach. Supports cooperation and resource sharing across units

Whole vs. part of MNEs focus on whole or subsidiaries

MNE is a single entity that faces a global environment - different national environments; integration and control imperatives - sometimes the good of the whole is more important than one subsidiary's profitability

Trade union concerns about MNEs

MNEs have formidable financial resources, alternative sources of supply, can move production facilities to other countries, have a remote locus of authority, have production facilities in many industries, have superior knowledge in industrial relations, can stage an investment strike

Femininity vs Masculinity

Masculine orientation wants financial success, heroism, strong performance. Feminine wants life quality, modesty, interpersonal relationships. Higher role flexibility in feminine oriented cultures

Base salary

May be paid in home or local country currency or combo of both. Foundation block for international compensation whether employee is PCN or TCN

Implementers subsidiary role

Rely heavily on knowledge from parent or peer subsidiaries and create relatively small amount of knowledge themselves. Global HRM decisions made in parent company, then subsidiaries responsible for implementation at local level

Aim of local responsiveness of HRM practices

Respect local cultural values, traditions, legislation or other restraints such as government policy and/or education systems. Attempt to implement methods and techniques that have been successful in one environment can be inappropriate in another

Power distance

Scale on which members of culture accept that power is not distributed equally in institutions. Emotional difference between employees and superiors. High power distance accepts hierarchical organization structure. Low power distance want equal distribution and explanations for inequality.

Look through international industrial relations & global institutional context slides!!! & guest lecture notes

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Affective approach

2-12 month job, some interaction. 1-4 weeks long training Role playing, critical incidents, cultural assimilator training: prepare your interpretation of a situation with people coming from other countries; case studies, stress reduction training, moderate language training

Sales subsidiary structure

As firm develops expertise in foreign markets, distributors often replaces by direct sales. May be prompted by problems with foreign agents, more confidence in the international sales activity, desire to have greater control, and/or decision to give greater support to the exporting activity, usually due to its increasing importance to success of organization Stage 1: establishment of sales subsidiaries or branch offices in foreign market countries Stage 2: export manager may be given same authority as other functional managers

Cultural context impact on compensation

High uncertainty avoidance: employees prefer fixed compensation packages or seniority-based pay Low uncertainty avoidance: employees accept high income variability through performance-based pay

Geocentric cons

Host governments want high # citizens employed, may use immigration controls to increase HCN employment. Expensive documentation. Can be expensive - increased training and relocation costs, compensation structure needs standardized international base pay. Large #s employees need to be sent abroad

Headquarter Support

Accept assignment for mix of career and financial orientation with genuine feeling of loyalty and commitment to organization. Adjustment produces range of emotional and psychological reactions to unfamiliar situations

Cultural adjustment - expatriates

Adjustment to foreign culture is multifaceted, individuals vary in reaction and coping behaviors

Roles of expatriates

Agent of direct control: ensure compliance through direct supervision Agent of socialization: assist in transfer of shared values and beliefs Network builder: foster interpersonal linkages Boundary spanners: activities that bridge internal and external organizational contexts Language nodes Transfer of competence and knowledge

Expatriates frequently used to oversee implementation of appropriate work practices

At some point MNCs replace expatriates with local staff with expectation that work practices will continue as planned. Based on assumptions that appropriate behavior will have been instilled in the local workforce through training programs and hiring practices, and that the MNC's way of operating has been accepted by the local staff in the manner intended. MNC's corporate culture will operate as a subtle, informal control mechanism - a substitution for direct supervision

Main objectives of employee compensation

Attracting and retaining the talent required for sustainable competition. Attract right people at right time for right job - keep people motivated to perform jobs to best of their ability

Non-expatriate performance management challenges

How to determine performance criteria and goals related to the effective conduct of non-standard assignments, especially virtual assignees Isolating the international dimensions of job performance might not be as straightforward as in traditional expatriate assignments Outstanding or under- performance will challenge performance appraisal process Impact of non-standard assignments on HCN co-workers should be considered

Housing Allowance

Implies that employees should be entitled to maintain their home country living standards. Determined by family size and job level

Expatriate Performance management compensation package

Importance of remuneration and reward in the perceived financial benefits. Progression potential associated with an overseas assignment. If these expectations are not realized during the assignment - fall in the level of motivation and commitment, lower performance

Goal of training

Improve employee competencies needed today or very soon, in order to increase employee performance in a specific job. From general to firm specific knowledge

Goal of Development

Improving employee competencies over a longer period of time, in order to prepare employees for future roles

Integrated player subsidiary role

Create knowledge but are also recipient of knowledge flows. Represent important knowledge node in MNE network, should be supported by highly integrated HRM orientation. High extent of global standardization and localized elements when needed.

Pre-departure training

Cultural awareness training: cultural orientation, assimilators, sensitivity training Preliminary visits, language instruction, assistance with practical day-to-day matters, security briefings, training for the training role

Factors driving localization of HRM practices

Cultural environment, institutional environment

National culture

Culture consists in patterned ways of thinking, feeling, and reacting. Acquired and transmitted mainly by symbols, constituting the distinctive achievements of human groups... including their embodiments in artifacts; the essential core of culture consists of traditional ideas and their attached values

Going Rate Approach (def, pros, cons)

Base salary linked to salary structure in host country. Local market pay rates, consider pay of HCNs, compensate differences using direct/indirect tools Pros: quality of locals, simple, identify w/ host country, equity among different nationalities Cons: variations between assignments, between expatriates from same country in different country, potential reentry problems

Why cultural context matters

Basic assumption that there are differences between management practices in various countries and that the respective environment is of particular significance in explaining these differences. Rejects the universal appraoch

Global Matrix structure

Broken up by Area and Product division. Has overlap (manager will belong to division B and area 2)

Schein's model - the levels of culture

Level 1: artifacts or creations - values, underlying assumptions. Visible organization structures and processes. Middle level: comprises values of a company or society. Found in intermediate level of consciousness. Lower level: underlying assumptions. Include convictions, perceptions, thoughts and feelings, which are usually invisible and unconscious. Sources of value and actions based on them

Confucianism vs. short term orientation

Long term: greater endurance in pursuing goals, position of ranking based on stats; adaptation of traditions to modern conditions, shame Short term: low savings, personal stability, avoid loss of face without consideration of costs, expect quick profit, respect for traditions

Information-giving approach

Low interaction, similar cultures. <1 week training Area or cultural briefings, lectures, movies, books. Interpreters, survival-level language training

Soft goals

Relationship or trait-based (leadership style, interpersonal skills)

Regiocentric cons

Can product federalism at regional, not country bases, limit MNE from developing global perspective. Doesn't improve career prospects at national level. Talented managers can go to regional headquarters, less frequently to MNE HQ

Leaders at all levels

Companies need leaders at all ages. Young leaders to developing leaders to keeping senior leaders relevant and engaged. #1 talent issue facing companies

Possible HRM roles for emerging issues with industrial relations

Consult with unions/employee representatives Manpower planning, considering the scope for employee redeployment Contribute to internal communication strategy Identify training needs Design new jobs generated by offshoring operations Highlight potential risks

Home leave allowance

Covers expense of 1+ trips back home every year. Purpose: renew family and business ties, minimize adjustment problems

What millennials want in work

Employee engagement, but also work that inspires passion and can help fulfill their professional, personal, and social goals

Expatriate

Employee who is working and temporarily residing in a foreign country (someone working abroad)

CEO and senior managers in subsidiaries conduct performance appraisal

Employees appraised by immediate superiors Doesn't work in MNCs - work in different countries, don't know day to day performance Solution: subsidiary managers assessed based on subsidiary performance, reliance on hard criteria. Risk of opportunistic behavior - manager does strategy that favors short-term performance

Multidomestic industry

Ex: Retailing, distribution, insurance. International strategy collapses to a series of domestic strategies. Competition in each country independent of competition in other countries Establish local HR departments to make sure you meet with local contingencies

Global industry

Ex: airlines, semiconductors, copier Must integrate activities on a worldwide basis Firm's competitive position in one country is significantly influenced by its position in other countries Small local HR department, have standardized practices so local office is not as important

Role of HRM department in sales subsidiary structure

Exporting controlled at HQ, has to decide staffing of subsidiary. Ethnocentric firm: staffs sale subsidiary from HQ through use of PCNs, HR department becomes actively involved in personnel aspects of firm's international operations. If sensitivity to host-country needs, may staff with HCNs

Uncertainty avoidance

Extent members feel threatened by uncertain, ambiguous, or unstructured situations and try to avoid them. Strong = strict beliefs and behavioral codes. Weak = high tolerance for deviations.

Individualism vs. collectivism

Extent to which individual initiative and caring for oneself and nearest relatives is preferred as opposed to public assistance or concept of extended family. Individualist cultures - casual network between people, primarily responsible for elf. Collective - closer, more clearly defined systems of relationships.

Regiocentric pros

Facilitates interaction between transferred managers and PCNs at that location. Reflects sensitivity to local conditions, local subsidiaries staffed by almost all HCNs

Factors affecting goals

Financial figures, host governments, use of transfer pricing/financial tools, multinationals have to place controls on subsidiary managers, financial results don't always accurately reflect subsidiary's contributions

Business and talent strategies

Global in scale, local in implementation

Spouse assistance

Guard against or offset income lost by expatriate's spouse as result of relocation

Morgan's "3 dimensions" definition of IHRM

HR activities of procurement, allocation, and utilization

Why MNEs use HCNs

High costs of expats, trends toward polycentrism and geocentrism, language and culture not a barrier, local legislation requires it, demand for highly qualified employees, require expertise

Immersion approach

High interaction, novel culture - more training rigor, 2+ months Assessment center, field experiences, simulations, sensitivity training, intercultural web-based workshop, extensive language training

Cultural context impact on task distribution

High on collectivism emphasize group work High on individualism attribute individual responsibilities in the work system

Cultural context impact on training and development

High on gender egalitarianism: women have same chance for vertical career advancement as men Low on gender egalitarianism: female managers are rare

Talent analytics

Data driven. Companies that successfully leverage analytics and big data will be positioned to outperform their peers in executing talent strategies

Decentralized HR companies

Devote HR responsibilities to small group who confined their role to senior management at corporate HQ. Operate with product or regional based structures.

Performance appraisal of international employees

Dimensions and level of performance criteria, task and role definitions, timing of formal/informal aspects of the appraisal - compromises a formal process of goal setting, performance appraisal, and feedback

Total compensation

Direct: wages/salaries, commissions, bonuses, gainsharing Indirect: time not worked, insurance plans, security plans (pensions), employee services

Polycentric approach

Each subsidiary considered distinct national entity with some decision-making autonomy Subsidiaries usually managed by HCNs, seldom promoted to positions at headquarters, PCNs rarely transferred to foreign subsidiary operations

Polycentric approach - pros of employing HCNs

Eliminates language barriers, avoids adjustment problems of expatriates and their families, removes need for expensive cultural awareness training, less expensive, lower profile in sensitive political situation, avoids turnover

Why MNEs don't use HCNs

Inadequate knowledge of HQ goals, policies, culture, Need for HQ control, locals lack experience, firm serves HCNs in global markets, weak language skills

Global product/area division structure role of HRM department

Increasing devolution of responsibility for local employee decisions to each subsidiary. Corporate HR staff performs monitoring role - reflects management's desire for central control of strategic planning.

Education allowance for children of expatriates

Indirect compensation. Tuition, application and enrollment fees, books/supplies, meals, transportation, excursions

Management development in international experiences

Individuals get experience, advance careers. MNE gets cadre of experienced international operators

Trade unions limit MNE strategies

Influence wage levels, constrain the ability of MNEs to vary employment levels at will, hinder or prevent global integration of operations of multinationals

Export and Export department structure

Initial stage for manufacturing firms entering international operations. Stage 1: exporting handled by intermediary - need local knowledge Stage 2: export sales increase, export manager appointed to control foreign sales and seek new markets (commonly PCN) Stage 3: further growth may lead to establishing an export department at same level as domestic sales department

Non-expatriates

International business travelers - don't relocate. Concerns: Home and family issues, work arrangements at domestic location, travel logistics, health concerns, host culture issues

Host Environment - expatriates

International context (differing demands) can be a major determinate of expatriate performance, so expatriate performance should be placed within its international as well as organizational context

Cost of Living Allowance

Involves payment to compensate for differences in expenditures between countries: Costs of transportation, furniture, medical, alcohol, automobile maintenance, domestic help

Expatriates are management under development

Job rotation -> broader perspective. Become global operators

Centralized HR companies

Large, well-resourced HR departments responsible for wide range of functions. Operate with product-based or matrix structures. Corporate HR role: Establish and maintain control over worldwide top level management positions so strategic staffing under central control

International division in firm

May be triggered by foreign production/service operations. More common in US than Europe. Foreign subsidiaries are structured to mirror domestic org. Subsidiary managers report to head of international division. MNCs place PCNs in all key positions, OR if local employment requires local handling, MCNs place HCN in charge of subsidiary HR function, OR HCNs in several key positions to comply with host-government directives or emphasize local orientation of subsidiary

Relocation allowance

Moving, shipping, storage charges. Temporary living expenses. Subsidies regarding appliance or car purchases or sales

Control through personal relationships

Networks part of social capital, training and development programs

Hard goals

Objective, quantifiable, can be directly measured (market share, ROI)

Risk of working a global experience

Out of sight, out of mind. Not considered/thought of for promotion back home because you are not there and people don't see you performing

Expatriate CEO or Subsidiary Manager

Oversees and directs the entire foreign operation

Information overload and 24/7 work connection

Overwhelms workers, undermine productivity, contribute to low employee engagement. HR can manage overwhelming communication, simplify work environment (lean management), create more flexible work standards, teach managers and workers how to prioritize efforts

Foreign service inducement and hardship premium

PCNs often receive a salary premium as an inducement to accept a foreign assignment, as well as a hardship premium to compensate for challenging locations

Expatriates as trainers

Part of knowledge and competence transfer, expected to help train and develop HCNs

Expatriate Operative

Perform functional jobs tasks in an existing operational structure, in generally lower level supervisory positions

Multinational performance management

Performance management primarily based on strategic factors, so it affects the appraisal and success of subsidiary's chief exec and senior management team most directly

Subsidiary role

Position of a particular unit in relation to the rest of the organization and defines what is expected of it in terms of contribution to the efficiency of the whole MNE. Can take different roles. 2 variables: magnitude of knowledge flows, directionality of transactions

Role of HRM department in international division

Primarily concerned with expatriate mangement, some monitoring of subsidiary HR function.

Stages of internationalization

Process and has a lifecycle - can be rapid or evolve slowly. Some firms can accelerate the process through acquisitions, leapfrogging over intermediate steps. Some firms can be driven by external factors such as host-government action, others are formed expressly with international market in mind

Using HCNs pros and cons

Pros: language barriers are eliminated. Reduced hiring costs, no work permit. Continuity of management, longer stay in positions. May need to hire them anyways because of government. Morale may improve with career potential. Cons: Control and coordination of HQ may be impeded. Limited career opportunity outside subsidiary. Limits opportunities for PCNs abroad. Could encourage national rather than global units.

Using TCNs pros and cons

Pros: lower salary and benefits than PCNs. May be better informed than PCNs about host country environment. Cons: Possible national animosities for transfers. Host government may resent hiring. TCNs may not want to return to home country after assignment.

Using PCNs pros and cons

Pros: organizational control & coordination. Promising managers get international experience. Special skills and experiences. Subsidiary will comply w/ MNE objectives and policies. Cons: limited promotional opportunities for HCNs. Slow adaptation to host country. May impose inappropriate HQ style. PCN and HCN compensation may differ

Why companies become MNCs

Protection of their knowledge and tech in avoiding transnational transactions and taking advantages from their advanced technologies, Tap global knowledge, Increase market share, Reduce costs and labor costs, MNCs typically produce in home country then open a factory abroad - e.g. Ford

Global innovator subsidiary role

Provide significant knowledge for other units and have gained importance as MNEs move toward the transnational model. Parent firm develops policies and practices which are then transferred to overseas affiliates

Aim of global standardization of HRM practices

Reach consistency, transparency, and alignment of a geographically fragmented workforce around common principles and objectives. Use of common management practices is intended to foster a feeling of equal treatment among managers involved in cross-border activities and common understanding of what is expected from employees

Ability for MNCs to continue culture from expatriates depends on...

Receptivity of local workforce to adhere to corporate norms of behavior, effectiveness of expatriates as agents of socialization, and whether cost considerations have led the multinational to localize management prematurely

Hofstede's Model

Refers to the values level of culture. Identifies 5 dimensions of culture

Stronger cultural relationship

Schein emphasizes that relationships that lead from artefacts through values to underlying assumptions are much weaker than those leading in the contrary direction, because the influence of underlying assumptions on values and artifacts is stronger than vice-versa

Expatriate troubleshooter

Sent to foreign subsidiary to analyze and solve a particular operational problem

Engagement > retention

Shift from "hold people here" to "attracting and engaging people" through measures that build commitment, align employee goals, and experience with corporate purpose

International assignments types

Short term (up to 3 months) Extended (up to 1 year) Long term (traditional, 1-5 years) Alternatives: Commuter assignments, rotational assignments, contractual assignments, virtual assignments, self-initiated assignments

Expatriates ensure adoption

Show how systems and processes work, monitor HCN performance

Management demands of internationalization

Size, structure, geographical dispersion, control mechanisms, national cultures and languages, host-country demands, operation modes, flow and volume of information

Control through corporate culture

Socializing people so they share a common set of values and beliefs that shape behavior. Form of standardization: recruitment/selection, training and development

MNE range

Somewhere in range of multidomestic industries to global industries

4 basic elements of culture

Standardization of communication, thought, feeling, and behavior

Local innovator subsidiary role

Subsidiaries engage in creation of relevant country/region specific knowledge in all key functional areas because they have complete local responsibility. Operate independently, localized practices.

Contextual goals

Take into consideration factors that result from the situation in which performance occurs

"Think Global, Act Local" Paradox

The complex international environment push the MNC toward global integration while Host governments and other stakeholders (such as customers, suppliers and employees) push for local responsiveness

Reverse diffusion

Transfer of practices from foreign locations to the headquarters

PCN role conflict

Trying to perform to different expectations may cause role conflict, headquarters think commitment to the parent is important, because of the importance given to the parent as role sender in performance appraisal o A PCN may ignore role communication sent from host country stakeholders if they consider that performance appraisal is determined by how role behavior conforms to headquarters' expectations

HCN

US company employs British citizens in its British operations

PCNs

US company sends US citizens to Asian countries on assignment

TCNs

US sends German employees on assignment to its Chinese operations

Learning styles

Visual, auditory, kinesthetic

Constraints that may affect global attainment

Whole vs. part non-comparable data Volatility in global business environment Separation by time and distance Variable levels of maturity across markets

Foreign service inducements

usually made in the form of a percentage of salary, usually 5-40% of base pay. Sometimes offered as lump-sum incentive

Ethnocentric approach

• Few foreign subsidiaries have any autonomy and strategic decisions are made at headquarters • Key positions in domestic and foreign operations are held by managers from headquarters • Subsidiaries are managed by staff from the home country (PCNs)

Job structure

relative pay for different jobs within the organization (fairness equity theory)

Pay level

average amount organization pays for a particular job

Changes in traditional employee training

being revolutionized by flipped classrooms, learning centric models, and explosion of content delivered over online platforms. Empowering employees to be equal partners in learning process - HR foster culture of development and growth

Expatriate Structure reproducer

carries the assignment of building or reproducing in a foreign subsidiary a structure similar to the one he knows from another part of the company

Domestic base salary

denotes the amount of cash compensation serving as a benchmark for other compensation elements (such as bonuses and benefits)

MNCs decision making process and IPM are based on...

economic and political imperatives, strategy - specific expectations for each of its foreign subsidiaries, cooperative ventures and other forms or operation modes/market performance and contribution to total profits and competitiveness

Host-country effect

extent to which HRM practices in subsidiaries are impacted by the host-country context. For the HQ, basis for the country-of-origin effect, describing MNEs that try to transfer HRM activities shaped by their home0country environment to foreign locations

Developmental assignments

focus on in-country performance and acquisition of local or regional understanding by the assignee

Strategic assignments

high-profile activities that focus on developing a balanced global perspective

Country of origin effect

implies that MNCs are shaped by institutions existing in their country of origin and that they attempt to introduce these parent-country-based HRM practices in their foreign subsidiaries (ethnocentric firm). Effects are stronger in non-restrictive local environments. Also evidence that MNEs tend to limit the export of practices typical for the country-of-origin to those that are considered to be their core competencies

Institutional environment

institutional pressures may be powerful influences on HR practices

Balance sheet approach (def, pros, cons) DO EXAMPLE!!

maintain relativity to PCN colleagues and compensate for costs of international assignment - maintenance of home country living standard + financial inducement 4 major categories: goods and services, housing, income taxes, reserve Pros: equity between assignments and expatriates of same nationality, facilitates reentry, easy to communicate to employees Cons: disparities between expatriates of different nationalities and expatriates and locals. Complex

Challenge of international performance management

make performance measurement and the creation of performance management processes that are simultaneously locally relevant and globally comparable

Volatility in global business environment

may require that long-term goals be flexible to respond to market. Challenges - subsidiary managers perceive goals/deadlines set by HQ are unrealistic, HQ fails in taking into account local conditions that change as result of volatile environment

Non-comparable data

measures of performance. What constitutes adequate quality control checks can vary widely between countries. Tariffs can distort pricing schedules. Strike in one country can unexpectedly delay supply of necessary components to a manufacturing plant in another country. Local labor laws may require close to full employment at plants that aren't producing at capacity ♣ These factors make an objective appraisal of subsidiary performance problematic, and it complicates the task of appraising the performance of individual subsidiary managers

Cultural environment

members of a group or society who share a distinct way of life will tend to have common values, attitudes, and behaviors that are transmitted over time in a gradual, yet dynamic, process

Functional assignments

more enduring assignments with local employees that involve the two-way transfer of existing processes and practices

National culture has important impact on work and HRM practices

more integrated personal social relationships implies more complete balance of intrinsic and extrinsic rewards. Personal independence and isolation (individualism) as well as rapidly changing personal and social contexts leads to emphasize extrinsic rewards - given the absence of a strong and enduring social matrix that attributes meaning and power to intrinsic rewards

International Assignments reasons

position filling, management development, organization development

Expatriate base salary

primary component of a package of allowances, many of which are directly related to base salary (e.g. foreign service premium, cost of living allowance, housing allowance). Basis for in-service benefits and pension contributions

Performance management is broken

ranking/ratings based performance is damaging employee engagement and costing mangers time. Leading orgs are replacing with ongoing feedback and coaching to promote continuous employee development

Technical assignments

short-term knowledge and transference activities

Performance appraisal of subsidiary managers

soft criteria can complement goals - appraisal is somewhat subjective, can be difficult due to cultural exchanges/clashes relying on hard criteria like financial data doesn't consider the way results are obtained

Separation by time and distance

time-zone differences, frequency of contact, cost of reporting system, but sophisticated worldwide communications makes these issues less relevant

Diverse and inclusive workplace

transform diversity from compliance obligation to business strategy

Variable levels of maturity across markets

the need for relative comparative data: the specific needs of local environment, the phase of international strategy

Performance appraisal

the process by which a manager examines and evaluates an employee's work behavior by comparing it with preset standards, documents the results of the comparison, and uses the results to provide feedback to the employee to show where improvements are needed and why. Employed to determine who needs what training, and who will be promoted, demoted, retained, or fired.

International performance management

the process that enables the MNE to evaluate and continuously improve individual, subsidiary unit and corporate performance against clearly defined, pre-set goals and targets

Hardship premium

where a host country's work week may be longer than that of the home country

Polycentric approach - cons of employing HCNs

• Bridging gap between HCN and PCN managers at HQ is difficult - cultural differences, MNE could become independent national units with nominal link to HQ • HCN managers have limited opportunity to get experience abroad & cannot progress past senior positions • Parent-country managers have limited opportunities for experience abroad • HQ positions are only held by PCNs, senior management has limited abroad exposure

Ethnocentric cons

• Limits promotion opportunities of HCNs, could lead to reduced productivity and increased turnover • Adaptation of expatriate managers to host countries takes time, during which PCNs often make mistakes and poor decisions • When PCN and HCN compensation packages are compared, often considerable income gap in favor of PCNs can be seen as unfair • For many expatriates a key overseas position means new status, authority, and an increase in standard of living

Ethnocentric pros

• Perceived lack of qualified HCNs • Need to maintain good communication, coordination, and control links with corporate headquarters The role of time: Can reduced perceived high risks for firms at early stages of internalization. If you acquire a firm in another country, it may wish to initially replace local managers with PCNs to ensure that the new subsidiary complies with overall corporate objectives and policies