Multinational Corporations' Challenge for Global Competitiveness
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International Journal of Business and Public Administration, Volume 16, Number 1, Spring 2019 27
EXPATRIATE FAILURE IS A COMMON CHALLENGE FOR
MULTINATIONAL CORPORATIONS: TURN EXPATRIATE
FAILURE TO EXPATRIATE SUCCESS
Semere Haile
Donald White
Grambling State University
ABSTRACT
Research indicates that international work assignments have been, and continue to be, a
growing development for global economic competitiveness driven by multinational corporations
(MNCs) desire. This is not important only for MNCs’ success, but also for societal developmental
sustainability. As global business activities increase, expatriate assignments increase for foreign
subsidiaries. However, the challenge becomes more formidable for expatriates who are
unequipped to succeed. The authors of the current study will elaborate on major reasons for
expatriate failure; suggest plans (expatriate selection and preparation, training and development
needs, and cultural adjustment) that MNCs can use to turn expatriate failure to success. The
authors will also deliver study implications, draw concluding remarks, and suggest
recommendations for future research.
Keywords: Expatriate failure, Reasons for expatriate failure, expatriate selection and preparation, training and
development needs, and expatriate cultural adjustment
INTRODUCTION
As foreign investment continues to grow globally, multinational corporations (MNCs)
and governments become dependent on expatriates to act as knowledge transfer agents in today’s
global competitive business environment. MNCs send expatriates to a foreign country to work
and live for at least one year in order to complete a specific assignment, and then typically
repatriates back to the home country (Kraimer, et al., 2016). Conducting business overseas
requires special trained employees and a deep understanding of the local cultures, business
dynamics, legal environments and workforce diversity. However, expatriates face numerous
challenges associated with adjusting to working and living in culturally diverse countries.
In fact, many MNCs face high-expatriate failure rates. When MNCs expatriate objectives
are not met for their assigned jobs in host countries, the rates of expatriate failure will be
traditionally very high (Tahir, 2018). Research has shown how challenging it could be for
expatriates to work overseas, adjust to new cultures, and understand managerial effectiveness
and decision making in their roles (Matic, et. al., 2016). The jobs of expatriates continue to be a
relevant subject of research in business relations between host countries and MNCs. Many
expatriates return from their international assignments early or have poor job performance. The
criticality and costs associated with expatriates and their reported high failure rates make training
necessary (Peng, 2018).
Expatriates are from parent-country nationals; they are employees from the country of the
company headquarters. Most MNCs usually operate their business overseas through an expatriate
assignment. An expatriate can be defined as “an employee of a parent company who is
transferred for a particular amount of time (from several months to several years) to work in a
branch of an international company located abroad” (Banerjee, Gaur, & Gupta, 2012). In other
EXPATRIATE FAILURE IS A COMMON CHALLENGE FOR
MULTINATIONAL CORPORATIONS: TURN EXPATRIATE
FAILURE TO EXPATRIATE SUCCESS
Semere Haile
Donald White
Grambling State University
ABSTRACT
Research indicates that international work assignments have been, and continue to be, a
growing development for global economic competitiveness driven by multinational corporations
(MNCs) desire. This is not important only for MNCs’ success, but also for societal developmental
sustainability. As global business activities increase, expatriate assignments increase for foreign
subsidiaries. However, the challenge becomes more formidable for expatriates who are
unequipped to succeed. The authors of the current study will elaborate on major reasons for
expatriate failure; suggest plans (expatriate selection and preparation, training and development
needs, and cultural adjustment) that MNCs can use to turn expatriate failure to success. The
authors will also deliver study implications, draw concluding remarks, and suggest
recommendations for future research.
Keywords: Expatriate failure, Reasons for expatriate failure, expatriate selection and preparation, training and
development needs, and expatriate cultural adjustment
INTRODUCTION
As foreign investment continues to grow globally, multinational corporations (MNCs)
and governments become dependent on expatriates to act as knowledge transfer agents in today’s
global competitive business environment. MNCs send expatriates to a foreign country to work
and live for at least one year in order to complete a specific assignment, and then typically
repatriates back to the home country (Kraimer, et al., 2016). Conducting business overseas
requires special trained employees and a deep understanding of the local cultures, business
dynamics, legal environments and workforce diversity. However, expatriates face numerous
challenges associated with adjusting to working and living in culturally diverse countries.
In fact, many MNCs face high-expatriate failure rates. When MNCs expatriate objectives
are not met for their assigned jobs in host countries, the rates of expatriate failure will be
traditionally very high (Tahir, 2018). Research has shown how challenging it could be for
expatriates to work overseas, adjust to new cultures, and understand managerial effectiveness
and decision making in their roles (Matic, et. al., 2016). The jobs of expatriates continue to be a
relevant subject of research in business relations between host countries and MNCs. Many
expatriates return from their international assignments early or have poor job performance. The
criticality and costs associated with expatriates and their reported high failure rates make training
necessary (Peng, 2018).
Expatriates are from parent-country nationals; they are employees from the country of the
company headquarters. Most MNCs usually operate their business overseas through an expatriate
assignment. An expatriate can be defined as “an employee of a parent company who is
transferred for a particular amount of time (from several months to several years) to work in a
branch of an international company located abroad” (Banerjee, Gaur, & Gupta, 2012). In other
28 International Journal of Business and Public Administration, Volume 16, Number 1, Spring 2019
words, MNCs locate expatriates to a foreign country to work and live for at least one year in
order to complete a specific assignment, and then typically repatriates back to the home country
(Kraimer, Bolino, & Mead, 2016).
With a given set of capabilities, MNCs employ expatriates as vehicles for the knowledge
transfer from one unit to the other (Musasizi, et. al., 2016). However, the risks of an expatriate’s
staffing family adjustment problems are many. Expatriate failure rates have been traditionally
very high because either his/her job performance is less than expected, or he/she is unable to
adjust to the new host country and culture. Moreover, work-related and family-related problems
also lead to expatriate failure. Expatriates fail because of inadequate education and training or
preparation for his/her international assignments (Tahir, 2018).
According to Witting-Berman and Beutell (2008), there are high costs associated with
expatriate failure and repatriate turnover. Wang (2008) reported that expatriate failure causes a
high level of loss to the employer and may result in loss of market share or hurt the reputation of
an MNC. The survey conducted by GMAC Relocation Trends (Business Editors, 2008) reported
that 21% of expatriates left their companies during the assignments and another 23% left within
a year of returning from the assignment. Therefore, expatriate failure causes a high level of loss
to the employer and may result in loss of market share or hurt the reputation of an MNC (Wang,
2008).
Peng (2018) noted that the cost of each expatriate failure is between $250,000 and
$1,000,000 dollars, which is remarkably high. Other sources noted that the cost of an
unsuccessful expatriate assignment is approximately $100,000 (Misa et al., 1979). Furthermore,
others estimated the cost for each expatriate failure ranges between $40,000 and $1,000,000
(Barbian, 2008).
Recent studies have suggested that 80% of medium-sized and large-sized U.S. employers
are successfully sending expatriates around the world, and 45% expect the number of expatriates
to increase (Black & Gregersen, 1999). In May 2008, a GMAC Relocation Trends survey also
found that despite a slowing economy, 68% of MNCs continued to relocate expatriate employees
at record levels (Deresky, 2011). Also, 54% of the expatriates are being deployed at younger
ages (20-39 years old, up from 41%).
Women represent 21% of those sent overseas, an increase from the historical 15% (Ball
et al., 2010; Haile, Jones, and Emmanuel, 2010). Such an increasing trend of females for
expatriate assignments is a positive sign of progress. Women comprise over 40% of the
employable global workforce, yet women hold only 22% of all expatriate jobs (SHRM, 2014). A
current review of research by Brookfield Global Relocation Services (2016) noted that female
expatriates accounted for 25% of the total. Haile, Jones, and Emmanuel (2016) also noted that
the global average workforce of women is 35% compared to the global average composition of
women in senior management, which is 24%.
Female managers and MNCs have the responsibility to play a role in breaking the
“expatriate glass ceiling.” Women managers who desire expatriate assignments must be more
proactive in managing their careers. MNCs must play a significant role in breaking the
“expatriate glass ceiling” that still exist for women seeking expatriate assignments. The success
level of women for expatriate assignments does not differ from that of their male counterparts
(Taylor & Napier, 1996; Insch, McIntyre, &, Napier, 2008)
The authors of the current study will elaborate on major reasons for expatriate failure;
suggest ways and means (expatriate selection and preparation, training and development needs,
words, MNCs locate expatriates to a foreign country to work and live for at least one year in
order to complete a specific assignment, and then typically repatriates back to the home country
(Kraimer, Bolino, & Mead, 2016).
With a given set of capabilities, MNCs employ expatriates as vehicles for the knowledge
transfer from one unit to the other (Musasizi, et. al., 2016). However, the risks of an expatriate’s
staffing family adjustment problems are many. Expatriate failure rates have been traditionally
very high because either his/her job performance is less than expected, or he/she is unable to
adjust to the new host country and culture. Moreover, work-related and family-related problems
also lead to expatriate failure. Expatriates fail because of inadequate education and training or
preparation for his/her international assignments (Tahir, 2018).
According to Witting-Berman and Beutell (2008), there are high costs associated with
expatriate failure and repatriate turnover. Wang (2008) reported that expatriate failure causes a
high level of loss to the employer and may result in loss of market share or hurt the reputation of
an MNC. The survey conducted by GMAC Relocation Trends (Business Editors, 2008) reported
that 21% of expatriates left their companies during the assignments and another 23% left within
a year of returning from the assignment. Therefore, expatriate failure causes a high level of loss
to the employer and may result in loss of market share or hurt the reputation of an MNC (Wang,
2008).
Peng (2018) noted that the cost of each expatriate failure is between $250,000 and
$1,000,000 dollars, which is remarkably high. Other sources noted that the cost of an
unsuccessful expatriate assignment is approximately $100,000 (Misa et al., 1979). Furthermore,
others estimated the cost for each expatriate failure ranges between $40,000 and $1,000,000
(Barbian, 2008).
Recent studies have suggested that 80% of medium-sized and large-sized U.S. employers
are successfully sending expatriates around the world, and 45% expect the number of expatriates
to increase (Black & Gregersen, 1999). In May 2008, a GMAC Relocation Trends survey also
found that despite a slowing economy, 68% of MNCs continued to relocate expatriate employees
at record levels (Deresky, 2011). Also, 54% of the expatriates are being deployed at younger
ages (20-39 years old, up from 41%).
Women represent 21% of those sent overseas, an increase from the historical 15% (Ball
et al., 2010; Haile, Jones, and Emmanuel, 2010). Such an increasing trend of females for
expatriate assignments is a positive sign of progress. Women comprise over 40% of the
employable global workforce, yet women hold only 22% of all expatriate jobs (SHRM, 2014). A
current review of research by Brookfield Global Relocation Services (2016) noted that female
expatriates accounted for 25% of the total. Haile, Jones, and Emmanuel (2016) also noted that
the global average workforce of women is 35% compared to the global average composition of
women in senior management, which is 24%.
Female managers and MNCs have the responsibility to play a role in breaking the
“expatriate glass ceiling.” Women managers who desire expatriate assignments must be more
proactive in managing their careers. MNCs must play a significant role in breaking the
“expatriate glass ceiling” that still exist for women seeking expatriate assignments. The success
level of women for expatriate assignments does not differ from that of their male counterparts
(Taylor & Napier, 1996; Insch, McIntyre, &, Napier, 2008)
The authors of the current study will elaborate on major reasons for expatriate failure;
suggest ways and means (expatriate selection and preparation, training and development needs,
International Journal of Business and Public Administration, Volume 16, Number 1, Spring 2019 29
and cultural adjustment) that MNCs can use to turn expatriate failure to success. The authors will
also deliver implications, draw concluding remarks, and recommendations for future research.
MAJOR REASONS FOR EXPATRIATE FAILURE
Historically, expatriate failure has been a major concern and the problem persists today.
Forster (1997) defined Expatriate failure as “a premature return” (or ending the international
assignment before the contract ends, or is considered ineffective by senior management, or low
performance and adjustment problems). Forster (1997) expanded the definition of “expatriate
failure” to include underperformance and retention upon completion of the assignment.
There are several reasons why expatriates overseas’ tenure ends in failure. MNCs often
focus on the obvious expatriate failures who return home early instead of going in depth and
focusing more on exploring corporate level concerns in relation to why foreign assignment fail
(Connelly et al., 2007). Mendenhall and Oddou (1985) stated that a major problem in many
MNCs is that HR professionals tend to compare domestic performance with overseas
performance possibilities. Domestic performance and overseas performance potentials are not
the same thing
Reviews of research literature reveals that there is a lack of preparation of expatriates
before departure, improper selection and training, inadequate support to the accompanying
family members, and the expatriate’s inability to adjust to other cultures. A similar review of
research study shows that 57% of expatriates fail due to their inability of adjusting to the new
environment (Olsen & Martins, 2009). Other reasons include family related issues, expatriate’s
and the manager’s inability to cope with responsibility associated with the overseas work
(Heijden et al., 2009)
The literature on expatriate-adjustment consistently confirmed the lack of pre-departure
training for the expatriate and their family (Tung, 1998; Insch et al., 2008). The MNCs normally
identify the skills and knowledge that expatriates have and those needed in the area of operation.
Expatriates who lack the necessary skills or knowledge persist because their MNC did not direct
them into specific training or development (Wild, 2012). Foreign languages are barriers and
frustration for expatriates in host countries. In addition, misunderstanding cultural differences
between home country and host country are important factors to expatriate failure. Expatriate
success depends so much on the entire family’s cultural adjustment; therefore, the spouse should
be included in the preparation training activities. Andreason (2008) explored how international
work experience affect the spouse and children of the expatriates.
Failure of the family to adjust to a new culture is a common reason for expatriates
terminating their international assignments (Shaffer & Harrison, 2006). In reviewing some of the
research literature, the most striking reasons for expatriate failure is the “inability of spouse to
adjust” for U.S. multinational subsidiaries in the host countries (Tung, 1998). Most research into
the matter of expatriate failure concluded that the family situation should be part of the expatriate
selection process. The family members of an expatriate play a critical role in the success or
failure of the international work assignment and living experience. It is important to note that the
ability of a family member (spouse in particular) to adapt to a new culture is a key factor in the
success or failure of an expatriate (Wild, 2012).
If MNCs’ HR professionals do not train “expatriates and their family” with native
language, social behaviors, and cultural norms, both expatriates and their family will face
cultural shock and not a smooth transition to a host country. Ineffective communication system
and cultural adjustment) that MNCs can use to turn expatriate failure to success. The authors will
also deliver implications, draw concluding remarks, and recommendations for future research.
MAJOR REASONS FOR EXPATRIATE FAILURE
Historically, expatriate failure has been a major concern and the problem persists today.
Forster (1997) defined Expatriate failure as “a premature return” (or ending the international
assignment before the contract ends, or is considered ineffective by senior management, or low
performance and adjustment problems). Forster (1997) expanded the definition of “expatriate
failure” to include underperformance and retention upon completion of the assignment.
There are several reasons why expatriates overseas’ tenure ends in failure. MNCs often
focus on the obvious expatriate failures who return home early instead of going in depth and
focusing more on exploring corporate level concerns in relation to why foreign assignment fail
(Connelly et al., 2007). Mendenhall and Oddou (1985) stated that a major problem in many
MNCs is that HR professionals tend to compare domestic performance with overseas
performance possibilities. Domestic performance and overseas performance potentials are not
the same thing
Reviews of research literature reveals that there is a lack of preparation of expatriates
before departure, improper selection and training, inadequate support to the accompanying
family members, and the expatriate’s inability to adjust to other cultures. A similar review of
research study shows that 57% of expatriates fail due to their inability of adjusting to the new
environment (Olsen & Martins, 2009). Other reasons include family related issues, expatriate’s
and the manager’s inability to cope with responsibility associated with the overseas work
(Heijden et al., 2009)
The literature on expatriate-adjustment consistently confirmed the lack of pre-departure
training for the expatriate and their family (Tung, 1998; Insch et al., 2008). The MNCs normally
identify the skills and knowledge that expatriates have and those needed in the area of operation.
Expatriates who lack the necessary skills or knowledge persist because their MNC did not direct
them into specific training or development (Wild, 2012). Foreign languages are barriers and
frustration for expatriates in host countries. In addition, misunderstanding cultural differences
between home country and host country are important factors to expatriate failure. Expatriate
success depends so much on the entire family’s cultural adjustment; therefore, the spouse should
be included in the preparation training activities. Andreason (2008) explored how international
work experience affect the spouse and children of the expatriates.
Failure of the family to adjust to a new culture is a common reason for expatriates
terminating their international assignments (Shaffer & Harrison, 2006). In reviewing some of the
research literature, the most striking reasons for expatriate failure is the “inability of spouse to
adjust” for U.S. multinational subsidiaries in the host countries (Tung, 1998). Most research into
the matter of expatriate failure concluded that the family situation should be part of the expatriate
selection process. The family members of an expatriate play a critical role in the success or
failure of the international work assignment and living experience. It is important to note that the
ability of a family member (spouse in particular) to adapt to a new culture is a key factor in the
success or failure of an expatriate (Wild, 2012).
If MNCs’ HR professionals do not train “expatriates and their family” with native
language, social behaviors, and cultural norms, both expatriates and their family will face
cultural shock and not a smooth transition to a host country. Ineffective communication system
30 International Journal of Business and Public Administration, Volume 16, Number 1, Spring 2019
and lack of coordination between expatriates with their families, who do not accompany them,
will deter expatriate adjustment to an international assignment environment.
TURNING EXPATRIATE FAILURE TO EXPATRIATE SUCCESS
The authors of this study have developed a conceptual model showing selected factors
that could turn expatriate failure to success. Appendix 1 presents these factors, which the authors
have described below:
• Selecting and Preparing Expatriate
• Expatriate Training and Development Needs
• Expatriate Cultural adjustment
Selecting and Preparing Expatriate
Most MNCs use three types of employees: Parent-country nationals, host-country
nationals and third-country nationals to manage their overseas business operations.
Implementing these plans in the staffing process could be a highly difficult challenge in many
cultures (Deresky, 2011). Different scholars have suggested several approaches to enhance
expatriate success in host countries. Major approaches include expatriate selection and
preparation, expatriate training and development, and cultural adjustment.
Wild (2012) defined the expatriate selection as “the process of screening and hiring the
best-qualified applicants with the greatest performance potential.” The selection of expatriate
employees are determined based on the three most important reasons: technical competence,
management development and control (Rocke, 2017). Harvey (1983) attested that expatriate
failure is a result of MNCs improper selection policies to identify qualified candidates who will
succeed in international assignments. To reduce expatriate failure, MNCs should improve
selection procedures, training, adjustment, clearing their roles and screen out inappropriate
candidates in international assignment.
Preparing an expatriate for an overseas job is an exciting opportunity but it is a
challenging experience. It is also a crucial issue for MNCs to compete and succeed globally
because expatriate education and training is necessary in a global market place. There are certain
factors that have greater impact on the success of an expatriate. These factors include staff
recruiting, selection for expatriation, training for expatriates, costs of expatriates, repatriation of
expatriates, motivation and job performance evaluation of expatriates (Kraimer, Wayne, &
Jaworski, 2001).
A review of the family situation should be part of the expatriate selection process Tung
(1998). Yet, in spite of all of the aforementioned, MNCs are facing an increasingly complicated
task in finding, motivating and retaining talented expatriate managers who can handle the
complexity of cultural adjustments in their MNCs (attitude towards work and perception in time)
and personal lives (differences in food, language and weather) in other countries (Selmer, 2005).
This expatriate experience can be fully developed through expatriate assignments and global
corporate career support (Insch, McIntyre, & Napier, 2008; Heijden, Engen, & Paauwe, 2009). In
other words, MNCs need to provide continuous education and training for expatriates and their
families with comprehensive programs, which offer support for the length of the assignment
(Dolgener, 2017).
and lack of coordination between expatriates with their families, who do not accompany them,
will deter expatriate adjustment to an international assignment environment.
TURNING EXPATRIATE FAILURE TO EXPATRIATE SUCCESS
The authors of this study have developed a conceptual model showing selected factors
that could turn expatriate failure to success. Appendix 1 presents these factors, which the authors
have described below:
• Selecting and Preparing Expatriate
• Expatriate Training and Development Needs
• Expatriate Cultural adjustment
Selecting and Preparing Expatriate
Most MNCs use three types of employees: Parent-country nationals, host-country
nationals and third-country nationals to manage their overseas business operations.
Implementing these plans in the staffing process could be a highly difficult challenge in many
cultures (Deresky, 2011). Different scholars have suggested several approaches to enhance
expatriate success in host countries. Major approaches include expatriate selection and
preparation, expatriate training and development, and cultural adjustment.
Wild (2012) defined the expatriate selection as “the process of screening and hiring the
best-qualified applicants with the greatest performance potential.” The selection of expatriate
employees are determined based on the three most important reasons: technical competence,
management development and control (Rocke, 2017). Harvey (1983) attested that expatriate
failure is a result of MNCs improper selection policies to identify qualified candidates who will
succeed in international assignments. To reduce expatriate failure, MNCs should improve
selection procedures, training, adjustment, clearing their roles and screen out inappropriate
candidates in international assignment.
Preparing an expatriate for an overseas job is an exciting opportunity but it is a
challenging experience. It is also a crucial issue for MNCs to compete and succeed globally
because expatriate education and training is necessary in a global market place. There are certain
factors that have greater impact on the success of an expatriate. These factors include staff
recruiting, selection for expatriation, training for expatriates, costs of expatriates, repatriation of
expatriates, motivation and job performance evaluation of expatriates (Kraimer, Wayne, &
Jaworski, 2001).
A review of the family situation should be part of the expatriate selection process Tung
(1998). Yet, in spite of all of the aforementioned, MNCs are facing an increasingly complicated
task in finding, motivating and retaining talented expatriate managers who can handle the
complexity of cultural adjustments in their MNCs (attitude towards work and perception in time)
and personal lives (differences in food, language and weather) in other countries (Selmer, 2005).
This expatriate experience can be fully developed through expatriate assignments and global
corporate career support (Insch, McIntyre, & Napier, 2008; Heijden, Engen, & Paauwe, 2009). In
other words, MNCs need to provide continuous education and training for expatriates and their
families with comprehensive programs, which offer support for the length of the assignment
(Dolgener, 2017).
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