THE PARENT CORPORATE CONTEXT AND CROSS- CULTURAL TRAINING OF BUSINESS EXPATRIATES

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2 THE PARENT CORPORATE CONTEXT AND CROSS- CULTURAL TRAINING OF BUSINESS EXPATRIATES Jan Selmer * Hong Kong Baptist University Abstract The practice of providing expatriates with cross-cultural training varies widely among business corporations. To examine the proposition that some characteristics of the parent corporation context could be munificent to the practice of providing cross-cultural training, a mail survey was addressed to business expatriates in China. Surprisingly, the results showed no association between corporate size, international stake, and international experience on the one hand and the extent to which the expatriates had received cross-cultural training on the other hand. Although an ad hoc analysis found a positive relationship between international experience and the provision of sequential cross-cultural training, there was no association between any of the variables depicting corporate context and predeparture or postarrival training. The findings and their implications are discussed in detail. INTRODUCTION For many businesses, a global presence is the key to their survival. To coordinate and control world-wide operations, corporations often use expatriates in a variety of ways (cf. Black & Gregersen, 1999). These business expatriates need to be prepared for life and work in another country with a different cultural and institutional environment. To simply transfer managerial practices from the parent country to the foreign business operation is seldom advisable. Instead, expatriates must be flexible and be prepared to adapt their managerial practices (cf. Feldman & Bolino, 1999; Tung, 1998). What works well in one country may have little effect or even result in harmful consequences in another culture (cf. Black & Porter, 1991; Ralston et.al., 1995). Trying to support expatriates adjustment and performance, corporations can provide them with * Dr. Jan Selmer is Professor of Management, School of Business, Hong Kong Baptist University. He is the Co- Ordinator for the Focused Research Area on Cross-Cultural Management.

3 2 cross-cultural training. However, while some corporations routinely provide such training to their expatriates, other companies assign their employees to all parts of the world without any training at all (cf. Black & Gregersen, 1999; Black, Gregersen & Mendenhall, 1992; Black, Mendenhall & Oddou, 1991). This variation in practices of making use of expatriate crosscultural training may simply reflect the widely varying findings of studies examining the effectiveness of such training. While some studies have found cross-cultural training highly effective, other results point at a negligible or even negative correlation between training and various outcome variables. In the case of corporations that apply cross-cultural training, despite the doubtful results of such training, there could be some aspects of the corporate context that are munificent to cross-cultural training. Parent corporations with such characteristics may to a higher degree than others provide their expatriates with cross-cultural training. Therefore, the purpose of this study is to examine the association between potentially munificent corporate contexts and to which extent their business expatriates receive cross-cultural training. This is both relevant and important. Despite the varying corporate practice and the potential beneficial outcomes of cross-cultural training, no study is known to have investigated the underlying reasons for these differences. Hence, this investigation is necessary to try to begin to understand why corporate practices differ with respect to cross-cultural training. The place of investigation is mainland China and data was collected from business expatriates assigned to China by Western corporations. China may be experienced as a challenging host location. From a Western perspective, China is frequently regarded as the most foreign of all

4 3 foreign places. Chinese culture, institutions, and people may appear completely baffling (Chen, 2001). Hence, China seems to be a suitable host destination for this study since the apparent need for effective cross-cultural skills could be substantial. EFFECTIVENESS AND PRACTICE OF EXPATRIATE CROSS-CULTURAL TRAINING Many studies recommend expatriates to undergo cross-cultural training (cf. Berry, et.al. 1993; Black & Mendenhall, 1990; Gregersen & Black, 1992; Hammer & Martin, 1990; Naumann, 1993; Oddou, 1992). However, the empirical support for the effectiveness of such training varies widely. Studies have found correlations between expatriate cross-cultural training and expatriate adjustment ranging between r=-.42 (Black, 1988) and r=.57 (Early, 1987). Similarly, correlations between training and performance range from r=-.08 (Black & Gregersen, 1991) to r=.79 (Early, 1994). Furthermore, claims of methodological shortcomings (Kealy & Protheroe, 1996), narrowness in scope, and the use of other sojourners than expatriate managers as respondents have made findings of empirical studies doubtful (Caligiuri et.al., 2001). These misgivings may also be reflected in the practice of international corporations. It was previously reported that few firms provided their expatriate managers with any cross-cultural training (cf. Dunbar & Katcher, 1990; Mendenhall, Dunbar & Oddou, 1987; Tung, 1981). However, a more recent survey of U.S. and other Western corporations found that most of the sampled firms provide at least a one-day cross-cultural training programme to their expatriates (GMAC Global Relocation Services, 2002). Consequently, international corporations seem to be ambivalent on the usefulness of cross-cultural training leading to a considerable variation in the practice of

5 4 providing training to their expatriates. Some firms may assume that "good persons always manage", preferring a learning-by-doing approach (Black & Mendenhall, 1990; Brewster, 1995; Kühlmann, 2001), while others provide cross-cultural training on a routine basis as part of a standardized expatriation process. The choice whether to apply training or not could be based on the specific circumstances of the parent corporation. Certain aspects of the corporate context in some firms may be munificent to expatriate cross-cultural training. In the following section, a number of hypotheses exploring the association between such potentially munificent corporate contexts and cross-cultural training of business expatriates are developed. MUNIFICENT CORPORATE CONTEXTS AND EXPATRIATE CROSS-CULTURAL TRAINING Some characteristics of the parent corporation may potentially influence the extent to which expatriates receive cross-cultural training. In this study, three such potentially munificent corporate contexts will be examined; the size of the parent corporation (corporate size), the extent of the stake of the international operations (international stake), and the amount of experience of international operations (international experience). Corporate Size

6 5 It is reasonable to assume that the size of the corporation may influence to what extent expatriates receive cross-cultural training. As opposed to small firms, large corporations would typically have substantial discretionary financial resources to cover training costs. A study of 32 Fortune 500 companies revealed that 94 per cent of these firms at least offered language training for their expatriate candidates and 64 per cent offered some additional form of cross-cultural training (Cuthill, 1997). Increasingly, web-based and CD-ROM-based media are becoming available (Mendenhall & Stahl, 2000). Such training typically has a flat fee pricing model likely to be more appealing to large than small organizations (Morris & Robie, 2001). Big corporations may also lower the costs per participant by leveraging their greater training needs and purchasing power. Last, but not least, expatriation in large corporations could involve more standardized routines and procedures than small firms which may entail some kind of crosscultural training or preparation. These various observations provide a basis for Hypothesis 1. Hypothesis 1: There is a positive relationship between corporate size and the extent to which expatriates receive cross-cultural training. International Stake The share of the international operations of a corporation could also have an impact on to which degree the expatriates are trained cross-culturally. Parent corporations with a large international stake will be well motivated to maintain and develop their global ventures. Hence, they may try to use cross-cultural training to ensure that their expatriates have the requisite skills, knowledge, and attitudes to perform effectively in a foreign cultural business context. Similarly, firms with a

7 6 large proportion of expatriate managers could have good reasons to try to support foreign assignment success and to prevent failure by means of cross-cultural training (Bennet, Aston & Colquhon, 2000). It has been repeatedly argued that while there is no lack of business strategies to operate global business ventures effectively, there is a dearth of human capability to implement them (cf. Adler & Bartholomew, 1992; Bartlett & Goshal, 1987; 1990; 1992; Brake, 1997). While it is not easy to locate internationally competent managers today, some researchers have warned that the situation may get worse and that most multinationals could encounter a serious shortage of global leaders in the near future (Gregersen, Morrison & Black, 1998). Executive international assignment experience is rare, valuable, and difficult to imitate. It can create unique competitive advantage for the firm and help to ensure a supply of internationally seasoned candidates for future executive positions. Executives with international assignment experience could constitute a crucial resource for firms competing worldwide (Carpenter, Sanders & Gregersen, 2000). Not to discourage suitable candidates for top positions, especially firms with a high international stake may try to use cross-cultural training to achieve a successful outcome of the foreign assignment. This discussion leads to Hypothesis 2. Hypothesis 2: There is a positive relationship between a corporation s international stake and the extent to which expatriates receive cross-cultural training. International Experience The amount of international experience of a corporation could be a determining factor as well to which extent cross-cultural training is received by its expatriates. Internationally seasoned corporations may suspect that by failing to provide expatriates with cross-cultural training, they may unintentionally create the wrong impression that there are no major differences between the

8 7 parent and the host cultural context. Therefore, expatriates may mistakenly assume that there is no need to adjust their behaviour and management style at the host location (Black & Porter, 1991). Needless to say, this may result in enhanced foreign assignment failures, providing an incentive for internationally versed corporations to include cross-cultural training as a standardized element in dealing with expatriation to all foreign countries, also neighbouring locations. That may be justified, since previous research has suggested that it may be as difficult to adjust to a similar as a dissimilar host culture (Selmer, in press; Selmer, 2002; Selmer & Shui, 1999). Internationally experienced firms may also be more familiar with the fast growing training industry. Great advances have been made over the past three decades in the design and delivery of quality cross-cultural training programmes. Although it is now possible to effectively train a large group of managers, it is dependent on the will of the top management. Such training programmes are not likely to be created and implemented without firm corporate support (Mendenhall & Stahl, 2000). Hence, internationally knowledgeable top management teams may be more committed to train their expatriates than corporations without much global experience. New forms of cross-cultural training have also facilitated such an undertaking. Various kinds of self-training packages via multimedia software and the Internet have become available. Some of this software may fill gaps in current training practices like, for example, including the whole family in the training programme. Others apply computer-assisted learning to old concepts like the intercultural sensitizers or culture assimilator (cf. Albert, 1983; Black & Mendenhall, 1990; Cushner & Landis, 1996). Consulting firms increasingly sell their products, questionnaires, information and other services through the Internet. However, one of the most valuable novelties in cross-cultural self-training is homepages that are constructed by expatriates themselves

9 8 (Mendenhall & Stahl, 2000). It is likely that corporations with international experience would be more willing to financially and otherwise support such expatriate cross-cultural self-training than firms without much experience of the global business arena. The discussion above supports Hypotheses 3. Hypothesis 3: There is a positive relationship between a corporation s international experience and the extent to which expatriates receive cross-cultural training. METHOD Sample Data for this study were extracted from a mail questionnaire directed at expatriates working for Western business corporations in China. There were 165 returned questionnaires, representing a response rate of 25.2%. This is not high, but compared to some other mail surveys of business expatriates, this represents a respectable figure (cf. Harzing, 1997; Naumann, 1993). The average total turnover of the studied parent corporations was Million US$ (SD= ) and the average share of that turnover generated in foreign operations was per cent (SD=28.28). On the average, the international experience of the investigated parent corporations was years (SD=44.14), they operated on the average in countries (SD=87.51), and, on the average, the mean share of expatriates of all managers working for the studied parent corporations was per cent (SD=26.95). There were 41 (25.3%) parent

10 9 corporations from the U.S., 22 (13.6%) from Germany, 15 (9.3%) from Britain, 9 (5.6%) from Australia, 9 (5.6%) from France, and the rest from various Western countries. The operations covered most of the 23 provinces of China, but the locations of Beijing, Shanghai and Guangzhou dominated. Instrument All variables were measured by direct, single questions. The dependent variable, cross-cultural training was dichotomized. Having received training = 1 and having received no training = 0. The independent variables were all continuous. There was one variable depicting corporate size: total turnover (million US$) of the parent corporation. There were two variables representing the international stake of the parent corporation: Percentage of turnover from foreign operations (per cent) and percentage of expatriate managers (per cent). Also in the case of international experience, there were two variables: Number of years of international operations (years) and number of countries of operations (number). RESULTS Table 1 provides sample means, standard deviations and zero-order correlations. There were no significant association between the independent variable and any of the dependent variables, providing no preliminary support for the research question. On the other hand, there were two

11 10 significant associations among the independent variables. Not surprisingly, there was a positive relationship between number of countries of operation and number of years of international operations (r=.22; p<.01), implying that with longer periods of international operations, parent corporations may expand operations to more countries. There was also a positive association between the percentage of expatriate managers and the percentage of turnover from foreign operations (r=.35; p<.001) suggesting that the larger the international stake, the more parent corporations may want to monitor, control and protect such business operations with their own parent nationals. Insert Table 1 about here Hierarchical multiple regression was used to formally test the hypotheses. In the first step, the independent variable depicting the corporate size of the parent corporate organization, measured as the total turnover was entered. The two predictor variables depicting the international stake of the parent corporation, percentage of turnover from the foreign operations and percentage of expatriate managers, were entered in the second step. In the third step, the two independent variables representing the international experience of the parent corporation, number of years of international operations and number of countries of operations were entered. As displayed by Table 1, none of these variables had any statistically significant association with the dependent variable, crosscultural training. This confirms the lack of support for any of the stated hypotheses, as was preliminary indicated above. The change in F was small and not significant in any of the three steps.

12 11 Furthermore, the overall explained variance in the dependent variable was negligible and the overall F-value was non-significant. This strongly suggests that there may be other circumstances influencing cross-cultural training more than the parent corporate context. Insert Table 2 about here To further explore possible associations between the variables representing the parent corporate context and cross-cultural training, different types of such training were compared in an ad hoc analysis. Based on timing of the training administered, the following three kinds of cross-cultural training were identified: Predeparture cross-cultural training (only administered before the respondent s departure to China), postarrival cross-cultural training (only received after the expatriate had arrived in China), and sequential cross-cultural training (combining both predeparture and postarrival training) (Selmer, Torbiörn & de Leon, 1999). An equivalent hierarchical multiple regression analysis as above was performed for each of these types of cross-cultural training. Table 3 displays the findings. Both the regression of the independent variables on predeparture and postarrival cross-cultural training failed to produce any significant results. Besides, the change in F was small and non-significant in both cases for all steps. The overall explained amount of variance was again negligible in both cases and none of the two F-values were significant. On the other hand, regressing the independent variables on sequential cross-cultural training yielded some significant results. The third step, introducing the two variables depicting the international experience of the parent corporation, produced a significant change in F explaining 12 per cent of the variance in the

13 12 dependent variable. The independent variable, number of countries of operations, was found to have a positive association with the dependent variable, sequential cross-cultural training (beta=.36; p<.01). All together, the predictor variables explained 13 percent of the variance of the dependent variable and the F-value was significant (F=2.74; p<.05) indicating a good data fit. This finding seems to suggest that, at least, a certain kind of corporate context could be munificent for a certain kind of cross-cultural training. The results will be further discussed below. Insert Table 3 about here DISCUSSION The main findings of this study are surprising. None of the potentially munificent corporate contexts was significantly associated with the extent to which cross-cultural training was received by the expatriates. Corporate size does not seem to matter, and neither does international stake nor international experience. The munificence of these corporate surroundings is not substantial enough to promote cross-cultural training. In other words, there must be other circumstances why certain organizations provide their expatriates with this type of training on a routine basis. It has been noted that many companies are disappointed in cross-cultural training because of their own experiences (cf. Selmer, 2001). Others are discouraged by practical restrictions such as insufficient time available for training (cf. Mendenhall & Oddou, 1985). Yet others are hesitant to undertake cross-cultural training because the potential return is difficult to quantify (cf. Harvey, 1983).

14 13 On the other hand, examining the different types of training separately, generated a more clear picture. All three investigated aspects of the parent corporate context were, disappointingly, unrelated to both predeparture and postarrival cross-cultural training. But international experience, depicted by the number of countries of operations of the parent corporation, showed a positive association with sequential training. Since an individual's capacity for efficient learning ebbs and flows during the expatriate period, sequential cross-cultural training progresses in steps starting at predeparture and continuing to the postarrival phase. Sequential training would provide continuous guidance for the incremental restructuring of the expatriate's frame of reference towards greater consistency with the host culture. The concept of sequential cross-cultural training suggests that timing and content should be consistent with the psychological receptivity of the expatriate, as it develops throughout the foreign assignment. Hence, there is a sequencing of appropriate training methods at different training periods, so that learning from one phase enhances the learning in later phases (Selmer, Torbiörn & de Leon, 1998). Recent research has stressed the importance of continuing cross-cultural training (cf. Eschback, Parker & Stoeberl, 2001; Gudykunst, Guzley & Hammer, 1996; Mendenhall, 1999; Osland & Bird, in press). Others have also argued that crosscultural training may be even more effective when delivered after the expatriate have arrived in the host country than prior to the foreign assignment (cf. Black, et.al., 1999; Mendenhall 1999). Consequently, the findings of this study suggest that internationally experienced corporations may provide their expatriates with an adequate support for their foreign assignments. This is an encouraging revelation, presumably in the best interest of these globally versed organizations. Although this investigation only covers cross-cultural training, one could speculate that internationally experienced corporations may also be superior in handling other aspects related to

15 14 their business operations abroad in general, and different tasks in their management of expatriates in particular. Common to all investigations, this study may have some potential shortcomings worth considering when interpreting the results. Firstly, single method variance could have affected the results since all data was self-reported. However, the common condemnation of all methods involving self-reports have been found exaggerated (Crampton & Wagner, 1994), and in this study, the data representing both the dependent and independent variables are all based on non-sensitive factual information. Hence, in this case, respondents do not have much incentive to try to give biased responses following a cognitive set of rules in evaluating items intended to measure constructs that are supposed to be conceptually different (Lord & Maher, 1991). Despite the factual character of the questions, it cannot be completely ruled out that responses were not biased due to social desirability. For example, respondents may, to protect the prestige of their organization, have exaggerated their responses to the question about receiving cross-cultural training. Such bias typically results in a compressed response range (Podsakoff & Organ, 1986). However, upon inspection of the data, no compression of response range was found. There are some obvious implications for international corporations of these findings. Practice makes perfect: experience gained from engaging in international business and management could improve the choice of type of cross-cultural training the expatriates of the corporation receive. On the other hand, it may be prudent for firms not to blindly follow practices of big corporations assuming that

16 15 they necessarily must be doing the right thing in not training their expatriates. Similarly, it may be unwise to assume that corporations with much at stake internationally know what they are doing when they do not provide cross-cultural training for their expatriates. Implications for further research are straightforward. Although this study have eliminated some parent corporate contexts as not being munificent to expatriate cross-cultural training, more can be done to try to identify organizational circumstances that really promote such training. For example, do corporations early positive experiences with cross-cultural training successively create a general support at headquarters for such programmes leading to development of new expatriation routines and procedures incorporating such training? Does the apparent success with cross-cultural training of other corporations in the same industry or foreign market lead to adoption of the same (best) practices? Does careful planning of the process of expatriation, providing more time for preparations in general, result in more expatriates undergoing cross-cultural training? If firms have more top managers with international assignment experience, does that also facilitate their assessment of the potential benefits of cross-cultural training? Another suggestion is to test the generalizability of the findings by replicating the study in (an)other host location(s). As mentioned above, China could be a culturally challenging host country for Western business expatriates, justifying a thorough crosscultural training approach to equip expatriates with the required skills. However, the cultural differences may just be too dramatic, and due to time and resource constraints, the parent corporations may tend to abandon any ambitions to train their managers in the language and culture of China. The findings of this study support such a scenario since only 24 per cent of the expatriates had received any cross-cultural training (Table 2). That is much lower than a recently

17 16 published survey, including 150 U.S. and other Western firms, reporting that 69 per cent of the companies provided training with an average participating rate of the expatriates of 67 per cent (GMAC Global Relocation Services, 2002). This indicates that, on the average, 46 per cent of the expatriates received cross-cultural training. Hence, a replication of the study in less demanding host country surroundings would be a worthwhile endeavour. In conclusion, this study contributes to the literature on cross-cultural training of business expatriates. Surprisingly, the findings of this investigation suggest that corporate size, international stake and international experience are irrelevant contexts of the parent corporation in promoting cross-cultural training in general. However, international experience was found to be positively associated with a specific training type: sequential cross-cultural training. Since this is a continued type of training highly recommended in the literature, globally familiar corporations may be on the right track in supporting their business expatriates for successful foreign assignments and operations abroad. REFERENCES Adler, N. & Bartholomew, S. (1992), Managing Globally Competent People, Academy of Management Executive, 6(3), Albert, R.D. (1983), The Intercultural Sensitizer or Cultural Assimilator: A Cognitive Approach, in Landis, D. & Brislin, R.W. (Eds.), Handbook of Intercultural Training (Vol.2.), Elmsford, NY.: Pergamon.

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26 25 TABLE 1: Means, Standard Deviations, and Correlations among the Variables Variables Mean SD Cross-Cultural Training Corporate Size 2. Turnover (M$) International Stake 3. Percentage of Turnover From Foreign Operations Percentage of Expatriate Managers *** 1.00 International Experience 5. Number of Years of International Operations Number of Countries of Operations ** Training = 1; No Training = 0 ** p<.01; *** p<.001 (2-tailed)

27 26 TABLE 2: Parent Corporate Context Regressed on Cross-Cultural Training Predictor Variables Cross-Cultural Training β R 2 F Corporate Size Turnover (M$) International Stake Percentage of Turnover from Foreign Operations Percentage of Expatriate Managers International Experience Number of Years of International Operations Number of Countries of Operations R R 2 Adjusted R 2 F

28 27 TABLE 3: Parent Corporate Context Regressed on Types of Cross-Cultural Training Predictor Variables Predeparture β R 2 F Postarrival β R 2 F Sequential β R 2 F Corporate Size Turnover (M$) International Stake Percentage of Turnover From Foreign Operations Percentage of Expatriate Managers International Experience Number of Years of International Operations Number of Countries of Operations ** ** R R 2 Adjusted R 2 F * *p <.05; ** p <.01