Revisiting 'global integration without expatriates': evidence from Ireland and Spain

Importance and Key Contributions Multinational companies (MNCs) are still expanding worldwide, multiplying their activities across the globe and entering new markets (UNCTAD, 2014). One significant line of research... [ view full abstract ]

Importance and Key Contributions
Multinational companies (MNCs) are still expanding worldwide, multiplying their activities across the globe and entering new markets (UNCTAD, 2014). One significant line of research concentrates on the willingness, necessity and ability of the MNC to achieve international integration in its policies and practices (Kim et al., 2003). Embedded within bigger debates on convergence versus divergence, and as a response to the institutional pressures experienced by MNCs in different environments, international integration activities are focused on regulating the MNC activities in different geographic locations (Smale et al. 2013). Comparatively, international human resource management scholars have paid little attention to the mechanisms that foster the integration of MNCs activities. As Smale et al. (2013, p. 181) note “what is lacking, however, is systematic research that combines multiple mechanisms of global HRM integration and explanations behind their reportedly differential usage”. Building on Kim et al.’s (2003) four way classification of modes of integration (centralization, formalization, information and people based), we offer an analysis of the differentiated use of these integration modes, paying particular attention to how the deployment of a suite of personal, centralisation, formalisation and information-based mechanisms may attenuate the use of expatriation, a well-established personal-based integration mechanism.

Theoretical Base
International integration is viewed as the MNC’s capacity “to control the HRM policies and practices of their subsidiaries and to ensure coordination of the policies and practices across their subsidiaries” (Smale et al., 2013, p. 232). A comprehensive typology of integration modes have been identified (Kim et al. 2003). First, MNCs pursue international integration through “centralizing decision-making authority” (Kim et al., 2003, p.330) by which global or regional HQ formulates HR policies and practices and subsidiary units are tasked with the local implementation process. Second, people-based integration refers to those modes involving the deployment of expatriates from the parent office to other national units international teams, international committees, short-term assignments and they broadly constitute what has been traditionally termed “personal control” mechanisms. Third, formalization-based integration refers to formal standardized procedures, policies and manuals detailing codified rules for application across national boundaries. Finally, information-based integration concerns “the international flow of information through impersonal communication systems such as databases, electronic mail, internet, intranet and electronic data interchanges” (Kim et al. 2003; p.330). Within the domain of the HRM function, centralisation-based integration modes have been found significant at strategic level, having a direct positive impact on the use of personal, formalisation and information integration mechanisms (Belizon et al. 2015). Coordination and control was primarily exerted through personal-based integration modes, chief among them was the use expatriation, before the information technology boom (Edström and Galbraith, 1977). However, new forms of coordination and control along with knowledge transfer mechanisms have been found in the past two decades (Harzing et al. 2001; Smale et al. 2013; Belizon et al. 2015). Recent research suggests that the use of expatriation might be undermined by the deployment of other forms of personal, information and formalisation-based integration modes (Harzing et al 2001; Belizon et al. 2015).

Concomitantly, there are a number of reasons why MNCs would opt for alternatives to traditional expatriation as personal-based integration mechanism. Direct and indirect expatriation costs and performance constitute one of the major concerns along with a decreasing willingness to accept international assignments on the part of the employees, career expectations and dynamics (Harzing, 2001; Collings et al. 2007). MNCs are developing HRM practices or using existing ones as an alternative to expatriation. Among others, Collings et al. (2007) emphasises the need for a reassessment of the use of alternatives forms to expatriation in the HR function such as short international assignments and other HR integration mechanisms. There are a good deal of motives why barriers to employee mobility have been continually increasing, such as the cost of expatriation and the return investment, dual-career incompatibilities or the lower cost of technology or other mechanisms providing the same output as expatriates would (Harzing, 2001). A particular relevance must be given to the role of information technology in work organisation and its rapid evolution over recent years.
Based on the growing and efficient development of alternative global integration mechanisms and taking stock of the so-proven difficulties and limitation of the expatriation process, we argue that the use of alternative personal, formalisation and information-based integration mechanisms will have a negative impact on the use of traditional expatriation.

Methods
This paper employs data from a large scale survey on HRM practices in MNCs undertaken in Spain and Ireland, part of the INTREPID (Investigation of Transnationals’ Employment Practices: an International Database) project. The response rate was 27.1% (242 MNCs) and data was collected through face-to-face meetings. In the Irish case, the response rate was 60%, (210 MNCs). Face-to-face questionnaires were administered in Ireland through a combination of Irish research team members and specialist personnel from the Economic and Social Research Institute (Ireland’s leading independent research agency in the social sciences). Respondents were the most senior HR practitioner at subsidiary level, namely, the HR manager/director in most cases.
Measures
The dependant variables was measured through the following binary variable:
(i) the use of expatriates from HQ within the subsidiary is measured through a binary item (1= yes; 0=no)
(ii) the use of expatriates from the subsidiary to other parts of the MNC is measured through a binary item (1= yes; 0=no)
The independent variables were measured as follows:
People-based The presence of an international HR committee (binary variable)
The use of short-term international assignments (binary variable)
Information-based Utilization of an international IT system for HR issues such as People soft or
SAP HR (binary variable)
Formalized-based Accumulated index encapsulating 9 binary items: managerial pay packages, management career progression, overall labour costs, numbers employed (headcount), staff turnover, absenteeism, productivity, workforce composition by diversity (e.g. gender, ethnicity, disability, etc.), employee attitude and satisfaction
The presence of a global shared services centre for HR (binary variable).

Findings
We tested for correlations and collinearity tolerance for all the variables and the resulted outputs were all within normal limits. Second, given the binary nature of our dependent variables, two binary regressions were run for each variable. Our results suggest that the presence of an international committee acting as a poly-making body formulating and disseminating HRM practices across borders does not undermine the use of traditional expatriation. However, the employment of other personal-based mechanisms such as short-term international assignments is negatively related to the use of conventional expatriation. The employment of formalisation and information-based mechanism are negatively related to the use of traditional expatriates. In relation to the control variables, country of origin proves to be relevant in explaining variation in the use of expatriates in MNCs.

Implications
Conventional expatriation as a personal-based integration mechanism has caught the attention of scholars in the last decades while less emphasis has been paid to the alternatives to expatriation (Collings et al. 2007; Meyskens et al. 2009). This article tries to shed some light on the impact of alternatives integration mechanisms employed by MNCs on the use of conventional expatriates. According to our findings, those MNCs that employ short-term international assignments, along with formalisation and information integration mechanisms are less likely to use conventional expatriation. This might be explained by the fact that these integration mechanisms often entails a lower cost, a better response-time ratio and perhaps less chances to get an outcome that might carry the errors of the human hand (Lengnick-Hall and Moritz, 2003; Collings et al. 2007). Naturally, the extent to which integration is better and more efficiently achieved by these alternative mechanisms would constitute a new line of research for international human resource management scholars.

References
- Belizón, M.J., Morley, M. and Gunnigle, P. (2015) 'Modes of integration of human resource management practices in multinationals'. Personnel Review, 45 (3): 1-19.
- Bonache, J. and Cerviño , J. (1997), “Global integration without expatriates”, Human Resource Management Journal, 7 (3): 89-100.
- Collings, D.G., Scullion, H. and Morley, M.J. (2007), “Changing patterns of global staffing in the multinational enterprise: Challenges to the conventional expatriate assignment and emerging alternatives”, Journal of World Business 42: 198-213.
- Edström, A. and Galbraith, J.R. (1977), “Transfer of managers as coordination and control strategy in multinational organizations”, Administrative Science Quarterly, Vol. 22, pp. 248-263.
- Harzing, A.W. (2001), “Of bears, bumble-bees and spiders: The role of expatriates in controlling foreign subsidiaries”, Journal of World Business, Vol. 36, No. 4, pp. 366-379.
- Kim, K., Park, J.H. and Prescott, J.E. (2003), “The global integration of business functions: A study of multinational businesses in integrated global industries”, Journal of International Business Studies, Vol. 34, pp. 327-344.
- Lengnick-Hall, M. L. and Moritz, S. (2003), “The impact of e-HR on the human resource management function”, Journal of Labor Research, 24 (3): 365-379.
- Smale, A., Björkman, I. and Sumelius, J. (2013), “Examining the differential use of global integration mechanisms across HRM practices: Evidence from China”, Journal of World Business, Vol. 48, pp. 232-240.

International Integration, Expatriation, Multinational Companies [ view full abstract ]

International Integration, Expatriation, Multinational Companies