Corporate Expatriate HRM Policies, Internationalization, and Performance in the World's Largest MNCs1

Key Results Significant differences were found across the three regions for degree of internationalization and "best practices" in international HRM. However, we were unable to find significant relationships between either the degree of internationalization or nature of "best practices" and four measures of corporate financial performance. The reality, as Briscoe (1995) states it, is that the conduct of business is increasingly global. Hodgson (1981), some ten years ago reported that one in six products sold anywhere in the world crossed international borders on its way to its ultimate market. One can assume that even more share of all products now cross one or more international borders. The last decade has witnessed an accelerated growth of large multinational corporations, many of which operate in twenty five or more countries (Bartlett and Ghoshal 1992). In 1994, the top 25 multinational corporations (MNCs) had sales ranging from $55 to $175 billion a year (Fortune 1995, p. F-1). Increasingly, these large MNCs have shifted sales and production operations to countries closer to their widespread global markets. A number of them now garner more sales overseas than in their home country (e.g. IBM). The same often holds of share of corporate profits. An important corollary of this discussion of sales and manufacturing operations outside the home country is the assignment of expatriates to key positions in overseas units. In the early years, almost all such movement was from the home country to the overseas subsidiaries or joint ventures. For example, several decades ago one of our MNCs had over 40,000 employees and managers on expatriate status at the same time. However, today a growing number of MNCs are using third country nationals (TCNs), to staff foreign subsidiaries or are bringing key staff of their foreign operations into corporate headquarters (inpatriates) or are making intra-region transfers for career development and other purposes. It is estimated that approximately two million Americans work abroad for American companies at any given time. This situation is similar to that of other industrialized nations, though the numbers of expatriates are smaller. This paper reports the results of a study of corporate expatriate management policies, internationalization and MNC performance, in a sample of the world's 150 largest firms, as reported by Fortune magazine. First, we highlight the literature on various facets of expatriate management and IHRM. Second, we discuss the research method used in the study. Next, we present the results of the questionnaire study. Finally, we discuss the insights we gained from the study and suggest areas for future research. We had several objectives in doing this research. First, we were interested in including non-American MNCs in the sample, because so much has been written about American expatriate management. Second, we wished to determine if there were universal policies and practices in the field of IHRM. Finally, we sought to determine whether there was any direct link or association between the use of "best practices" in IHRM and corporate financial performance. Literature Review In the past few years, the number of articles published on various facets of IHRM has grown substantially. Schuler, Dowling, and DeCieri (1993) define IHRM as "concerned with human resource management issues, functions, and policies and practices that result from the strategic activities of multinational enterprises and that impact the international concerns and goals of their enterprises. " (p. 422) Our review is meant to be representative, rather than comprehensive, of this emerging literature. Research in the broad field of international HRM (Dowling and Schuler 1990, Dowling, Schuler and Welch 1994) has focused on a number of topic areas. One of the areas links literature on strategic corporate planning and international HRM planning (e. …