Expatriation in Europe: Factors and Insights
Stoyan Mitrev, Stephen F. Austin State University, USA
Robert Culpepper, Ph.D., Stephen F. Austin State University, USA
ABSTRACT
Much of today’s academic literature on expatriation and the process of managing expatriates comes from North
American researchers and aims to explain the process in North American multinational companies. However, in recent
years, there has been increasing interest and research into International Human Resource Management in Europe, as a
result of globalization and market integration. This paper examines past and current expatriation processes and
practices in Europe. Special attention is devoted to comparisons and contrasts to patterns found in North America.
INTRODUCTION
Regardless of whatever local political, economical or socio-cultural situations and boundaries may exist, the
globalization of world businesses marches on. Increasing integration and globalization has led to a number of terms and
concepts such as ―going international‖, ―global expansion‖, ―cross-state acquisition‖, ―global mergers‖, ―multinational
corporation‖ etc. clear signs. Expatriation is an important part of the globalization phenomenon, with more and more
managers and workers living and operating outside of the borders of the company's home country.
In the global business structure, success is highly dependent on the quality of international management.
Questions about whether to send someone on an international assignment, whom, when, and for how long, has lead to
the development of varying international staffing policies, recruiting practices, and employment contracts. At the same
time, scholars and analysts have become more aware of the trends in the international staffing practices, and devoted
increasing attention and research to this topic.
This paper will examine the European business practices surrounding expatriation and will be divided in three
parts. First, we will discuss the current state of the academic research on expatriation in Europe. Second, we take a
look at the specifics of the traditional ―expatriate cycle‖ in the European context - selection, training and preparation,
transfer and adjustment, monitoring and performance management, and repatriation. These practices will be also be
contrasted with expatriation-related methods in the US. Third, we will review some of the latest developments in
European expatriate practices, namely alternatives to expatriation: quasi-expatriation, commuting, frequent flyers,
teleconferencing and videoconferencing. The research for this paper has been restricted to sources which have been
published in English.
Current state of expatriate literature in Europe
Why do multinational companies expatriate their managerial and professional workforce and what are the main
benefits and advantages? How cost effective is this practice compared to the alternative?
Edstrom and Galbraith (1977) suggest three main reasons why multinational companies (MNC's) use expatriates
in their foreign subsidiaries: (1) to provide technical expertise; (2) to aid in management development; and (3) for
organizational development. According to Kobrin (1988), other reasons included socialization of local management to
the corporate culture and the creation and control of a verbal exchange network that ties subsidiaries with corporate
headquarters. The use of expatriates is not without disadvantages. Expatriates can cost three to five times an assignee's
host-country salary per year--more if currency exchange rates become unfavorable (Krell, 2005). Thus, the costs and
benefits of expatriates are often compared. For example, the term "return on investment of international assignments"
has been defined as a measurement of expatriate effectiveness (McNulty, 2005).
In recent years the number of European based MNCs has increased tremendously and with it the number of
managers given foreign assignments outside of the home country's national borders but within the continent. Progress
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in social, political, and economic development in Eastern Europe since the beginning of the nineties has lead to new
business opportunities for the global economy. This in turn has led to empirical research into European human resource
management (IHRM) and expatriation, in particular. Researchers studying the managerial behaviors of growing
European markets discern similarities and differences in the practice of IHRM to draw lessons that inform company
expectations and guide business decisions.
As previously mentioned, most of the research in the field of the IHRM comes from North American academics
and focuses on North American MNCs (Brewster, 1999). However, Scullion and Brewster (2001) point out that by the
1990s, European scholars were increasingly adding to existing research by studying the IHRM practices of WestEuropean multinationals. East-European expatriation practices, on the other hand, are still in their formative years due
to ongoing economic reforms, privatization of the state-owned corporations, and the dearth of home-country MNCs in
this part of Europe. Apart from European Union (EU) governing institutions (EU parliament and European Central
Bank) and some non-government organizations, eastern Europeans are primarily sent abroad as inpatriates to foreign
MNCs.
In the past decade there has been a growing interest in expatriate HRM in Europe and new fields in this area have
been opened up by European researchers (Brewster & Harris, 1999; Franke, and Nicholson, 2002; Brewster at al., 2004;
Dowling et al., 2004; Colakoglu, and Caligiuri, 2008; Hipler, 2010). The number of conferences, articles, journals, and
books related to the management of expatriates in Europe has rapidly increased (Brewster & Harris, 1999; Harzing,
1999; Selmer, 2001; Linehan and Scullion, 2001; Huo et al., 2002; Krell, 2005).
Formation of the EU
As a supranational governing entity connecting multinational political and economic communities throughout
Europe, the EU is responsible for business convergence and facilitating multinational trade and commerce. The genesis
of the EU establishment, the common European market, was initiated at the Treaty of Paris in 1956 which created the
European Coal and Steal Community. Originally signed by six countries, France, Germany, Italy, Belgium, the
Netherlands and Luxembourg, the community eventually grew to the EU-27 in 2007. The idea of the European Union,
besides creating a political union, is to create a common market as well. The preamble of PART II: ―THE CHARTER
OF FUNDAMENTAL RIGHTS OF THE UNION‖ of the EU constitution provides for free movement of people, goods,
services and labor. Comprehensive legislation and the principles of the free market support, stimulate, and facilitate the
cross-border trade and business.
Single market
Europe is a unique place, extremely diverse and heterogeneous (Weinshall, 1977; Hofstede, 1980). Nevertheless,
in recent years with globalization and the internal processes of unification, Europe is becoming a new entity where the
movement of goods, capital and labor has no barriers. A new phenomenon is emerging – the Single European Market
where various participants with diverse business practices and traditions obey common laws, regulations, and rules.
This phenomenon shows clear signs of an ongoing process of convergence and makes conducting business in Europe
more homogeneous in nature.
The European labor market is becoming increasingly integrated. As Hipler (2010) suggests, the idea of a "quasidomestic" pan-European labor market is supported by a rapidly developing institutional framework. The Social Charter
of Employee Rights, the Directive on Mutual Recognition of Professional Qualifications or the
SOCRATES/ERASMUS programs, all seek to eliminate barriers to employee mobility in the European Union.
Another important factor in the growth of the expatriation in Europe is the distribution of Foreign Direct
Investment (FDI). With the exception of UK, all the major European economies have more than half of their FDI
allocated to other European countries (Dicken, 1998).
The emergence of EU citizenship creates opportunities for even greater facilitation labor and investment mobility
within the continent. A large body of legal and administrative requirements directed toward foreign workers does not
apply to labor transfers between EU countries (Brewster, 2001). Foreign-owned operations, Ford Europe, for example,
transfer expatriate managers around their European subsidiaries with fewer restrictions than between Europe and the
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corporate headquarters (Dowling et al., 1999). Moreover, the advantages of the common market extend beyond the EU
countries through pacts, union and free trade agreements. This involves non-EU European such as EEA/EFTA
countries, Turkey, Western Balkans, Belarus, Ukraine, Moldova and the Caucasus republics.
Staffing policies
The international staffing policies in North America differ from those in Europe, as empirical research shows
(Tung, 1981, 1982). For example, Scullion (2001) suggests that European MNCs employ their overseas subsidiaries
with expatriates more frequently than US companies and they usually have longer contracts. Brewster and Scullion
(1997) argue that staffing policies in both North America and Europe are oftentimes developed separately from other
areas of expatriation thus creating an imbalance between the process of expatriate selection and the company‘s
international business strategy. Taking this into consideration, researchers have attempted to clarify the relation
between expatriates and competitive advantage by emphasizing the flow of knowledge through teams rather than
individuals (Bonache and Fernandez, 1999).
Research into staffing policies in Japanese, US, and European multinationals suggests that when the cultural
distance is higher, MNCs tend to send more expatriates (Tung, 1982). Recent European research highlights the
importance of country specific factors and points out the differences between countries in international staffing policies
(Scullion and Brewster, 2001). Further, Harzing (1999) shows that German and Japanese MNCs have a larger
expatriate staff than US and UK firms. Some authors, such as Konopaske and Werner (2005), have offered, without
empirical support, that US managers may be more reluctant to accept international assignments in the wake of the 9/11
terrorist attacks.
However, not all expatriates are ―staffed‖ through the traditional means of international assignments. There is a
considerably high volume of self-initiated expatriates, at least in Europe. These are individuals who find their own way
to another country (Suutari and Brewster, 2000).
The expatriation process
The process of expatriation usually represents the assigning of a professional to a foreign subsidiary. This process
is most commonly characterized by selection, training and preparation, transfer and adjustment, monitoring and
performance management, and repatriation. We discuss below some of specifics of the process of expatriation in
Europe and compare them to practices in US.
Selection
Recruitment and placement of employees in positions where they can perform effectively is a goal common to
organizations around the world, and a mismatch between jobs and people can substantially reduce the effectiveness of
other human resource activities (Huo et al., 2002). Nonetheless, organizations around the world have never
implemented a uniform process for the recruitment and selection of personnel. Yet despite the abundance of literature
professing the importance of the topic, there is little agreement about what strategies should be applied to select
expatriate managers, with much of the research suggesting that selection processes and criteria vary according to the
type of organization and nationality (Franke and Nicholson, 2002).
Extant literature on expatriate selection policies identifies three main sources from which expatriate managers can
be recruited for an international assignment (Phatak, 1995): host-country nationals (HCNs), parent-country nationals
(PCNs), and third-country nationals (TNC). General local staffing policies often time determine which source to use.
The literature has identified four major policies for MNC staffing decisions, which tend to reflect the managerial
philosophy toward international operations held by the top management at headquarters (Dowling, Welch and Schuler,
2004). These policies are described as ethnocentric, polycentric, regiocentric, and geocentric. Mayrhofer and Brewster
(1996) have suggested that most of the European MNCs can be characterized as having an ethnocentric approach to
international human resource management.
Research examining expatriate selection criteria indicates that the more prevalent selection criteria for both US
and Europe currently used in the expatriate selection decision include technical competence (Franke and Nicholson,
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2002); motivation (Welch, 2003); previous job performance, managerial talent, and independence of mind (Franke and
Nicholson, 2002); language fluency (Franke and Nicholson, 2002); interpersonal skills (Huo et al., 2002); personality
characteristics (Caligiuri, 2000; Selmer, 2001); family issues (Franke and Nicholson, 2002); and previous overseas
experience (Franke and Nicholson, 2002; Huo et al., 2002).
The US and Europe are similar in the selection of expatriates in that companies in both areas emphasize technical
expertise and domestic track record. However, studies have proposed that European organizations give more
prominence to language skills and international adaptability than US MNCs (Tung, 1982, Suutari and Brewster, 1999).
A survey among Finnish expatriates operating around the world showed that the criteria for international assignee
selection include work related skills (74%), language skills (60%), human relations (50%), willingness to live abroad
(47%), and knowledge of the country and its culture (42%; Suutari and Brewster, 2001). The survey found that
technical expertise is the most important factor when selecting an international assignee and this finding thus coheres
well with the main theory of expatriation.
Faulty expatriate selection is directly related to expatriate failure, usually defined as the premature return of an
expatriate manager (Tung, 1981). It is suggested that expatriate failure is higher in US MNCs than in Europe (Tung,
1981, 1982), which has been confirmed by European researchers as well (Scullion, 1994; Suutari and Brewster, 1999).
Most recent studies, however, suggest that the trend in expatriate failures in US MNCs has changed. In her empirical
research Tungli (2009) argues that the pattern of a high expatriate failure has changed since Tung 1982. Tungli (2009)
showed that no significant statistical differences were found among Japan, UK, US and Germany; the overall premature
return percentage was a relatively low 6.3%. The study also suggests that the shift in the U.S. premature return rates
may be a sign of improvements taking place in the United States. As U.S. companies have started to apply more
elaborate selection criteria and to provide an increased amount of training, these changes may be leading to the drop in
premature return rates (Tungli, 2009).
Training
Expatriate training is the process of familiarizing the already selected employees with the country of their
international assignment. This would primarily include general awareness of the culture and basic language skills.
Some authors (Vance and Paderon 1993) argue that including local employees in the cross-cultural training will
facilitate the acceptance of the expatriates in the host-country organizational environment.
Preparation and training come as a natural continuation to the selection process. As suggested by some scholars,
pre-departure training appears in past decades to have been more common among European MNCs than US (Tung,
1982; Hendry, 1994). Tung found in 1982 that only 30% of US organizations offered cross-cultural training. However,
more recent studies claim that the preparation and training practices has changed and now more than 70% of 177 of
surveyed US MNCs offer at least one day of pre-departure cross-cultural adjustment (Windham International &
National Foreign Trade Council, 1998).
Cross-cultural training has been widely accepted as having a positive effect on expatriates‘ performance (Caligiuri,
Phillips, Lazarova, Tarique, & Bürgi, 2001). An important component of cross cultural training is to provide the
expatriate with a realistic preview of what is expected in the overseas position (Tung, 1998). Even though research
suggests that the most often quoted reason for premature return of expatriates at US MNCs is the spouse‘s inability to
adjust, companies often fail to involve the spouse/partner in the selection or the pre-departure training (Gates, 1994;
Mandenhall et al., 1987). This contrasts sharply with the recent trend among European MNCs - pre-departure training
programs are extended to include the spouse/partner and children, which is a reflection of the understanding that
expatriate performance and family adjustment have a direct relationship (Linehan and Scullion, 2001).
In Europe, cultural awareness training remains the most common form of pre-departure training for expatriates.
Nevertheless, other forms of preparation such as look-see visits, shadowing, and briefings are implemented more often
than formal training programs and as Brewster and Scullion (1997) propose, may be more cost effective.
Several influential models of training and development for expatriate management have been developed including
contingency models which consider the task, the individual and the environment before deciding the depth of training
required (Black et al., 1999). Some recent studies, however, propose that the expatriate training for managers in the
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future will include cross-border job swaps, short assignments, or assignments to multi-cultural project teams (Forster,
2000). Interestingly, one study showed that neither US nor European MNCs provide on-the-job training for expatriates
on their overseas missions (Shih et al., 2005).
Transfer/Adjustment
Black and Stephens (1989) indentified three relevant facets in regards to expatriate adjustment: work, general, and
interaction. Work adjustment represents the expatriate's psychological comfort with respect to the job tasks of the
foreign assignment. General adjustment is in relation to the general living conditions and culture of the foreign country.
Interaction adjustment is with respect to interacting with the host-country nationals.
The U curve of adjustment is a theory posited by Church (1982), aiming to explain why CCT (cross-cultural
training) should be successful and tailored to the cross-cultural adjustment of expatriates. According to this theory,
expatriate adjustment can be expressed as a function of time. For instance, in the beginning of the assignment, the
individual is optimistic and elated to be in the new environment. Then, as the assignment progresses a dip in the level
of adjustment occurs as the individual becomes confused and frustrated by the foreign environment. Finally, the
individual begins to gradually recover and eventually progress to near complete adjustment (Church, 1982).
Issues of expatriate adjustment in Europe have been highlighted in recent research in central and Eastern Europe
(CEE). Local managers in these countries often resent the attitude of Western (North American and Western European)
expatriate managers who are seen as arrogant and unwilling to take the views of local people under consideration, with
respect to subsidiary operational decisions (Cyr and Schneider, 1996). Morley et al., (1997) claim that frameworks of
international adjustment, developed primarily in the North American context, are limited in their application to the
transitional economies of the CEE. They suggest that a detailed understanding of the context of adjustment in each case
is therefore seen to be important in determining which variables are likely to cause problems.
Empirical research has shown, however, that North American expatriates are not less well adjusted to the People‘s
Republic of China than Western European managers Selmer (2001a). On the contrary, North American expatriates
were found to be better adjusted in socio-cultural aspects than their western European counterparts, especially in the
case of interaction adjustment. This is an interesting finding which contradicts the common stereotype of ―ugly
American expatriate…who bulldozes his or her way through another country – speaking only English and making
everyone around him or her pull out their English phrase book just to keep up‖ (Dolainski, 1997).
Monitoring/performance management
Performance measurement and management in MNCs involves a complex range of issues, and research suggests
that performance appraisal systems for expatriates are far from universal (Brewster and Harris, 1999). This fact comes
as a surprise, given that expatriates are seen as strategic human asset and given the high cost of expatriate
underperformance (Black and Gregerson, 1999).
Studies have proposed that European MNCs are more involved in monitoring and managing expatriate
performance and tend to evaluate managers more on the achievement of long term goals than the short term measures
used by US multinationals (Lindholm et al., 1999). Scullion (2001) suggests that this is a result of the growing use of
international assignments for developmental purposes in European multinationals and the greater integration of
expatriation into the overall career development process. However, recent research highlights the considerable
differences in the way the appraisal process is actually handled in different countries. Tahvanainen (1999) observed
that in Sweden and Germany, for example, it is normal for employees to take part in defining the job goals, whereas in
the USA this process remains with higher management. Also, problems in cultural adjustment which may have an
impact on work performance should be considered when assessing an expatriate‘s performance in a new role (Lindholm
et al., 1999).
Repatriation
Many expatriates are dissatisfied upon return because they do not feel their company has paid adequate attention
to their repatriation policies or programs (Tung, 1998). The repatriation of expatriates has long been seen as a major
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problem (Peltonen, 1997; Scullion, 2001), yet early studies into the issue of repatriation indicated that it was somewhat
neglected by multinationals (Mendenhall et al., 1987). The contribution of the North American academics has had a
major impact on our understanding of the repatriate adjustment (e.g., Adler, 1986; Black & Gregersen, 1992; Tung,
1998). In European MNCs the concern over repatriation has been cited as a significant factor affecting expatriate
performance (Forster, 2000). Expatriates anticipate problems associated with re-entry into the domestic organization
such as loss of status, loss of autonomy, loss of career direction, loss of income, all of which come along with a feeling
that their international experience is undervalued by the company (Scullion, 1994; Peltonen, 1997; Linehan & Scullion,
2001.
Many expatriates leave their company on return, which is usually seen as a loss of investment and expertise
(Adler, 1986; Suutari & Brewster, 2001a). Although it is widely accepted that the costs of expatriate turnover are
considerable, only a small number of firms have effective repatriation programs (Forster, 2000; Scullion, 2001) - though
career mentoring systems are more common in Europe (Conference Board, 1997; Price Waterhouse, 1998; Peltonen,
1999). Interestingly U.S. and U.K. MNCs appear to be different from multinationals in continental Europe when it
comes to repatriation policies. A Conference Board survey (1997) showed that 74% of mainland European companies
provided written guarantees of a return position, compared with 50% of U.K. companies and 38% of the U.S.
companies in the sample. Job guarantees are declining generally—from 70% of companies in the 1995 survey to 46%
in 1998 (Price Waterhouse, 1998). A survey among Finnish expatriates showed that 15% already had an arrangement
for a specific job before even the assignment started and for a little over 56% of them the company pledged at least a
similar level job upon repatriation (Suutari and Brewster, 2001).
Paik (2002) suggests that the sense of loyalty between the employees and their company in European MNCs is
greater than that of US employees. As for reasons for this difference Paik points out the negative reputation US
companies have gained over the years, caused by layoffs and reengineering that resulted in low morale and diminished
loyalty. Also strong individualism often leads Americans to put individual ambitions before collective goals in an
organization (Paik, 2002).
One of the major repatriation issues in the USA is job placement for the spouse. US companies do not provide
much assistance in this field, which affects the quantity of candidates willing to accept the international assignment
(Solomon 1996). In contrast, the governments of Norway and Denmark have taken this into consideration by
implementing regulations that protect the job of a spouse for a period of time while the other accepts an international
assignment (Paik, 2002).
Paik (2002) also draws a line between US and Scandinavian countries with respect to the organizational structure.
A flat organizational structure, which is more typical for the Nordic European countries, is seen as one in which
promotions are not as highly sought after by repatriates. In contrast most US organizations are more vertical in their
organizational structure. Therefore greater emphasis is placed on the need to be promoted after return from overseas
assignments. In addition most US companies consider international assignments important to the career development of
employees leading them to expect a promotion.
New trends and alternatives to the expatriation in Europe
The emergence of the EU and borderless travel, as well as the improvement of travel and technology, facilitates
the development of new trends and alternative forms of expatriation (Scullion and Brewster, 2001). Due to the
relatively small geographical area of Europe, citizens can travel – without restriction – to a number of neighboring
countries in only a few hours driving time or couple of hours by plane. Therefore, many European MNCs treat
international assignments to a neighboring country a quasi-expatriation.
Some German companies have long treated assignments to Austria or Switzerland as ‗quasi-domestic‘ and
therefore not paid hardship allowances, while retaining hardship allowances for all other Western European destinations.
The reasoning behind this was that those two countries were perceived to be sufficiently similar to Germany to justify
this approach. More importantly, the argument of ‗sufficient similarity‘ was credible to potential expatriates-to-be.
Against the background of a deepening European integration, the question is whether this perception of ‗sufficient
similarity‘ now extends beyond countries that share a common language, as is the case with Austria, Germany and
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(parts of) Switzerland (Hipler, 2010). At one point, up to 25% of European MNCs surveyed by Price Waterhouse (1997)
had adopted an approach of treating intra-European transfers of employees as relocation rather than expatriation.
One of the very popular alternatives to traditional expatriation is euro-commuting, where executives travel to
Hungary and Slovakia on Monday morning and return to Vienna and Stuttgart on Thursday evening or Friday morning
(Petrovic et al., 2000). As Scullion and Brewster (2001) suggest, the frequent flyer is another alternative to the
―traditional‖ expatriation in Europe. This practice is mainly used for managerial control, skill transfer, or developing an
international cadre. Where applicable, many European MNCs utilize the teleconference or videoconference technology
in support or even as a substitute for expatriation (Scullion and Brewster, 2001).
CONCLUSION
The purpose of this paper was to outline research literature explaining expatriation processes and practices in
Europe, with an emphasis on contrasts with patterns found in North America. We have demonstrated a number of
similarities and differences between US and European expatriation; however, our survey of the literature suggests that
understanding the particular context of expatriation is of great importance. Although not specific to Europe, issues such
as expatriation to NGOs and supra-governmental bodies (EU), expatriation to neighboring countries, self-initiated
expatriates, and the role of the women in the international management and repatriation, as well as dual-career practices
have been addressed as they related to the European context. Further work is needed to improve our understanding of
the repatriation in the European context.
As cell phones and the internet link the world‘s most remote locations, the globe is continually shrinking.
Expatriate employees, more than most, are discovering just how culturally diverse this planet is – and most of its
inhabitants cannot speak English. The implications for North American and European expatriates and for their
assigning companies are straightforward. Although English is widely spoken in the global business world the language
of business is in fact the language of the customer and that may be something very different from English. Recognizing
English as the lingua franca of business could be very deceptive as it may obscure vast cultural differences (Selmer
2001).
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