Knowledge transfer from expatriates

Transcription

1 June 02, 2008 Department of Business Studies Bachelor Thesis Supervisor: Francesco Ciabuschi Knowledge transfer from expatriates A study of MNCs exploitation of expatriates knowledge Authors: Frida Hermansson Ulrika Kilnes

2 Abstract This paper investigates how expatriates experience that their knowledge gained from international assignments is transferred and exploited by the MNC. The results from 93 expatriates from eleven Large Cap companies suggest that knowledge is not exploited trough formal mechanisms. Instead informal mechanisms of knowledge transfer such as networks and own initiatives seem to be a more common way of transferring and exploiting knowledge in the investigated MNCs. The findings indicate that the knowledge that the expatriates that failed their mission abroad gained is not exploited to the same extent as the expatriates that successfully completed their assignments. Key words: Knowledge transfer, learning, expatriation, repatriation, expatriate failure. 2

3 Table of contents 1 INTRODUCTION PROBLEM DISCUSSION PURPOSE DISPOSITION REPATRIATION, KNOWLEDGE TRANSFER AND EXPATRIATE FAILURE INTERNATIONAL ASSIGNMENTS THE REPATRIATION KNOWLEDGE TRANSFER AND KNOWLEDGE EXPLOITATION BARRIERS TO THE TRANSFER OF EXPATRIATE KNOWLEDGE MANAGING KNOWLEDGE TRANSFERS EXPATRIATE FAILURE CONCEPTUAL FRAMEWORK FIGURE 1: FACTORS EFFECTING THE TRANSFER & EXPLOITATION OF EXPATRIATE KNOWLEDGE METHODOLOGY COLLECTION OF DATA SAMPLE SELECTION TABLE 1: RESPONSERATES FROM PARTICIPATING COMPANIES LIMITATIONS EMPIRICAL DATA THE INTERNATIONAL ASSIGNMENT THE REPATRIATION EXPECTATIONS CAREER OPPORTUNITIES KNOWLEDGE TRANSFER AND KNOWLEDGE EXPLOITATION KNOWLEDGE EXPLOITATION KNOWLEDGE TRANSFER ANALYSIS INTERNATIONAL ASSIGNMENTS THE REPATRIATION EXPECTATIONS CARRIER OPPORTUNITIES KNOWLEDGE TRANSFER AND KNOWLEDGE EXPLOITATION TYPE OF KNOWLEDGE FORMAL MECHANISMS INFORMAL MECHANISMS INDIVIDUAL FACTORS ORGANIZATIONAL CULTURE AND STRUCTURE COUNTRY SPECIFIC FACTORS CONCLUSIONS AND IMPLICATIONS MANAGERIAL IMPLICATIONS IMPLICATIONS FOR FURTHER RESEARCH REFERENCES APPENDIX 1: CONTACTED COMPANIES APPENDIX 2: QUESTIONNAIRE APPENDIX 3: LETTER TO HR MANAGERS APPENDIX 4: LETTER TO EXPATRIATES

4 1 Introduction Globalization has had many effects on the world of business. One of these effects is an increase in managers and other employees that are relocated on assignments abroad (Bolino 2007). An employee that is relocated abroad together with family is called an expatriate (Collings, Scullion & Morley 2007). An important issue of expatriate management is the repatriation of expatriates. This is a major but often neglected issue in multinational corporations (MNCs) as well as in expatriate research (Bonache & Brewster 2001 and Kamoche 1997). Most research concerning expatriates has focused on the adjustment upon repatriation but little attention has been given to issues such as how international assignments influence individual careers after completed assignments abroad and perhaps even more importantly; whether firms take advantage of repatriates international skills and knowledge (Lazarova & Cerdin 2007). In other words, the individual and organizational outcomes of repatriation have not been clearly investigated. The exploitation of skills and knowledge of returning expatriates would seem like an obvious top priority for an MNC since an organization can acquire a competitive advantage by attaining this knowledge. Expatriates are a key resource to new organizational knowledge since they are able to gain knowledge about new markets, cultures and ways of doing business and expatriates are also able to transfer knowledge based on experience to other parts of the MNC (Lazarova & Cerdin 2007) There is in other words a value in retaining repatriates since they are able to transfer local knowledge to the organizational headquarters upon their return (Bonache & Brewster 2001, Welch 2003 and Hocking 2004). 1.1 Problem discussion That repatriation often is an ignored issue in MNCs has consequences for expatriates as well as for the MNC as a whole. One of these consequences is high turnover rate and another is that expatriates feel that their company does not value the knowledge that they gained from their international assignment when they return home (Lazarova & Cerdin 2007). Studies on expatriation illustrates that expatriates have the ability to add value to MNCs by contributing with new international knowledge (Downs & Thomas 1999). Whether or not MNCs actually exploit this knowledge is something that have not yet been clearly investigated. We therefore want to investigate the following research question: How do expatriates experience that their 4

5 knowledge gained from international assignments is transferred and exploited by the MNC? However, international assignments do not always end well. Expatriate failure 1 is a widespread problem among MNCs. We will therefore also investigate if there is a difference in this knowledge exploitation of those expatriates that successfully completed their international assignment and those expatriates that failed to complete their assignment. This is interesting to investigate since it can indicate if MNCs tend to focus and learn from their successes and not from their failures. 1.2 Purpose The purpose of our study is to investigate how expatriates experience that their knowledge gained from international assignments is transferred and exploited by the MNC. We will then from our collected data analyse if there is a difference in this knowledge exploitation between those that successfully completed their international assignment and those who failed. Since not much research is done on the subject, this research could contribute to a deeper understanding of the outcomes of repatriation. The focus on knowledge is important since knowledge has been viewed as the most important element transferred in an MNC (Tsang 1999 and Bonache & Brewster 2001). Pressure from competition in the international market makes it more important than ever for firms to gain as much knowledge as they possibly can on how to manage the firm internationally to be able to stay competitive (Berthoin 2001). 1.3 Disposition The following section will give a brief overview on the literature written in the area of repatriation, knowledge transfers and expatriate failure. Section three will highlight the arguments for our choices and the limitations of our study. In section four our results will be presented and in section five we will analyze these results by using the presented theory. The thesis then ends with our conclusions, the managerial implications of our study and suggestions for further research. 1 Defined in this paper as an expatriate that had to be recalled to their home country or dismissed because of his/her inability to function effectively in a foreign country. 5

6 2 Repatriation, knowledge transfer and expatriate failure There is not much research done in the field of knowledge exploitation and knowledge transfer from expatriates. We have therefore in this literature review focused on the relatively few articles that have highlighted these issues. There is however research done on expatriates and repatriation as well as research done on knowledge transfer and learning. To be able to analyze our results we have also chosen articles from these two different research areas and with this material written our theory section. In order to investigate if there is a difference in knowledge exploitation between successful and the unsuccessful expatriates we will also discuss expatriate failure. This section then sums up with the presentation of a conceptual framework that will guide us through our empirical data collection. 2.1 International assignments Globalization has had many effects on international business. One of these effects is according to Bonache and Brewster an increase in managers and other employees that are sent on assignments abroad, so called expatriates (2001). Previous research in this area indicates that international assignments are the single most important feature in the development as a manager. Earlier research has also shown that CEOs with experience from international assignments are likely to be more effective in managing MNCs (Bolino 2007). International assignments do not always have positive outcomes. Negative implications are not unusual. A study by Tung highlights the importance of family and the family s situation to successful international performance. She finds that there is a need to include an assessment of the candidate's spouse to determine if the candidate is suitability for overseas work. The expatriates' spouses also need to be involved in training programs to prepare them for living in a different cultural environment (Tung 1982). 2.2 The repatriation A problem connected to international assignments is the repatriation of expatriates. The repatriation is the process of the expatriates return and adjustment to their home countries (Kamoche 1997, Lazarova & Cerdin 2007). This is an important but often neglected issue in MNCs today. In order to make use of the benefits of expatriates MNCs must ensure that the expatriates stay within the company when they return home. However, many expatriates leave their company when they return home. This is one of the major human recourse problems MNCs face today (Lazarova & Cerdin 2007). 6

7 The repatriation process of the expatriate is not without problems (Mezias & Scandura 2005). Bolino (2007) finds that former expatriates often are extremely frustrated and disappointed when they come home because many find that their employers do not value their international experience. Common repatriation problems that the expatriates experience are loss of status, loss of autonomy and loss of career direction. Once again research shows that expatriates feel that their international experience is not of much value to the company (Selmer, Ebrahimi, & Mingtao 2002). Many perceive their jobs at home as lacking in significance compared to their global assignments. Many expatriates also feel that they have been offered a limited amount of career opportunities and that they are rarely considered for promotion. Repatriates feel that they have been removed from the mainstream of corporate advancement (Lazarova & Cerdin 2007). Increased support for the expatriate while on the assignment, with for example information about workplace changes, can prevent expatriates from feeling out of sight out of mind, and this will ensure that the expatriate is better prepared upon repatriation (Selmer, Ebrahimi & Mingao 2002). Mezias and Scandura (2005) have also suggested that international mentoring and informal networks are important since this might improve expatriate adjustment and knowledge assimilation as well as knowledge transfer and repatriation success. Repatriate turnover is likely to be high in organizations that are unable to meet the expectations of the expatriates who have returned home (Bolino 2002). The basic way to facilitate the adjustment to the home country and to make sure that the repatriation process is made as easy as possible for the employee is to make sure that the employee has got realistic and accurate expectations. Clear information as well as the frequency and quality of information between the home country and the expatriate will facilitate this formation of accurate expectations and will help the employee to better know what to expect when they come back home (Lazarova & Cerdin 2007). 2.3 Knowledge transfer and knowledge exploitation The previous section illustrated that one of the problems with the repatriation process is that many expatriates feel that their company does not value the knowledge that they gained abroad. In spite of this, or maybe just because of this, recent studies on expatriate management have turned the attention to expatriates as vehicles of knowledge transfer. These studies shows that expatriates can function as a key resource to new knowledge since they are 7

8 able to gain knowledge about new markets, cultures and ways of doing business (Collings, Scullion & Morley 2007 and Lazarova & Cerdin 2007). When it comes to the transferability of knowledge two different types of knowledge is often highlighted in the literature, tacit and explicit knowledge. Tacit knowledge refers to the knowledge that is hard to codify and teach. This type of knowledge is achieved trough experience and observations and not trough formal learning. Explicit knowledge on the other hand refers to knowledge that more easily can be shared and formally transmitted trough for example blueprints and manuals. Both of these types of knowledge are important when it comes to the transfer of expatriate knowledge (Riusala & Suutari 2004 and Nonaka 1991) Barriers to the transfer of expatriate knowledge Transfer of expatriate knowledge within the MNC is not an easy task and a study done by Riusala and Suutari (2004) supports this fact. According to Riusala and Suutari there are at least four sets of factors, also referred to as stickiness factors that influence the difficulty of international knowledge transfer. The first factor concerns the type of knowledge that is transferred, and more specifically if the knowledge is tacit or explicit in its nature. Riusala and Suutari found in their study, done on 24 Finnish expatriates in Poland, that many expatriates perceived that the knowledge they transferred included tacit elements. As a result, their knowledge could not be transferred exclusively through written material. Oral communication and experience was also of importance. Tsang (1999) have also acknowledged the importance of turning tacit knowledge into explicit knowledge. In order to make the expatriate knowledge useful for the organization, the tacit knowledge that is placed in the mind of the individual must be transformed to explicit knowledge that can be shared in the whole MNC. The second factor that, according to Riusala and Suutari, influences the difficulty of knowledge transfer is the social context. This refers to features connected to a specific country. Studies indicates that the success of knowledge transfers is partly dependent on country specific features and Riusala and Suutari s study point out that the bureaucracy of the public authorities, legislation, taxation as well as the traditional use of bribes and gifts all affect the transfer of expatriate knowledge. 8

9 The third factor that Riusala and Suutari highlight is the organizational context. This factor concerns the effect the organizational culture has on the transfer of knowledge. According to the Finnish expatriates in the study the general organizational culture did however not hinder the transfer of expatriate knowledge, instead the interviewed expatriates highlighted that the organizational culture supported innovation and change. The fourth and final factor influencing the transfer of expatriate knowledge is, according to Riusala and Suutari, the relationship context. This factor concerns attitudinal (commitment to, identification with and trust in the parent company) as well as power/dependence relationships. When it comes to attitudinal relationships the authors study showed that the locals were committed to and felt trust within the parent company but that the majority of the expatriates saw that locals primarily identified themselves with the local company instead of the parent company. Concerning the power/dependence relationships the majority of the Finnish expatriates perceived that the subsidiaries were dependent on the parent and as a result they thought that the motivation and need for transferring knowledge would also would increase (Riusala & Suutari 2004). Similar to Riusala and Suutari, Berthoin (2001) has also highlighted the difficulties connected to knowledge transfers. However, Berthoin s research focuses on the exploitation of expatriate knowledge when the expatriates have returned home. Berthoin s study, done on two German companies, illustrates the difficulty in turning expatriates tacit knowledge into explicit knowledge. Berthoin acknowledge that a gap exists between what individuals learn and what the organization as a whole learns from international assignments. According to Berthoin (2001) there are three main barriers when it comes to turning expatriates knowledge into organizational knowledge. The first barrier is connected to the process of organizational learning. Berthoin s study indicates that difficulties when it comes to the distribution of knowledge are related to the absence of interest, initiatives and structures for the communication of knowledge. As a result the expatriates in the German companies had to develop their own way of distributing their newly gained knowledge. What is interesting to note is that several of the German expatriates highlighted that is was more effective to wait until their knowledge was asked for than it was to prove their knowledge when they wanted to communicate. Another problem that Berthoin found was that it was hard for the expatriates to get their co-workers at home to 9

10 understand their new knowledge. The interviewed expatriates felt that the absence of a shared understanding lead to difficulties in knowledge sharing. This problem has to do with the fact that organizational learning only is possible if the employees can achieve a shared understanding of the knowledge. However, when the local employees were able try the new knowledge in their own context they were also able convert the knowledge into their own tacit knowledge. As a result the new knowledge could be embedded in new organizational structures (Berthoin 2001). The second type of barrier Berthoin acknowledges is the cultural and structural barrier. Berthoin s study (2001) indicates that the factors needed to motivate and support learning processes were often missing in the organizational/national culture or held back by the firm s structure. A specific cultural feature that was highlighted as a barrier to knowledge transfer by the interviewed expatriates was the organizational politics within headquarters. The expatriates highlighted that the fear of loosing power was one of the reasons to why headquarters did not use the expatriates knowledge. Another reason was fear for sharing new ideas with other co-workers. The returning expatriates also mentioned that the structure of the company functioned as a barrier to organizational learning since the hierarchical structures within the firm made knowledge sharing difficult. In large MNCs with bureaucratic structures it becomes more difficult to identify the relevance of and develop a mutual understanding of the new knowledge (Berthoin 2001). The third barrier Berthoin (2001) highlights concern the way the expatriation process is managed. Studies done in the area of expatriation recommends that the process of expatriation is handled as a whole cycle. However, in reality the expatriation process is not always treated accordingly. As a result, the MNCs overall strategy, the HR policies and the expatriation process often stands in contrast to the organizational learning. Many expatriates in Berthoin s study reported that bad connections with managers during their time abroad negatively affected their ability to contribute to the organizational learning when returning. Furthermore, Berthoin s study also indicated that the position that the company assign for the returning expatriate also affect the use of knowledge within the organization. If an expatriate is assigned to a position connected to the region that she/he have been working with in the MNC, the company is more likely gain more from the expatriate s than they would if the expatriate was assigned another position. However, regardless of the position gained after returning home, active procedures with the purpose of identifying and sharing knowledge are 10

11 according to Berthoin crucial to facilitate the learning process within a MNC. Tacit knowledge is not easy to express and it is therefore of great importance for a MNC to acknowledge the importance of interaction and communication. As a result the expatriates tacit knowledge can be turned into explicit knowledge (Berthoin 2001). In the same vein as Berthoin, Nonaka (1991) argues that turning tacit knowledge into explicit knowledge can be done by creating what he calls a knowledge creating company. This type of company is built on internal competition, free information and strategic rotation. In this type of organization there is a conscious overlapping of activities, information and managerial responsibilities (Nonaka 1991). Hence, according to Nonaka (1991), a knowledge creating company needs to have a specific kind of organizational culture that encourages the above mentioned values Managing knowledge transfers To transfer expatriates knowledge to different parts of the MNC is, as the previous sections have shown, not an easy task. To manage these flows of knowledge is therefore of high importance if a company wants to gain something from the expatriates international expertise. A study done by Kamoche (1997) focuses on a number of implications concerning expatriates knowledge transfer. Kamoche argues that if a company wants to benefit from expatriates knowledge the organization needs to evaluate expatriates experiences, create information channels (such as manuals, news letters and databases) as well as linking the international mission with career management. However, Kamoche also argue that failure of taking advantage of expatriates knowledge occur because of inconsistencies at the strategic level. By not having a consistent strategic vision about the significance of the expatriates knowledge, the organization will neglect valuable support mechanisms to take care of the knowledge. Kamoche therefore suggest a model of effective learning that highlight strategic thrust as well as operational and social mechanisms on both the individual and the organizational level (Kamoche 1997). Downs and Thomas (1999) have also studied how an organization can benefit from expatriates knowledge. These two authors highlight that expatriates are a source of sustainable competitive advantages since they are able to transfer tacit knowledge from different international missions. However, in order to benefit and control this knowledge MNCs must build up an infrastructure with the purpose of supporting the adaptation and institutionalization of expatriates knowledge. Downs and Thomas (1999) therefore suggest 11

12 that a MNC needs to address the individual and organizational goals as well as develop flexible expatriate policies and incorporate the expatriate into long-term career planning as well as to reward international assignments. 2.4 Expatriate failure In addition to the problems connected to repatriation and knowledge transfers, expatriate failure is also a problematic issue of international assignments and expatriate management. Earlier research has for example demonstrated that a majority of expatriate managers fail their job assignments in developing countries (Maurer & Li 2006). The most cited and commonly used definition of expatriate failure is the definition by Tung. In Tung s research respondents were asked to indicate the percentage of expatriates that had to be recalled to their home country or dismissed because of their inability to function effectively in a foreign country (Tung 1981). In later research Tung defines failure as the inability of employees to perform effectively in a foreign country and hence, the need for the employee to be fired or recalled home (Tung 1987). There is however a lot of critique directed towards this definition. The definition is to simplistic in that sense that the definition implies that as long as the expatriate stays abroad for the contracted time, the assignment is to be looked upon as a success. (Lee 2007). Factors like cross-cultural adjustment and actual performance abroad could and maybe should also be incorporated in the definition of success and failure (Collings, Scullion & Morley 2007). In an interview study by Lee, respondents did not agree with the traditional definition of expatriate failure. Respondents found issues such as the inability to learn new things and inability to adapt as more appropriate measures of failure. Other issues that the respondents also though were important when defining failure was the inability to achieve performance standards, repatriation difficulties and the company s undervaluing of repatriates skills and knowledge (Lee 2007). Tung writes in a later published article that cross-cultural adjustment and actual performance are factors that also should be looked upon when deciding whether an expatriate assignment is a failure or a success (Tung 1998). A broader definition of failure combines the traditional definition, premature return from overseas assignments, together with a definition of failure as individuals who return from overseas assignments but then leave the firm within one year of repatriation (Black, Gregersen 1991). According to Harzing (1995), premature reentry might be a very inaccurate 12

13 way of measuring expatriate failure. Harzing (1995) means that one can easily argue that those expatriates who stay on their assignment but who fail to perform inadequately are (potentially) more damaging to the company than the ones who return prematurely. In many cases, what might be bad for the organization and looked upon as a failure might be a success for the individual. Expatriate turnover is very expensive for the organization and is therefore almost always looked upon as a failure. International experience will potentially give the employee an edge that will make them more marketable and therefore also more likely to leave. It makes no sense for the employee to stay faithful to the company if the employee is presented with better opportunities in other companies (Lazarova & Cerdin 2007). This means that the failure in the sense that the employee quits might be good for the employee since the employee leaves because better opportunities are presented elsewhere. We will, however, define failure from the organizations point of view. 13

14 2.5 Conceptual framework The literature review has highlighted several factors that seem to have an effect on the transfer and exploitation of expatriate knowledge. These factors are summarized in figure Figure 1: factors effecting the transfer & exploitation of expatriate knowledge The international assignment Family and the family s situation is a very important factor when it comes to the success of international performances (Tung 1982). As a result this could also, in the long run, have an effect on the transfer of expatriates knowledge The repatriation Expectations are of great importance in MNCs since repatriate turnover is likely to be high in organizations that are unable to meet the expectations of the expatriates who have returned home (Bolino 2002). The basic way to facilitate the adjustment to the home country is to 14

15 make sure that the employee has got realistic and accurate expectations home (Lazarova & Cerdin 2007). It is easier to transfer knowledge Berthoin says that the entire expatriation process has to be successful if the firm wants a successful knowledge transfer (2001). It is therefore likely that expatriates where expectations are met transfer knowledge in a successful way. Career opportunities concern the expatriate s job options upon return. For example, Lazarova & Cerdin (2007) as well as Berthoin (2001) have highlighted that a MNC will gain more knowledge if the expatriate is a given a position connected to the region he/she has specific knowledge about Knowledge transfer and exploitation Type of knowledge refers to the different types of knowledge an expatriate can gain. Studies done by Collings, Scullion & Morley (2007) as well as Lazarova & Cerdin (2007) showed that expatriates can function as a key resource to new knowledge since they are able to gain knowledge about technology, the unit itself as well as the market (including culture and ways of doing business). This knowledge can also be tacit or explicit in nature. Among others, Berthoin (2001), Riusala & Suutari (2004), Nonaka (1991) and Tsang (1999) acknowledged the importance of turning knowledge that can benefit the whole organization from tacit into explicit knowledge Formal mechanisms of knowledge exploitation concern instruments such as databases, manuals, newsletters, seminars and workshops but also if an organization has a specific strategy or vision about knowledge exploitation or not. Downs and Thomas (1999) and Kamoche (1997) have for example argued that MNCs must build up a supporting infrastructure in order to gain something from the expatriate s knowledge. For knowledge transfer to be successful Berthoin (2001) have highlighted that these types of mechanisms must exist throughout the whole expatriation period, not only when the expatriate returns home. Informal mechanisms of knowledge exploitation have to do with relationships between coworker as well as other informal networks. Riusala & Suutari (2004) and Berthoin (2001) all pointed out the importance of creating channels of communication within the MNC. In the 15

16 same vein have Mezias and Scandura (2005) also proposed that informal mechanisms such as international mentoring can improve knowledge transfers within the MNC. Individual factors refer to factors connected to the communication and interpretation of the knowledge. For example, Berthoin s study indicated that it is hard for expatriates to get their co-workers at home to understand their new knowledge due to difficulties in interpretation and communication. This factor also includes expatriates own perception and interpretation of their knowledge. Organizational culture concern traditions, power relations and attitudes connected to the organization. Riusala & Suutari (2004), Nonaka (1991), Kamoche (1997) and Berthoin (2001) all highlight the effect that the organizational culture can have on the transfer of knowledge. If the organizational culture is open for both communication and change it seems like it the exploitation of expatriate knowledge is easier then in firms with a closed and bureaucratic organizational culture. Organizational structure refers to vertical and horizontal structures within the company. For example, the returning expatriates in Berthoin s study expressed that the structure of the company functioned as an obstacle to organizational learning since the firm s hierarchical structure made knowledge sharing difficult. Country specific factors refer to features connected to one specific country. Riusala and Suutari s (2004) study pointed out that the bureaucracy of the public authorities, legislation and taxation as well as the traditional use of bribes and gifts all affects the transfer of expatriate knowledge Expatriate failure As earlier mentioned the possible difference in the knowledge exploitation of those expatriates that successfully completed their international assignment and those that failed is also going to be investigated. In our empirical study, we will use the definition of Tung. Even though there is a lot of critique directed towards this definition, it still is the most quoted definition. The definition of failure will therefore be that the expatriate failed if the individual had to be recalled to their home country or dismissed because of their inability to function effectively in a foreign country. Since we only will be able to access the ones that stayed within the company, we will look at those who had to be recalled early. We will also add those who requested and received a transfer back home prematurely (Naumann 1992) as expatriate 16

17 failures. Expatriate success will be defined as an assignment abroad were the expatriate completed the assignment according to contract or when the expatriate was recalled early because the assignment was completed ahead of schedule. 17

18 3 Methodology In this section we will present the design of our study and how we have collected our data. We will also argue for the choices that we have made and the consequences of these. The limitations of our study will also be presented. 3.1 Collection of data Since many studies have indicated that expatriates often are frustrated about the knowledge exploitation within their company we choose to investigate knowledge transfer and exploitation from the expatriates point of view. An alternative would be to investigate the same issue but from a company s point of view, by collecting data from, for example, HRmanagers in each company. We chose the expatriates point of view not only because of the indications from earlier studies but also because this viewpoint enabled us to reach the individuals that actually had real life experience of missions abroad. HR-managers would be able to give us a good picture of how expatriation and repatriation policy s functioned in theory but by collecting data from the expatriates we were able to get an idea of how these policies worked in reality. By choosing the expatriates viewpoint we were also able to get a more detailed picture of the factors that affected knowledge transfer and exploitation, while a company perspective potentially would have given us a better overview. A focus on the expatriates themselves also enabled us to get several different statements from people within the same company. This would not have been possible to the same extent if we had chosen a company perspective. The choice of investigating from the expatriate s point of view left us with two main options for data collection, interviews or questionnaires. We chose the latter since we wanted to get information from a large sample of expatriates. As a result we were also able to draw more general conclusions based on the results from our study. We decided to design a questionnaire on the website SurveyMonkey.com. We were recommended to use this website since this site makes it is very easy to collect and analyse the results from the respondents. The questionnaire (appendix 2) was divided into four different parts. Part one (general information) was designed to get a general picture of the 18

19 expatriates. This part included general questions about for example age, sex and position. Part two (the international assignment) included more specific questions about the international assignment such as how many years the expatriate had been assigned for and if there were any financial bonuses attached to the mission. Part three (the repatriation) focused on the repatriation process and included questions about the return, the expatriates expectations and career opportunities. This part was also designed in a way that enabled us to make a distinction between successful and unsuccessful assignments. The final part (knowledge transfer and exploitation) was designed to in investigate knowledge transfer and knowledge exploitation in more depth. This part included general questions about knowledge but the respondents were also asked to rank different statements about knowledge transfer and knowledge exploitation. When the respondents were asked to rank a statement a scale from one to seven was used. We choose this scale since it is the most commonly used scale when designing surveys. After some preliminary testing of the questionnaire two questions in the survey were slightly changed in order to avert misunderstanding. These adjustments did, however, not change the contents of the questions. 3.2 Sample selection Since our study concerns knowledge exploitation of expatriates, we choose to focus our selection of companies to large international firms. The sample selection of companies was based on the OMX Stockholm 30 Index from The OMX Stockholm 30 (OMXS30) consists of the 30 most traded stocks on the Swedish Stock Exchange (Den Nordiska Börsen 2008). We chose OMX Stockholm 30 because we wanted to investigate how companies traded in SEK deal with knowledge exploitation of expatriates. The companies quoted on the exchange also have a high degree of transparency when it comes to accounting as well as the willingness to answer questions from people outside of the company, since those people might be future investors. Companies traded on the Swedish Stock Exchange are divided into three segments, Large Cap, Mid Cap and Small Cap. Large Cap companies have a market cap or market value exceeding 1 billion euro (Den Nordiska Börsen 2008). All of the companies on OMX Stockholm 30 are Large Cap companies. We believe that the companies listed on OMXS30 are representative for MNCs in the Nordic countries and are more likely than smaller 19

20 companies (companies with market values below 1 billon euro) to have the possibility to send expatriates to subsidiaries. There is however a possibility that these big companies differ in their handling of expatriate repatriation from how smaller companies handle expatriate repatriation.. Companies on the Stockholm Stock Exchange are also divided into ten different industries according to the international standard GICS (Global Industry Classification Standard) developed by Standard & Poor s and Morgan Stanley (Den nordiska börsen 2008). However, we did not select a specific industry that we wanted to contact for our sample; instead we contacted all the companies on the OMX Stockholm 30, which meant that we contacted 29 companies (see appendix 1) 2. We started out with our sample of 29 companies that are the companies behind the 30 most traded stocks on the OMX stock exchange in Stockholm. To collect data from this sample we sent out s to the HR managers, IR manages or communication managers in these companies. The purpose of this mail was to get hold of names and addresses of expatriates that had returned home from their assignment abroad but were still working within the company. Ericsson offered to send the survey to 10 expatriates. Scania sent it to 18 employees. Only 13 of the companies that we contacted answered, two agreed to participate. Since we only received 15 survey answers by expatriates, we started calling all the companies that didn t respond to our first or our reminder (the reminder mail was sent out ten days after the first ). The result was that Teliasonera, Sandvik, Electrolux, SSAB, Volvo also agreed to participate in our survey. Teliasonera sent the letter to six expatriates and Sandvik to nine. From Volvo, SSAB and Electrolux we unfortunately only got one respondent from each firm. Since we still did not have enough respondents for our study, a friend was contacted on Ericsson. This friend offered to help us and as a result 97 expatriates from Ericsson were contacted. Since we were running out of time to get the answers that we needed, we decided to contact all the other large cap companies on the OMX Nordic exchange (see appendix 1). Five of these companies only had operations in one country and as a result we sent out to 91 additional companies. The outcome of this was that four companies agreed to participate in 2 Ericsson has two different stocks, A and B, and that is why it is only 29 companies in the Stockholm

21 our study. Kesko Food LTD sent the letter to four expatriates, Konecranes Oyj to six, Danske Bank to 21 and Swedbank Group to four expatriates Table 1: Responserates from participating companies 3.3 Limitations Only a few of the 120 companies that we contacted agreed to participate in our study. There is a risk that only the ones that agreed to participate were the ones that focus on and prioritize their expatriates. This might lead to answers from expatriates that are more positive than the average expatriate would give. This might in turn have affected the results that we have found. We chose to contact all Large Cap companies on the Nordic OMX exchange and as a result we did not select a specific industry that we wanted to contact for our sample. A limitation of our sample selection could therefore be that we are not looking for potential industry-related differences. Of the expatriates that agreed to participate in our study, 50,55% were employed by Ericsson. That expatriates from Ericsson represented such a large amount of the total respondents could be seen as a limitation. However, our study did not have a company focus. The aim with the study was to analyze knowledge transfers and knowledge exploitation from the expatriates point of view regardless of employing company. We chose the employees point of view. This choice represents a limitation since we are not able to tell something about the repatriation 21

22 policies that actually exist, or does not exist, within the participating companies. We are only able to analyse how the expatriates experience the knowledge transfers and exploitation. We chose to only contact those expatriates that are still employed within the company, not the expatriates that failed with their assignment and left the company afterwards. We might have reached different results if we surveyed the ex-employees. The might have been less content with the way they were treated when they came back than the ones that stayed within the company. We have in this study highlighted factors that can effect knowledge exploitation within MNCs. Many different external factors could affect how an expatriate believes that his/her knowledge is exploited by the MNC. Age, sex, amount of years within the company, the amount of missions abroad, the expatriates position within the company, location of the assignment, financial bonuses and the success/failure of the mission are all examples of factors that potentially could influence the exploitation of knowledge within a MNC. You could for example assume that an expatriate that have completed many missions abroad would be more likely to transfer knowledge than an expatriate that is doing his/her first assignment (the opposite is of course also possible). Due to the scope of this study we only considered one of these factors, namely if there is any difference in the knowledge exploitation between expatriates that successfully completed their assignment and those who failed. A certain definition of expatriation failure has been chosen in this study and this will influence the selection of people that we believe fit into our group of unsuccessful expatriates. Implications for further research would be to apply either a broader or narrower definition of expatriate failure to see if the results that we reach in our investigation still hold. We will look at the expatriates who had to be recalled to their home country or dismissed because of their inability to function effectively in a foreign country and the ones who requested and received a transfer back home prematurely. As stated before, we will not look upon early reentry as a failure if the expatriate was recalled early because the assignment was completed ahead of schedule. Another limitation could be that there might be a bias towards the successful or the unsuccessful answers in our survey. For example, expatriates that succeeded with their expatriate assignment might be more willing to talk about their time abroad than the ones that failed are. 22

23 4 Empirical data In this section the findings from our questionnaire are presented. These results are based on answers from 93 expatriates in 11 different companies. 4.1 The international assignment 85,6% of the respondents were male. Most of the expatriates in our study were between 31 and 40 years old. 70,33% of the respondents were Swedish, 13% were Danish, 6,6% were Finnish and the remaining were Dutch, Lithuanian, Estonian, Cameroonian, Italian, French and American. The majority of the respondents were directors or managers. The majority of the respondents, 71,1%, were located in a Swedish unit or corporate headquarters. Everyone that completed the questionnaire has returned home. The majority of the respondents, 52,3%, returned in The expatriates have all been located in very different parts of the world. To mention some they have been located in countries like China, United Arab Emirates, Brazil, Algeria, Saudi Arabia, Egypt, France, India, Italy, Japan, the UK and the US. The majority (44,3%) has only done one international assignment in their career, but some have done more than seven. 55,7% were abroad for two to three years. 75,9% of the expatriated had their family with them abroad. 34,8% of these families had problems to accommodate to local conditions. When comparing the successful expatriates with the unsuccessful, 29,2% of the successful expatriates said that their families had problems to accommodate to local conditions. The number for the failed expatriates was almost twice that at 53,3%. Of the 63 expatriates that participated in our study 28,7% returned home earlier than planned from their assignment. 52% of these expatriates requested and received a transfer back prematurely due to personal reasons and 32% were requested by their company to return early. The remaining 16% requested and received a transfer back prematurely due to work related reasons or completed the assignment earlier than the contracted time. 4.2 The repatriation Expectations The expatriated were asked to evaluate: Did your repatriation process meet your expectations? The following answers were collected: 23

24 When only including the expatriates that failed their mission abroad the following answers was collected: Career opportunities When asked about what position the expatriates returned to after their last assignment abroad, 51,7% answered that they returned to a position with higher status and 36,8% answered that they returned to the same or a similar position. The remaining 11,5% returned to a position with lower status than the one they had when they left for their international assignment. The expatriates were asked to evaluate the statement: After your time abroad, your opportunity to career advancement has: The following answers were collected: When only including the expatriates that failed their mission abroad the following answers was collected: 4.3 Knowledge transfer and knowledge exploitation 64,4% of the respondents expressed that they transferred knowledge to co-workers when they came back from their international assignment. 96,5% expressed that there were no formal mechanisms of knowledge transfer related to the return of expatriates in the company that they are employed in. When asked to describe the mechanisms applied in their company to transfer the competence accumulated during their mission abroad, the respondents gave examples such as holding seminars and meetings with HR. One also answered that: It was 24

25 more the type of job I was offered than any specific mechanism. Another said that it was part of the new job position. When asked about what type of knowledge expatriates felt that they mostly have gained from their assignment abroad, 67% answered that they mostly gained specific knowledge about the market. 29,5% answered that they mostly gained specific knowledge about the unit they were working in and 3,4% answered that they mostly gained specific knowledge about technology and products. 54,5% of the expatriates that failed their assignment abroad said that they transferred knowledge to co-workers when they came back from their international assignment. All these expatriates expressed that there were no formal mechanisms of knowledge transfer related to the return of expatriates in their company. 59,1% of the failed expatriates answered that the knowledge they gained abroad was knowledge about the market, 36,4% answered that they received knowledge about the unit and 4,5% answered that they had gained knowledge about technology. 25

26 4.3.1 Knowledge exploitation The respondents were asked to evaluate the following eight statements about knowledge exploitation on a scale from one to seven where one represented not at all and seven very much. The following answers were collected: Most of the respondents did not agree with the statement that the company evaluated their experience when they returned home. On the same scale respondents were asked to evaluate if they had been given the opportunity to hold seminars and/or workshops concerning their assignment abroad. Most disagreed. When asked to evaluate the statement I have been assigned to a position within the company that takes advantage of my specific international knowledge, most agreed. Most disagreed to the statement that they have been encouraged and inspired by their company to communicate their international knowledge their everyday work. The expatriates believed that their co-workers had been able to take advantage of and use the knowledge that the expatriate gained abroad in their own context. 77,8% of the respondents did not write a formal report on their mission abroad. Most expatriates were aware of the outcome of their mission abroad and did not believe that their colleagues were aware of the outcome of their mission abroad. 26

27 When only including the expatriates that failed their mission abroad the following answers were collected: Most failed expatriates, 30%, did not agree to the statement the company evaluated my experience abroad when I returned home. 73,7% of the failed expatriates had not at all been given the opportunity to hold seminar or workshops. 84,2% of the failed expatriates also answered not at all when asked if they had been writing a formal report about their mission. Most expatriates did not feel that they had been encouraged by their company to share their knowledge and majority of the expatriates did not feel that their co-workers had been able to use their knowledge in their own context. 40% of the failed expatriates answered very much to the statement I am aware of the outcome of my mission abroad. This statement also had the highest average rating of all the statements, 5,00. 27

28 4.3.2 Knowledge transfer The respondents were also asked to evaluate seven different statements about knowledge transfers on a scale from one to seven where one is strongly disagree and seven is strongly agrees. The following answers were collected: Most of the respondents did not experience knowledge transfer as difficult because their coworkers interpreted the knowledge differently than they had. When asked to evaluate if knowledge transfer was difficult because the organizational culture created barriers for knowledge transfer, most disagreed. When asked to evaluate the statement transfer of knowledge was difficult because the organizational structure of the company created barriers for knowledge transfer, most disagreed. The majority of the respondents did not believe that the transfer of knowledge was difficult because of the differences between the home and the host country created barriers for knowledge transfer. Most of the expatriates that participated in the survey disagreed with the statement that the transfer of knowledge was difficult because 28

29 the whole expatriation process did not work well in the company. The expatriates believed that the transfer of knowledge was difficult because there were no formal procedures in their company. The average rating was 5,04 and represented the highest average rating of all the eight statements. Most of the respondents disagreed to the statement that the transfer of knowledge was difficult because the expatriate himself had problems to communicate their knowledge that they gained on their international assignment. When only including failed expatriates the following answers were collected: The failed expatriates expressed that one major barrier to knowledge transfer was that the expatriation process in general did not function well. 36,8% strongly agreed to this statement. 31,6% of the failed expatriates strongly agreed to the statement that knowledge transfer was difficult because of the absence of formal mechanisms. The average score was 5,41 which 29

30 represented the highest average rating of all the statements. The statement that most failed expatriates strongly disagreed to was transfer of knowledge was difficult because I had difficulties communicating my knowledge. 61,9% strongly disagreed to this statement. 30

31 5 Analysis In this chapter the results presented in the previous section will be analyzed using the theory presented in section two. This section deals with the analysis of international assignments, repatriation as well as knowledge transfers and exploitation. The end of each subsection will deal with the results from the expatriates that failed their assignment abroad. Only the deviations from the previously presented results will be investigated, i.e. results that are the same or almost the same for failed and successful expatriates will not be repeated. 5.1 International assignments Bolino (2007) found evidence suggesting that CEOs with experience from international assignments are more likely to be more effective at managing MNCs. We are not able to tell if managers or CEOs are more effective, but the companies seem to believe that they are. Our study shows that 51,7% of the expatriates returned to a position with higher status after their international assignment. Only 11,5% returned to a position with lower status. One of the studies done by Tung (1982) highlighted the importance of family and the family s situation to successful performance. This study suggested that it was necessary to include the candidate's spouse in the assessment when the company tries to determine the candidate's suitability for expatriate assignments. We are not able to say if family problems affect the performance of the expatriate since we have not been able to measure this, but we are however able to say something about the occurrence of family-related problems. In our study, 75,9% brought their families with them on their international mission. Out of these 75,9%, 34,8% expressed that their family had problems to accommodate to local conditions. The proportion of families of failed expatriates that had problems to accommodate to local conditions was almost twice as large as the proportion of families of the successful expatriates (53,3% for failed expatriates compared to the successful 29,2%). These numbers might indicate that the family situation is an important factor that influences if the expatriate mission is successful or not. This might in turn also influence the knowledge transfer since evidence presented later in this analysis will point out that the knowledge of failed expatriates to a lesser extent is transferred and exploited by MNCs. 31

32 5.2 The repatriation It is of high importance that the repatriation process within the MNC functions since this process effects the expatriate s decision to stay in the company. Earlier research has highlighted two factors as very important in the repatriation process, namely the expatriates expectations and their opportunities to career advancement. This following analysis is going to show if these two factors also had an effect on the knowledge exploitation within the investigated MNCs Expectations According to Bolino (2007), repatriate turnover is likely to be high in organizations that are unable to meet the expectations of the expatriates who have returned home. One way to make sure that the repatriation process is made as easy as possible for the employee is to make sure that the employee has got realistic and accurate expectations (Lazarova & Cerdin 2007). Expatriates in our survey were asked if their repatriation process met their expectations. They graded their answers on a scale from one to seven, where one represented not at all and seven very much. The average rating of the answers was This would represent a yes answer to the question, but there still is a considerable amount of answers that are more directed towards a not at all answer. It seems that managers do have somewhat realistic expectations, but clearly work needs to be done in this area. Of the expatriates that answered not at all on the statement did your repatriation process meet your expectations 66,7% felt that they had transferred knowledge to their co-workers. In contrast, of the expatriates that had answered that their expatriated process met their expectations very much 76,9% felt that they had transferred knowledge to their colleagues. The expatriates that expressed that their expatriation had met their expectations also had a higher average on almost all the statements about knowledge exploitation. These results suggest that expatriates that feel that their expatriation process met their expectations actually are able to transfer more knowledge but also that their knowledge in general also is more exploited, compared to the expatriates that did not think that their repatriation met their expectations at all Carrier opportunities Bolino (2007) found evidence suggesting that former expatriates often are extremely frustrated and disappointed when they come home because many find that their employers do 32

33 not value their international experience. The results from our survey suggest that this is not the case. 76,1% received a financial bonus that was connected to the international assignment. When asked to evaluate the statement I have been assigned to a position within the company that takes advantage of my specific international knowledge on a scale from one to seven where one represented not at all and seven very much, 47,1% answered with a six or a seven. This suggests that expatriates do feel that the company values their international experience. There are however several possible reasons to why we reach different results than previous research have done. We have only been able to reach those expatriates that stayed within the company after their repatriation. Maybe the reason that they stayed with the company was because they felt that the company took advantage of and valued their international experience. Maybe those that did not think this was the case left the company. When expatriates were asked to describe the mechanisms applied by their company to transfer the competences accumulated during their mission abroad, most said that this was part of their new position that they were offered when they came back. One said: not aware of formal ways, but in principle try to place people in a position where they can contribute with gained experience. Others gave similar answers such as; used in new position, part of the new job position and it was more the type of job I was offered than any specific mechanism. This suggests that it is up to the employee to make sure that the appropriate knowledge is exploited and transferred. Common repatriation problems that the expatriate generally experiences are loss of status, loss of autonomy and loss of career direction (Selmer, Ebrahimi, & Mingtao 2002). According to Lazarova and Cerdin (2007) many expatriates feel that they have been offered a limited amount of career options and are rarely considered for promotion. Our study suggests the opposite. Expatriates were asked to evaluate the statement After your time abroad, your opportunity to career advancement has: on a scale from one to seven where one represented decreased, four the same and seven increased. 52,3% answered with a six or a seven, indicating that a majority of the expatriates believed that they were now in a better position for career advancements and promotions than they were before they left on their international assignments. Once again it is important to mention that we only were able to contact those expatriates that stayed with the company. It is possible that those that did not feel that they were in position where they were considered for promotions after they returned left the company and looked for other employment elsewhere. 33

34 75,6% of the expatriates that returned to a position with higher status felt that they had transferred knowledge to their coworkers. Only 20% of the expatriates that returned to a position with lower status felt that they had transferred knowledge to their colleagues. 77,8% of the expatriates that expressed that they had been given a position that takes advantage of their international experience felt that they had transferred some knowledge. Of the expatriates that did not feel they had been assigned for such a position upon return the same figure was 20%. These results indicate that career opportunities actually have an effect on the exploitation of knowledge in the investigated MNCs. There are some differences concerning career opportunities between those that succeeded and those expatriates that failed their mission. The expatriates were asked to evaluate their career opportunities after their international assignments on a scale from one to seven. The average rating among expatriates that failed was 5,18. The average rating among the successful expatriates was 5,51. This suggests that successful expatriates thought that their opportunity to career advancement had increased slightly more than the failed expatriates thought. Most of the failed expatriates, 40,9%, returned to a position with a higher status after their assignment abroad. 31,8% returned to a similar position while 13,6% returned to a position with lower status. In contrast 54,1% of the successful expatriates returned to positions with higher status while only 11,5% returned to a position with lower status. This shows that successful expatriates were given better positions upon return than failed expatriates did. 5.3 Knowledge transfer and knowledge exploitation Studies done on knowledge transfers in general and knowledge transfer of expatriate s knowledge in particular have highlighted many different factors that can affect the transfer and exploitation of knowledge within MNCs. The literature review mentioned many different factors but is sum five main factors were highlighted, namely type of knowledge, formal mechanisms, informal mechanism, organizational culture and structure as well as country specific factors Type of knowledge Colings, Scullion and Morley s (2007) as well as Lazarova and Cerdin s (2007) studies have illustrated that expatriates are a key recourse when it comes to gain more knowledge. Our study showed that the expatriates mostly gained knowledge about the market during their 34

35 assignment abroad. 67% gained knowledge about the market, 29,5% about the specific unit they worked in and only 3,4% about technology. 61% of the expatriates that mostly gained knowledge about the market felt that they had transferred knowledge to their colleagues while the same figure was 68% for the expatriates that mostly received knowledge about the unit. All the expatriates that mostly gained knowledge about technology felt that they hade transferred knowledge to their co-workers. These results suggest that knowledge about technology is the easiest type of knowledge to transfer. However, only three of the 93 respondent had actually answered that they had transferred knowledge about technology. As a result, the findings from this question are inconclusive and more research needs to be done in order to tell what type of knowledge is most easily transferred to co-workers. 64,4% of all the respondents in our study felt that they had transferred knowledge to their coworkers. Only 54,5% of the failed expatriates felt that they had transferred any knowledge to their co-workers while 67,2% in the group of successful expatriates felt that they had transferred knowledge to their colleagues. These results suggest that an early return from a mission abroad actually can have an affect of the transfer of knowledge within MNCs Formal mechanisms Berthoin (2001) presented three main barriers to the transfer of expatriate knowledge in his research. The first barrier was linked to the process of organizational learning and Berthoin s study showed that the absence of formal mechanism was one of the reasons to why the transfer of expatriate knowledge was difficult. This problem was also highlighted by Kamoche (1997) and Downs & Thomas (1999) who both acknowledged the importance of formal mechanisms in order to exploit the expatriate s knowledge. Our study demonstrated, in accordance with Berthoin s study, that formal mechanisms for knowledge transfer were missing in MNCs. 96,5% of the expatriates in our study answered that their company did not have any formal mechanisms for knowledge transfer. Only three people out of 93 expressed that their company had formal mechanisms for knowledge transfer. This result was also supported by the fact that 77,8% of the expatriates answered not at all to the statement I wrote a formal report on my mission abroad. 31,8% of the respondents also answered not at all on the statement the company evaluated my experience abroad when I returned home. In addition, when asked about the barriers connected to knowledge transfer the most common answer was that the transfer of knowledge was difficult because there were no formal procedures. All these results give support for what Lazarova and Cerdin (2007) Bonache 35

36 and Brewster (2001), as well as Bolino (2007) all acknowledged. These researchers have argued that the exploitation of knowledge is an ignored issue within MNCs. There could be many reasons to why MNCs do not apply any formal mechanisms to exploit expatriates knowledge. The company could for example lack time and money or they might not have realised the benefits of exploiting expatriate knowledge. What is interesting to note is that many expatriates answered none that I know of when they were asked to describe the formal mechanisms used in the company to exploit knowledge. These answers could simply mean that there are no such formal mechanisms in the company but it could also mean that the companies are not very good at informing their employees about what support actually exists within the organization. If a MNC have realised the importance and also have the recourses to develop formal mechanisms an additional problem could however arise. It could become difficult to actually form and develop these mechanisms. Nonaka (1991), Riusala and Suutari (2004) and Tsang (1999) have highlighted the difficulties of turning tacit knowledge into explicit knowledge that the whole organization can learn from. Hence, even if there are formal mechanisms of knowledge transfer within the company it can be hard for expatriates to transfer this knowledge since the knowledge can be very hard to codify. Berthoin s study (2001) highlighted that the transfer of knowledge could be difficult if the expatriation process in general did not work well. For example the expatriates in Berthoin s study expressed that bad relations with managers during their assignment abroad negatively affected their ability to contribute to the organizational learning when returning. Our study showed somewhat mixed and inconclusive results concerning this issue. When asked to rank the statement transfer of knowledge was difficult because the whole expatriation process did not work well in my company the respondents average score was 3,31. As a result, our study does not give support nor reject this argument. However, when only analyzing the failed expatriates the results were somewhat different. 36,8% of the expatriates that failed their assignment abroad strongly agreed to the statement transfer of knowledge was difficult because the whole expatriation process did not work well in my company. Only 5,1% in the sample of successful expatriates strongly agreed to this statement. The average score on this statement was 4,44 for the failures and 2,91 for the successful expatriates. These results suggest that it is not only important to develop formal mechanisms of knowledge transfer in order to exploit knowledge, but that it is also of importance to incorporate these in a wider 36

37 expatriate program that supports the expatriate during the whole expatriation and repatriation period. What is important to acknowledge is that our sample consists of large MNCs and as a result formal mechanism could exist in some units of the MNC but not in other parts. For example one expatriate expressed that there were no formal mechanisms of knowledge transfer but added in my unit at least Informal mechanisms Riusala and Suutari (2004), Mezias and Scandura (2005) as well as Berthoin (2001) have all acknowledged the importance of relationships, informal communication and mentorship for transferring and exploiting knowledge within the MNC. The results in our study support this argument. Even if 96,5% of the respondents answered that there were no formal mechanisms of knowledge transfer 64,4% of the respondents in our study felt that they had transferred knowledge to their co-workers. These results suggest that despite the fact that many MNCs do not seem to have formal mechanisms for knowledge transfer expatriates do transfer knowledge to their co-workers. According to our study the transfer of knowledge seems to occur through informal mechanisms instead of formal mechanisms. For example, one expatriate expressed that own initiative was the main mechanism for knowledge transfer, another respondent highlighted personal networks as a mechanism of transferring knowledge while a third expatriate answered random, co-workers are not too interested when asked to describe the mechanisms of accumulating expatriate knowledge Individual factors Berthoin s research also highlighted the problems connected to the individuals such as interpretation and communication expatriate knowledge. Berthoin (2001) found in his research that it was hard for the expatriates to get their co-workers at home to understand their new knowledge since they interpreted the knowledge differently. However our study showed that 22,4% of the expatriates strongly disagreed to the statement transfer of knowledge was difficult because my co-workers at home interpreted the knowledge differently. Important to note is that 24,7% answered N/A to this statement. Furthermore, 41,7% of the respondents strongly disagreed to the statement transfer of knowledge was difficult because I had difficulties communicating my knowledge. These results suggest that interpretation and communication have not been a major problem for the expatriates in our study. The reason for 37

38 this could simply be that these expatriates and their co-workers have been very good at communicating and interpreting the knowledge but it could also have to do with the nature of the knowledge. Tacit knowledge is as earlier mentioned knowledge that is hard to codify and teach while explicit knowledge, on the other hand, is more easily shared and formally communicated. A possible explanation to these results could then be that the expatriates in our study mainly have transferred explicit knowledge. These answers could also be a result of the fact that our study concern returning expatriates and not expatriates abroad. Problems of interpretation and communication could potentially be a larger for an expatriate abroad since he/she is surrounded by a different environment and culture than the ones that are going to receive the information are. They are situated in different contexts. Berthoin s research (2001) also showed that when the expatriates could use the new knowledge in their own context they were also able to convert the knowledge to something that could be embedded in new organizational structures. Our study illustrates a mixed picture concerning this issue. When asked to evaluate the question my co-workers have been able to take advantage of and use the knowledge that I gained abroad in their own context the average score was 4,14. 10,8% answered not at all while 9,6% answered very much. This result indicates that in some cases the knowledge of the expatriates became embedded in the organizational culture because the employees had been able to use and take advantage of the expatriates knowledge in their own context. The most interesting difference between the failed and the successful expatriates when it comes to individual factors is the result on the statement I am aware of the outcome of my mission abroad. Among the expatriates that failed their assignments 15% were not at all aware of the outcome of their mission abroad while 0% of the successful expatriates answered not at all to this statement. When asked to rank the statement transfer of knowledge was difficult because I had difficulties communicating my knowledge 61,9% of the failed expatriates answered that they strongly disagreed to these statement. Only 35,6% of the successful expatriates strongly disagreed to the same statement. These results are puzzling since it would seem like it should be hard to communicate something that you are unaware of. However this does not seem to be the case. 15% of the failed expatriates said that they are unaware of the outcome of their mission but 0% answer that the transfer of knowledge was difficult because they had difficulties in communicating their knowledge. 38

39 5.3.5 Organizational culture and structure Riusala and Suutari (2004), Nonaka (1991) and Berthoin (2001) all acknowledged the effect that organizational culture can have on the transfer of knowledge. Berthoin s study indicated that the factors needed to motivate and support the learning processes were often missing in the organizational culture and as a result organisational culture functioned as a barrier. Riusala and Suutari s study demonstrated, on the other hand, that organizational culture did not have a negative effect on the transfer of knowledge. Our study showed, in accordance with Riusala and Suutari s research, that organizational culture did not function as a barrier to knowledge transfer, according to the expatriates. 19% of the respondents strongly disagreed to the statement that the transfer of knowledge was difficult because the organizational culture created barriers for knowledge transfer and 48,7% of the respondent disagreed to this statement. When asked to evaluate the statement I have been encouraged and inspired by my company to share and communicate my international knowledge in my everyday work 18,8% of the respondents answered not at all while only 3,5% answered very much. This indicates that most expatriates believe that the company does not inspire them to share knowledge gained on their international assignment. These two findings suggest that even if the organizational culture does not function as a barrier within the investigated MNCs, the organizational culture within the firms does not inspire them to transfer knowledge. This is of course troublesome since numerous researchers have found evidence suggesting that the exploitation of knowledge within MNCs can help contribute to new knowledge and organizational learning. The returning expatriates in Berthoin s study (2001) also expressed that the organizational structure of the company functioned as a barrier to knowledge transfer. Our results do not give much support for this argument. When asked to evaluate the statement transfer of knowledge was difficult because the structure of the company created barriers for knowledge transfer 19% strongly disagreed. The average rating was 3,10. This result suggests that, according to our respondents, organizational structure does not function as a main barrier to knowledge transfer and exploitation Country specific factors Riusala and Suutari s (2004) study pointed out that the public authorities, legislation, taxation as well as the traditional use of bribes and gifts all affected the transfer of expatriate knowledge. Our study gives little support for this argument. When asked to evaluate the 39

40 statement transfer of knowledge was difficult because of the differences between the home and the host country created barriers for knowledge transfer 24,1% of the respondents answered not at all. The average score to this question was 2,76 which indicates that the respondents generally did not consider differences between home and host country as a major barrier. The fact that the expatriates in our study had been assigned to missions in many different countries and not only Nordic countries gives additional support for this argument. 40

41 6 Conclusions and implications The first conclusion that can be drawn from our research is that expatriate knowledge in the studied MNCs is not exploited trough formal mechanisms. The majority of the expatriates in our study were not aware of any formal mechanisms of knowledge transfer within their company. According to the expatriates the absence of formal mechanism was also considered to be the greatest barrier to the transfer of expatriate knowledge. These findings also support the argument that repatriation and knowledge exploitation is an ignored issue in MNCs today. However, our study also showed that a majority of the respondents felt that they had been assigned to a position within the company that takes advantage of their specific international knowledge. This result suggests that the MNCs in our study, to some extent, actually exploit the expatriates knowledge formally by assigning them to specific positions. In general, informal mechanisms of knowledge transfer such as networks and own initiatives seem to be a more common way of transferring knowledge in the investigated MNCs. The second conclusion that can be drawn from our study is that our research did not give much support for some of the theories that have been suggested in earlier research. The expatriates did not consider organizational structure, country specific factors, individual factors and the repatriation process as a whole, to be major obstacles to the transfer of expatriate knowledge. The argument that expatriates often feel that they are offered a limited amount of career options and hardly ever considered for promotion was not supported among the expatriates in our study. 51,7% of the expatriates returned to a position with a higher status after their assignment abroad. The third conclusion that we are able to draw is that there are differences in the knowledge exploitation of successful and unsuccessful expatriates. On all the statements concerning knowledge exploitation, except from one, the failed expatriates had a lower average score then the sample of successful expatriates. Only 54,5% of the expatriates that failed their mission abroad felt that they actually had transferred knowledge to their co-worker while 67,2% of the successful expatriates felt that they had transferred knowledge. The career opportunities between the two groups were also different. While the majority of the expatriates (54,1%) that successfully completed their international mission abroad returned to a position with a higher status, only 40,9% of the expatriates that failed their assignment returned to a position with higher status. These findings suggest that the knowledge that 41

42 failed expatriates gain on their mission abroad is not exploited to the same extent as the knowledge of the successful expatriates is. These findings also suggest that the expatriates who failed their mission abroad do not have the same career opportunities as the successful expatriates. All these conclusions might be dependent on our sample. As mentioned in our section for limitations, the companies that chose to participate in this investigation might be the ones that especially focus on expatriates. They might be the ones that devote more resources to expatriates and the exploitation of knowledge gained on international assignments. Our sample is, in addition, rather small. Only 93 expatriates have participated in our study. There are also several external variables like age, sex, nationality, company, time employed within the company and number of international assignments completed that might influence the results. 6.1 Managerial implications Similar to other studies in this area our study demonstrated that there is a lack of formal mechanisms of knowledge transfer within MNCs. To be able to gain as much new knowledge as possible from the expatriates, formal mechanisms of knowledge transfer must therefore be developed. 35,6% of the expatriates in our study did not feel that they had transferred any knowledge at all to their colleagues. This number could probably be reduced if formal mechanisms for the exploitation of knowledge were implemented. Our study also showed that many of the expatriates that failed on their assignment abroad felt that the transfer of knowledge was difficult because the whole expatriation process did not well in their company. As a result, formal mechanisms of knowledge transfer should also be embedded in a wider support program that assists the expatriate and his family during the whole assignment, and makes sure that the expatriate has got accurate expectations about the return home. Since it is often possible to learn more from failures and mistakes management should also pay more attention to the expatriates that failed on their assignment abroad. These expatriates might possess valuable information that the company can learn from. If the company learns from previous mistakes, this might prevent other expatriates from returning home early in the future. 42

43 6.2 Implications for further research Our study only concern expatriates that returned to their old employer. A suggestion would therefore be to focus on the expatriates that have left their company to see if the same results would apply. Our study has been done from the expatriates point of view. Another interesting option would therefore be to be to investigate the same problem, but from the firm s point of view. The sample in our study only consists of large cap companies. Another implication for further research would therefore be to investigate how Mid Cap and Small Cap companies handle expatriate repatriation and knowledge exploitation to see if there are any differences. Implications for further research would also be to see if there are any differences between companies in different industries since we in this study do not look for this. As mentioned earlier many different external factors could potentially effect the exploitation of knowledge. We chose to further investigate how expatriate failure affected the knowledge transfer within the MNC. Many other external factors like age, sex, nationality, company, time employed within the company and number of international assignments completed might have influenced our results and therefore also could be interesting to investigate further. Since a certain definition of expatriation failure has been chosen in this study implications for further research would be either a broader or narrower definition of expatriate failure to see if the results that we reach in our investigation still hold. 43

44 7 References Articles Berthoin, A. (2001) Expatriates contribution to organizational learning Journal of General Management Volume 26, Black, J.S. and Gregersen, H. (1991) When Yankee comes home: factors related to expatriate and spouse repatriation adjustment Journal of International Business Studies Volume 22, Bolino, M. (2007) Expatriate assignments and intra-organizational career success: implications for individuals and organizations Journal of International Business Studies Volume 38, Bonache, J. and Brewster, C. (2001) Knowledge transfer and the management of expatriation Thunderbird International Business Review Volume 43, Collings, D., Scullion, H. and Morley, M. (2007) Changing patterns of global staffing in the multinational enterprise: challenges to the conventional expatriate assignment and emerging alternatives Journal of World Business Volume 42, Downs & Thomas (1999), Managing overseas assignments to build organizational knowledge, Human resource planning, Volume 22, Issue 4, Harzing, A. (1995) The persistent myth of high expatriate failure rates Human Resource Management Volume 6, Kamoche, K. (1997), Knowledge creation and learning in international HRM, The International Journal of Human Resource Management, Volume 8, issue 3. Lazarova, M. and Cerdin, J. (2007) Revising repatriation concerns: organizational support versus career and contextual influences Journal of International Business Studies Volume 38, Lee, Hung-Wen. (2007) Factors that influence expatriate failure: an interview study International Journal of Management Volume 24, Maurer, S. and Li, S. (2006), Understanding expatriate manager performance: Effects of governance environments on work relationships in relation-based economies, Human Resource Management Review Volume 16, Mezias, J. and Scandura, T. (2005) A needs-driven approach to expatriate adjustment and career development: a multiple mentoring perspective Journal of International Business Studies Volume 36, Naumann, E. (1992) A conceptual model of expatriate turnover Journal of International Business Studies Volume 23, Issue Nonaka, I. (1991) The Knowledge Creating Company Harvard Business Review Volume 69, Riusala, K., Suutari, V. (2004) International knowledge transfer and expatriates Thunderbird International Business Review Volume 46,

45 Selmer, J., Ebrahimi, B. and Mingtao, L. (2002) Career management of business expatriates from China International Business Review Volume 11, Tsang, E.W.K. (1999) The knowledge transfer and learning aspects of international HRM: an empirical study of Singapore MNC s International Business Review Volume 8, Tung, R. (1981) Selection and training of personnel for overseas assignments Columbia Journal of World Business Volume 15, Tung, R. (1982) Selection and training procedures of US, European and Japanese multinationals California Management Review Volume 25, Tung, R. (1987) Expatriate Assignments: Enhancing Success and Minimizing Failure Academy of Management Executive Volume 1, Tung, R. (1998) American expatriates abroad: from neophytes to cosmopolitans Journal of World Business Volume 33, Internet Den nordiska börsen 2008, Retrieved April 3, 2008 from: Frequently Asked Questions about GICS 2006, retrieved April 3 from: 45

46 Appendix 1: Contacted companies 46

47 47