Expatriate reduction and strategic control in American multinational corporations

Abstract

The significant reduction in the use of home country expatriates abroad by American multinationals is generally taken positively, reflecting internationalization, the environmental competence of host country nationals, equity, and the cost of maintaining Americans abroad. In this article I dissent, arguing that the phase‐out of expatriates has gone too far, much further in fact than European or Japanese competition and that the dominant reason for the cutback is the difficulty Americans have in adapting to overseas assignments and the high failure rate they have experienced. I conclude that expatriate reduction has significant consequences for the strategic management of multinational corporations: reduced identification with the worldwide organization and its objectives, difficulty exercising control through personnel, and a lack of opportunities for Americans to gain international expertise through assignments abroad. Although I do not advocate returning to the ineffective and inequitable over‐reliance on home country nationals, I argue that a corps of expatriates performs a function valuable to the MNC and that a means must be found to develop a group of managers who identify with the organization as a whole and provide overseas experience to home country managers.