Knowledge flows and expatriation in multinational corporations

2017-03-06T05:47:35Z (GMT) by Cheong, Adeline Yu Nah
According to leading international business scholars (Almeida, Song, & Grant, 2002; Gupta & Govindarajan, 2000; Kogut & Zander, 2003; Michailova & Mustaffa, 2012; Mudambi, 2002), the competitive advantage of MNCs is dependent on their ability to acquire and transfer knowledge across borders. Knowledge can be transferred by the parent corporation to the subsidiary (or vice versa), and from one subsidiary to another. Achieving efficient knowledge transfer is the underlying purpose of expatriate assignments in MNCs. Although a number of researchers have addressed the purposes of expatriation in MNCs, no research has been undertaken to understand how MNC knowledge flow strategies influence the direction, extent, duration, or purposes of expatriate assignments. A comprehensive search of international business and international human resource management literature resulted in the identification of the research problem. The research problem emerged from the continued expansion of expatriation at a time when MNCs expressed the need to reduce its extent and frequency. Deploying expatriates is an expensive undertaking and MNCs have been looking for ways to reduce the cost. Despite this objective, expatriation has continued to grow. Explaining this contradiction underpins the current research. The objective of this study was to solve the research problem. In order to do so, data on expatriation in MNCs were collected to provide an understanding of how different MNC strategies influence the number of expatriates, and the purpose and duration of their expatriation. Specific research objectives included: (a) examining the relationship between knowledge flow strategies and the flow of expatriates; (b) examining the relationship between knowledge flow strategies and the purposes of expatriate assignments, and; (c) examining the relationship between the different purposes of expatriate assignments and their duration. A holistic framework was developed to examine the relationship between MNC strategy and knowledge flow strategy, the use of expatriates, the purposes of expatriate assignments, and the duration of expatriation. The research population comprised 156 MNC subsidiaries in the service and manufacturing sectors in Malaysia and Singapore. A sequential mixed method approach was adopted, starting with the quantitative method where questionnaire surveys were sent to selected MNC subsidiaries. The second phase of the research was qualitative, and senior staff from a sample of nine subsidiaries from both the service and manufacturing sectors were chosen for interviews. Interviews were conducted with senior leaders, HR directors, or one or two expatriates from the different subsidiary types, using semi-structured questionnaires. The research results revealed a positive correlation between the flow of knowledge and the flow of expatriates. The higher the flow of knowledge, the greater the use of expatriates. Different strategic roles of subsidiaries implied different knowledge flow strategies, thus leading to different flows of expatriates and different purposes (i.e., business application, organisation application and expatriate learning purposes)of expatriate assignments. The study provided evidence of a relationship between the duration of expatriate assignments and the different purposes of the assignments. The duration for business applications and organisation applications was two to three years, while the duration for expatriate learningwas one to two years. Based on the qualitative findings, factors such as the expatriate learning cycle and the ability of local employees to absorb knowledge were noted as possibly affecting the duration of expatriate assignments. Overall, this study contributes significantly to our knowledge of international business, especially to the knowledge management and international human resource management fields.