Why Do Multinational Corporations Participate in Highly Skilled

Comparative Technology Transfer and Society, volume 7, number 1 (April 2009): 19–42 © 2009 by The Johns Hopkins University Press

“Going Global” Why Do Multinational Corporations Participate in Highly Skilled Migration?

christopher counihan

abstract. The global competition among states to attract and retain highly skilled and ever more mobile labor has become a subject of increasing scholarship and policy analysis. However, little attention has been paid to private organizations such as multinational corporations (MNCs) that send their “best and brightest” employees on long-term overseas assign-ments. These sending organizations are active players in the process of highly skilled migration—players that have invested valuable resources in the pursuit of sending their employees where they want, when they want. This article explores the evolving justification structures that explain why MNCs send their key employees on expatriate assignments. Over time, these corporations developed successive strategies for managing the ex-pansion of their business operations beyond the borders of their home countries, each strategy providing different concepts of what an expatri-ated manager should be and do. The current “global corporation” model acknowledges the necessity of expatriate assignments. Highly skilled mi-gration is viewed as an integral element in the development of the type of cosmopolitan worker now believed necessary to build a culturally sensi-tive organization—migration that corporate leaders regard as an existen-tial imperative in today’s hyper-competitive global marketplace.

IntroductIon

The study of migration has emerged from relative obscurity, having been largely ignored by mainstream authors of world politics, to occupy an

increasingly prominent place in our understandings and studies of the global political system (Freeman, 2005). This newly significant status held by inves-tigations of mass migrations has been cast, in part, as a response to the “cri-

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April 2009Comparative Technology Transfer and Society

sis atmosphere” created in the wealthy North to the immigration of lesser-skilled labor from the underdeveloped South (Hollifield, 2000). In contrast, the movement of highly skilled peoples across borders has traditionally been viewed as an “invisible phenomenon” due to the less politically charged na-ture of the migrating peoples: those who are more educated, wealthier, and desirable (Bohning, 1984; Findlay, 1995). Indeed, while highly skilled migra-tion remains a hidden issue in the popular consciousness, it is beginning to receive increased attention from scholars1 and policy makers2 as countries vie with one another to attract talented individuals. However, while an increas-ing amount of attention has been paid to the process of highly skilled migra-tion from the perspective of states and other public actors, the role of sending organizations, such as multinational corporations that sponsor highly skilled workers for foreign assignments, has been less well studied and understood. This article attempts to address this imbalance by focusing on the evolution of senior multinational corporations (MNCs) executives’ motivations and strate-gies in sending their “best and brightest” overseas.

This article is framed in reference to constructivist social theory,3 wherein identity formation occurs in tandem with the creation of a sense of commu-nity among individual agents. For constructivists, communal identities are de-veloped through a shared set of normative beliefs and understandings, even if these shared understandings remain tacit. The greater the degree of agreement on the normative assumptions that aggregates within an emerging commu-nity, the greater its coherence as a unit and the better its ability to both make and carry out collective decisions. Collective actors, which are only tentatively “real,” are able to function as single units (to the degree that they can) due to the strength of their shared normative assumptions. Normative agreement creates collective actors, such as multinational corporations (and especially their senior executives), and shared norms build a group’s identification as a distinct community. This communal identity shapes their collective interests, and their interests compel their behavior. Simply put, norms cause groups to act as they do. These understandings of social behavior are the cornerstones of constructivist social theory (Adler, 1997; Finnemore, 1996; Sell, 1998, 2004).

In order to uncover the shared yet often tacit norms that form the basis of a community’s common self-identification, one begins by simply asking. Most, if not all, collectives produce extensive documentation designed to explain and/or justify its point of view. While much of this discourse is purposely or unwittingly false or misleading, studying this rhetoric is an important first step toward understanding the norms and motives of the community in question. While these documents must be analyzed with a critical eye toward uncover-ing this false or misleading information, it must be remembered that these are public pronouncements designed to produce a public reaction. Since public

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Counihan | MulTinATionAl CorPorATionS AnD HigHly SkilleD MigrATion

behavior is at the heart of any study of political conduct, even discourses de-signed to obscure facts or mislead its audience are still important, because they lie at the beginning of a chain of socially determined actions that result in socially constructed outcomes.

Multinational corporations are collective actors deeply integrated in the fabric of social life in the modern world. As such, MNCs, and those that speak for them (both the managers and executives within their organization-al structures, and academics and researchers outside of them), make public pronouncements in an effort to explain their actions to both the public and their own staffs. In seeking to understand the actions of MNCs involved in highly skilled migration, their rhetoric must be studied from a constructiv-ist viewpoint in order to understand and explain their behaviors. Within the publicly available discourses of MNCs, business consultants, and international business reporters and authors, we can uncover the shared norms that are the foundation of today’s international business community, which drive the be-haviors of the collective actors populating that community. In this article, the focus will be on a review of the writings of international business academics, as well as on the reporters who convert their writings into mass-market busi-ness texts.4

Through an examination of the literature on international business strat-egy as it has evolved over time, established here is the content of today’s busi-ness culture concerning the process of business internationalization, as well as the roles played by highly skilled migrants in this process. By “internation-alization” is meant the manner by which multinational businesses expand their operations geographically from their homebase into neighboring and/or distant countries (Livingstone, 1989; Melin, 1992). Organizations have been engaging in the process of internationalization for centuries, but this process has historically been constrained by the seemingly insurmountable realities of physical distances and communication delays. The technologies promoting the current round of globalization, especially in the fields of transportation and telecommunications, have rendered these issues of time and distance less problematic—communications are nearly instantaneous, and almost every lo-cation is swiftly accessible for those with the necessary resources.

This increased capability, along with the business necessity of long-term assignments abroad for global organizations, has made such assignments in-creasingly common.5 Hard data on the numbers of highly skilled migrants are difficult if not impossible to obtain, as the definition of “highly skilled” varies (sometimes dramatically) from country to country (Freeman, 2005, p. 114). However, reports prepared by expatriate consulting firms and the re-location industry indicate that the general trend has been toward increasing numbers of expatriate assignments (GMAC Global Relocation Services, 2006;

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PriceWaterhouseCoopers, 2005). The internationalization strategy that cur-rently dominates the international business community is that of the global organization—a company that is physically present and socially comfortable in a multitude of locations around the globe. A global organization is one whose members are taught the skills necessary to work effectively and effi-ciently in a range of cultures. This concept of global in the organization is based on the characteristics of its members: they must possess the requisite personality traits and temperament to thrive in multicultural settings (Bend-er & Fish, 2000). Multinational organizations design training programs in-tended to develop these traits necessary to create global workers—those with the cross-cultural competencies necessary for communicating across cultural divides (Black, Gregersen, Mendenhall, & Stroh, 1999). Global organizations attempt to create these cosmopolitan workers not as an end in itself, but rather as a means to achieve organizations’ goals, whether profit-driven or nonprofit. The belief of senior executives of MNCs is that the best way to foster this kind of optimal workforce is by sending abroad their “best and brightest” staffers on long-term assignments, thus becoming sending organizations engaged in highly skilled migration (Tung, 1998).

the natIonal champIon model of InternatIonalIzatIon, and the foreIGn ServIce model of expatrIatIon

While the meaning and purpose of business internationalization has become widely debated in international relations studies,6 the narrative on the histori-cal evolution of MNCs in international business studies is not as highly con-tested. As, over time, MNCs have altered the objectives of their missions, they also engaged in transforming their personnel in accordance with their strate-gies of internationalization. The history of the development of MNCs is long, but the term itself did not come into existence until David Lilienthal coined it in 1960 (Jones, 1996, pp. 6–7). Despite the relative newness of the term, the phenomenon it denotes has long been a focus of scholarly and governmental interest: “Indeed, in the historical perspective, the short history of the term [multinational corporation] masks the substantially longer history of the ex-istence of multinational enterprise” (Teichova, 1986, p. 364). The history of international business can be placed into at least three broad time periods that are characterized by the dominance of different types of business structures and the strategies that drove their development, with each phase also empha-sizing its own conception of the strategic purpose of overseas assignments.

The first international business period, sometimes called the “golden age of mercantilism,” ran from the early sixteenth century until 1815 and was domi-

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nated by the great European chartered trading companies that, in tandem with the political and military might of their royal sponsors, “competed with each other for the European share of the prosperous Asian trade” (Moore & Lewis, 2000, p. 264). Prior to the development of these trading companies, including such organizations as the Dutch and British East India companies, the pur-suit of cross-national commerce was limited by the technological restrictions of the period. Instead of creating boundary-spanning organizational struc-tures capable of motivating and overseeing employees on foreign assignments, “(f)amily members were often used: the poor state of transport and commu-nications ruled out close monitoring of representatives abroad and dictated instead the use of people who could be ‘trusted’ not to act opportunistically” (Jones, 1996, p. 25). With advances in navigation and transportation technol-ogy, as well as with the rapid spread of incorporated business organizations during the 1500s, businesses began overcoming the limitations of distance and questionable loyalties. These advances enabled early corporations to create wide-ranging global enterprises that were bound through bonds of employ-ment rather than familial bloodlines.

The second great age of international business coincided with the ascent of British hegemony after the end of the Napoleonic Wars and the growing popularity of the principles of free trade. During this period of British naval supremacy, global trade multiplied manyfold to levels never before seen, and to which we have only recently returned (Moore & Lewis, 2000, p. 264). The most important development in this second age was the development of the modern corporate form in Britain with the passage of the British Joint Stock Companies Act of 1856. This model of the modern corporation spread quickly during the ensuing years, with France granting the legal authority to form sociétés anonyms in 1867, Germany easing its restrictions on forming joint-stock companies in 1870, and a host of states within the United States fol-lowing suit soon thereafter (Micklethwait & Wooldridge, 2003, pp. 51–53). By parsing out the investors financing corporations from the managers running their day-to-day operations, and by erecting barriers against liability in order to protect the wider assets of investors from the errors of managers, business organizations were able to find sources of funding that did not restrict their freedom of action (Williamson, 1981). Thus freed from concerns that the ac-tions of members on assignment away from the home office, being relatively unsupervised due to the long delays in communications, might bring down the entire organization and its investors,7 international businesses commenced deploying their employees in increasingly remote parts of the globe. During this initial phase, mirroring the colonial structures of their home states, MNCs staffed their overseas affiliates with a specialized cadre of “corporate diplo-mats” specifically designed to imitate their national governments’ foreign ser-vices (Gonzalez & Negandhi, 1967).

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This foreign-service model for overseas work assignments continued to be the dominant form of expatriate management organization through the early 1970s, at which time the model began to be less effective in meeting the needs of MNCs (Teague, 1976). The foreign-service model of overseas business as-signments did allow the creation of a highly specialized body of internationally trained executives, but its knowledge-base proved to be too narrow to meet the ever-expanding needs of international businesses (Weeks, 1992, p. 16). This model was built upon a foundation of semi-permanent overseas postings by home-office nationals. The heads of these foreign entities became the “point man” for the corporation and conducted business in the “proper” way—the home-office way. These expatriates, while working with local nationals, main-tained a sense of cultural aloofness (if not superiority) by residing in separate enclaves and maintaining distinct social organizations that denied member-ship to locals (Tung, 1998).

After the end of World War II, the global economy was rebuilt under the aegis of the United States’ hegemonic power. Large portions of the globe were still off-limits to international business due to the Soviet Union’s counter- hegemonic bloc. However, the spread of liberal free-trade ideology in the “free world,” backed by the economic, social, military, and political power of the United States, induced the return of global trade flows to the high level at-tained during the years before World War I. Business historians regard this post–World War II period as the “Indian summer of the second great age of global business,” a continuation of the patterns developed under the period of British hegemony prior to World War I (Moore & Lewis, 2000).8 It was later in this period of growing European and Japanese corporate power that the foreign-service model for international managers began to fall into disfavor and disuse. With the reassertion of the economic, political, and cultural power of countries around the globe, which had been chafing under seeming Western domination, the prevailing belief was that international experience and train-ing had to expand beyond its concentrated base, into the broader organization if MNCs were to survive (Weeks, 1992).

Much as the idealized vision of the proper way to structure MNCs has evolved with the growth of international business in the modern era, the no-tion of what type of person should represent these organizations has evolved along with it. The earlier model was an ideal characterized by attempting to create replicas of the home-office organizational culture in foreign environ-ments, which dominated thinking about international business through the post–World War II period, until the era of colonial independence during the 1960s and ’70s. This ideal called for managers (“national champions”) who had proven themselves successful in their company’s home offices and who sought to bring with them these same behaviors and mindsets so that they

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could imbue their native employees in the “proper” ways (the American, Brit-ish, or German ways) of conducting business.9 This model called for local cul-tures being abandoned in favor of an ethnocentric vision of an organizational culture that mirrored the national one back in the home office. These cultural differences were obstacles requiring elimination in the quest for organization-al efficiency and larger economies of scale (Adler, 1983).

tranSnatIonal corporatIonS and GeocentrIc employeeS

The dismantling of the West’s colonial empires and the rise of nationalistic rhetoric in the newly created states of Africa, Asia, and throughout the de-veloping world were matched by an increasing resistance to the attempts of MNCs to export their cultures as well as their foreign direct investment. While still seeking to create one common organizational culture within their corpo-rate boundaries, the next phase in the evolution of business sought a synthesis between the host culture the MNC encountered and its home-office culture. As these attempts to culturally assimilate the preexisting nationally based or-ganizational culture had come to be viewed as unwarranted encroachments on newly won national sovereignty, the international business researchers of the day10 recommended that overseas managers select the best of their host state’s culture and attempt to combine it with the best aspects of their own home-office and home-country cultures.

The intent of these efforts to manage culture was to develop an artificial third culture that could be indoctrinated in their employees worldwide—a transnational culture designed to span across and supplant the diverse nation-al cultures found in the various host countries of MNCs. Thus international managers were to become “cultural inventors,” seeking out and isolating those specific cultural characteristics that were believed to be positive contributors to the well-being of their organizations; they were to combine these positive aspects of the host culture with those of the home-office and home-country and those of other host cultures chosen by the same selection process. The combination of these “best cultural practices” formed a unique, synthetic or-ganizational culture. After having created this amalgamated culture, the task of an international manager was to teach it to members of the organization as the way of doing business—as their corporate culture. However, for all the lit-erature on this subject in international business and human resources journals of the time, this idea of creating and institutionalizing an idealized vision of a neutral, organizationally friendly, managed corporate culture ultimately came to naught (Earley & Singh, 1995).

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Although CEOs of MNCs such as the global consumer-goods manufac-turer Unilever proclaimed how “we want to Unileverize our Indians and In-dianize our Unileverans” (Perlmutter, 1969, p. 13), this cultural project never gained much momentum because employees did not seem to readily accept these synthetic, transnational organizational cultures. Even in rare cases where these cultures succeeded in corporations, their utility was minimal because they were limited to the organizations themselves. The so-called advantages created by such synthetic cultures vanished as soon as employees interacted with clients, customers, or vendors from outside the new cultural boundaries of corporations. Especially after organizations began to focus more exclusively on their core competencies—shifting their backroom operations to vendors outside the organization in such a way that the boundary between “inside” and “outside” became blurred—the ability of managers to create unique pan-or ganizational cultures (an ability that had been limited from the outset) be-came increasingly compromised.

Beginning in the 1990s, the trend of outsourcing essential though non-core-competency functions such as human resources, accounting, logistics, and information technology to specialist firms around the globe created geo-graphically decentralized business organizations. This process of outsourcing had the effect of turning organizations previously regarded as purely domes-tic into global corporations (Ferrant, 2005); this dispersal of administrative functions previously done in-house to sites across the globe creates linkages that tie “domestic” companies ever more tightly into an interdependent global marketplace (Rugman & Hodgetts, 2001). Due to the contractual nature of these relationships between companies and their outsourcing corporations, the ability of managers to shape the organizational cultures of those perform-ing these administrative tasks was greatly reduced. This rising trend of out-sourcing administrative units and even entire departments replaced former employer–employee relationships with weaker, indirect linkages built upon contractual relationships between corporations and their service firms. These more limited ties of authority and responsibility further undermined the abil-ity of managers to promulgate their organizational cultures (whether, in fact, they ever possessed that ability in the first place).

In addition to the growth of the outsourcing industry, the rapid expansion of the liberal economic marketplace to embrace globalism led to the demise of the transnational business model. Multinational corporations’ expansion beyond the confines of geographic and political restrictions that had been in place during the cold war further limited their to build and maintain transna-tional organizational cultures. Even in those rare organizations like Unilever that claimed success in developing such cultures, the process by which it was developed was slow and often painful, unsuited to the liberal economic mar-

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ketplace’s rapidly developed global scope and depth during the late 1980s and early ’90s. The process of developing a transnational organizational culture is time-consuming, and the race of MNCs to enter newly opened markets previ-ously closed to the West by the Soviets didn’t allow it. This process of continu-ally refining a transnational organizational culture in order to absorb the most desirable aspects of new marketplaces, along with the time-consuming process of promulgating it to employees, proved to be a task more formidable than even the most able managers could effectively implement.

Global orGanIzatIonS and corporate coSmopolItanISm

In place of the model of a transnational organizational culture, international business researchers began to construct and advocate a new model for multi-national organizations: the global corporation. The global organization had to be adept at operating simultaneously in several cultural milieux simultaneous-ly. The goal of these new organizations is not to redefine the cultural landscape within which they operate, but rather to provide their employees and manag-ers the skills and knowledge that might enable them to work effectively in a variety of cultural settings: namely, to leverage this cultural diversity into new sources of wealth creation for the benefit of shareholders and/or to advance the goals of nonprofit organizations. Advocates of this latest internationalization strategy regard diversity and the development of cross-cultural competencies not merely as adjuncts to promote a corporation’s positive public image, but as vital components in the development of successful organizations.

Many international business authors believe that the development of a globally mobile management corps is integral to becoming a truly global cor-poration. It is generally held both by most business scholars and mass-market popularizers that, to become global, a corporation must design a truly interna-tional human-resources strategy that routinely shifts its top-performing, most highly valued employees throughout its global operations in order to develop their cross-cultural competencies:

Critical to the success of the [global] organization is the transfer of the most critical capabilities between the home office and the foreign sub-sidiary as well as subsidiary to subsidiary. Much of this transfer occurs between managers and leaders who have a global mindset. In fact, a recent study of 150 global firms indicated a positive relationship between the level of employee internationalism and the organization’s return on net assets. (Stanek, 2000, p. 237)

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In the quest to become global, organizations are building globalized human-resource strategies and capabilities that can manage the circulation of key personnel throughout the organizational structure: “The ultimate aim of a company in filling an international assignment is the prospect or propensity of the manager’s success—the ability to become a global manager” (Baruch, 2002, p. 36). The idea is that this will lead to the development of “a corporate pool of cosmopolitan managers” able to evolve into “leadership positions in their organizations by finding commonalities, spreading universal ideas while adjusting easily to the requirements of diverse locations” (Selmer, 1999, p. 56).

In order to create the conditions for successful overseas postings, organiza-tions need to create a set of intercultural management and communication skills that business researchers believe are essential for those working within global corporations. These skills are viewed as requisite competencies for suc-cess in direct interactions with others, both domestically or internationally. Thus much of the current thinking about organizational leadership indicates that there is no longer a difference between a high-performing domestic man-ager and a high-performing global manager—the two are now one and the same: “All in all, the basic qualities essential for a successful manager—intel-ligence, motivation, entrepreneurship—are just as relevant for a proficient, worthy, genial global manager” (Baruch, 2002, p. 41).

The “glocalizing” effects of globalization have been regarded as some of the distinctive features of this current age (Keohane & Nye, 2000, pp. 2–12). Glocalization is regarded as a universal trend of concurrent and contradic-tory influences of globalizing forces that push societies toward harmonization, as well as a phenomenon that has geographically specific manifestations in the reactions of local groups attempting to defend their uniqueness against global homogenization. As a result of this simultaneous tendency toward both globalization and localization, homogenizing and differentialization, a dy-namic and challenging cultural environment has been created—a challenge that MNCs must address in order to remain viable. Because of glocalization, national cultures—continually in flux even in relative isolation from external influences—are rendered all the more fluid by pressures to conform to global standard(s) through the growth and intrusion of the global economic system into what once had been largely closed and distinct local systems.

National cultures are clearly not going away yet the world is indeed be-coming more similar, and both these processes are occurring simultaneously. Global corporations have had to alter their operations in response to this dual process: “In the late 1980s, this philosophy [the creation of a single transna-tional strategy] was being increasingly questioned; and, since that time, effi-ciency-seeking multinational enterprises (MNEs) have increasingly accepted the need to adopt their strategies to meet the particular needs of the countries in which they operate” (Dunning, 1993, p. 10).

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In the decades following World War II, when U.S. corporations first began to create subsidiary companies overseas in large numbers, they attempted to bring with them American business practices, organizational systems, and cul-ture (ibid.). At first, the economic disparities between a war-enriched United States and a war-ravaged world allowed U.S. companies to prosper as much despite, rather than because of, this approach. Yet, as the world’s economies began to recover, lesser-developed nations started revolting against what they perceived to be the cultural imperialism fostered by the United States through its MNCs. As a result of this resistance, out of competitive necessity U.S. cor-porations began to alter their approach to operating in foreign environments. As European companies also began to experience abroad the same cultural resistance, they also realized that they needed to change their modes of op-eration and to disengage from their historical ways of doing business. The perceived threat of Americanization was extended to European corporations in the general perception in many quarters of a larger project of Westerniza-tion (Jones, 1996, pp. 50–51). The resulting structural and, above all, cultural change in corporate behavior was captured by Howard Perlmutter in his term “geocentric.”11 In the highest form of the geocentric/transnational MNC, Perl-mutter envisioned the creation of a world-oriented corporation that would be able to think in terms above those of the nation-state, be driven by character-istics held in common by all people, and be populated by “Geocentric men” feeling equally at home anywhere around the globe (1969, p. 17).

Over time, MNCs discovered that Perlmutter’s idealized conception of finding/creating a single worldview spanning across national differences—a “transnational” organizational culture—was not in their best interests: Ameri-canization had not proven successful at selling products, Westernization was viewed as neocolonialism, and geocentric/transnational thinking was a goal that could not be operationalized. Bartlett and Ghoshal (1989) regarded this next corporate stage as the creation of a “transnational”12 structure—an or-ganization and mindset that sought to operate multi-domestically as a local citizen in each of the domestic marketplaces in which it operated. Perlmutter discussed the existence of such multi-domestic organizations (which he termed “polycentric”) as a form of multi-domestic MNCs built upon a bottom-up structure in which foreign subsidiaries operated as nearly independent entities, with little or no interference from home offices. Bartlett and Ghoshal’s trans-national (“global”) model was described as a top-down organization where senior management from the home office as well as employees from all levels of the corporation were all keenly aware of the local strategies in the various do-mestic marketplaces around the world. In their model, both management and rank-and-file employees were expected to be well-versed in and comfortable with an array of national cultural forms. In an era of immediate and forceful

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cultural resistance, perceived cultural affronts from any level of the organiza-tion were perceived to be bad for business (Harzing, 2000a, pp. 101–102).

Cross-cultural management has been a rapidly developing field in interna-tional business studies, becoming the foundation of a multitude of popular business texts designed for senior managers in corporations around the world (Roberts, 2003). The ability both to navigate cultural boundaries in the global economy and to manage culturally diverse teams within one’s own corporate structure are now considered to be13 required skills in the leadership of MNCs (Harris & Moran, 1979). From an analytical point of view informed by con-structivism, the widespread belief that such knowledge, skills, and mindsets are needed in order to be successful as well as the massive efforts undertaken by MNCs to foster these in their employees are forces that act to transform social reality in conformity with that view. In constructivism, it is not just the inherent value of an idea that determines its impact on the structure of society; rather, the resources and influence of those advocating the idea are perhaps more important in shaping the transformational potential of the con-cept for a community. In the intersubjective realm of social “reality/fiction,” a widespread transformation of the perceptual and behavioral set of key actors has the effect of altering the social landscape in response. The widespread ac-ceptance of this process ultimately reinforces the “necessity” of the suggested behavioral change, which in turn redoubles the effort to instill the mindset/be-havior within the organization (Adler, 1997).

These changes in behavior and mindset should be thought of as norma-tive changes that, once set in motion by the “norm entrepreneurs”—in this case, business authors—who popularize the notion and recruit other decision makers and opinion leaders (specifically, senior managements of multinational corporations) into their way of thinking, begin to cascade through the so-cial system. When successful, such a “norm cascade” can significantly alter the structure of the system in line with this new normative vision of the world. Subsequently, when the structure of the system is altered by the inclusion of a new normative element, the behavior of agents within the system is eventually affected by systemic pressure to act in conformity to the altered structure of the system (Finnemore, 1996; Finnemore & Sikkink, 1998).

the chanGInG role of expatrIateS In mncS

As institutions, all corporations (and, by extension, all MNCs) are organizations that socialize their members into behaving and, at least to some extent, into be-lieving in a certain manner. Through both formal and informal mechanisms, corporations exert powerful pressure on employees, from executives to clerks,

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to conform to the needs of the established goals (Roberts, 2003). For senior management, organizational culture is a tool to be carefully crafted and pur-posely wielded in service of the corporation’s short- and long-term goals. From vision and mission statements to training sessions and motivational speakers, corporations are keenly aware of the need to shape their organizational culture in ways that best suit their needs.14 Consequently, the type of global employee that MNCs are fostering is one that can operate successfully in this realm of cultural fluidity. In order to thrive under this new global organizational model, these employees must be perceived as possessing a degree to cultural flexibility that allows them to move between and among multiple cultures, without ap-pearing to be either overly foreign or overly local. By and large, businesses have learned the folly of attempting to change the world as a way of selling their products, and instead have turned to altering their organizations and products in order to successfully operate across borders and cultures:

To prepare global managers, expatriates, and others to interact effectively across cultures, we could theoretically provide them with a cultural brief-ing for every destination so they could learn how to live with their new neighbors and conduct business in that environment. That’s obviously in-efficient and not always possible, so we have developed a cultural training process that builds a foundation for both understanding new culture and recognizing cultural behaviors. This preparation develops managers who are multiculturally fluent and capable of functioning in a global environ-ment. (Schell & Solomon, 1997, p. 11)

The general concept of cultures and the skills needed to navigate through and between them in order to complete tasks, rather than the content of specific cultures, are the concerns of cross-cultural training.

Cross-cultural training is intended to develop a brand of cosmopolitanism within MNCs that is quite different from the notion of cosmopolitanism that many people intuitively have. Even a U.S. businessman managing a Chinese subsidiary of a Swiss company—a person hired because of his knowledge of local Chinese business conditions and his ability to manage local workers—might well deny that what he is doing was in any way “cosmopolitan.” Instead, he would believe that he is stuck in mundane provincial affairs, fully focused on purely local issues and local concerns. Yet in order to do his job effectively, he must be socially comfortable in all the cultural settings in which he oper-ates: he must be able to resonate within the culture that exists locally, whether he is returning home to the United States, visiting the home office in Switzer-land, dealing with locals on the factory floor, or when he meets with senior officials in Beijing.

The common definition of cosmopolitanism is one in which all cultures adjust equally through exposure to the global environment, a process where-

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by everyone accepts the same economic and cultural imperatives. With this new breed of cosmopolitan corporate culture being fostered by cross-cultural trainers and other advocates, the focus is instead on the need for the individual manager to adapt to the demands of the situation in which he finds himself (Marquardt, 1993, pp. 66–67). This type of cultural flexibility is rare among people confined to a specific national social context for much of their lives, but becomes second nature to this new breed of cosmopolitan corporate expatri-ate—even to the extent that it’s not regarded as being in any way unique or unusual (Marquardt, 1999, p. 252).

In exploring the psychological effects of globalization on migrant com-munities, Jeffrey Arnett (2002) calls this degree of cultural flexibility “bicul-turalism.” He uses the term to describe those people who have developed the psychological mechanisms that enable them to exist nearly simultaneously in two cultures: their home country’s and their host country’s.15 By extension, this new type of global corporate employee attempts to become multicultur-al so that he may simultaneously operate in a range of cultural milieux. The prototype global employee envisaged in these business texts is a world traveler, antithetical to the stereotype of the “ugly American.” This label may have aptly described the typical American doing business abroad during the post–World War II era, but today’s global business expatriate must possess multicultural empathy and flexibility in order to work across and within diverse national cultures (Ohmae, 1999). The skills that enable one to communicate in vastly different contexts are necessary to succeed in present-day MNCs. This ability to adapt to a variety of host cultures is the essential characteristic of successful corporate cosmopolitanism.

Some cross-cultural trainers and researchers consider these culturally com-petent managers as “bridge people”: those members of an organization acting as liaisons between cultural groups, thus providing both with a greater un-derstanding of the “other”—even the others within their own organizations. As MNCs are also multicultural organizations, they are viewed as relying on these bridge people to act not only as uniting forces, but as foundations for sound, efficient organizations: “We should remember that a bridge person is not born but is made by organizational support and by the strong commit-ment of a person who is willing to take on the burden and joys of crossing cul-tures” (Funakawa, 1997, p. 184). One of the goals of expatriation is to build a cadre of cross-cultural bridges through which the beneficial effects of cultural awareness and skills can be spread throughout the organization. Cross-cultur-al training is a component of instilling a set of cultural skills into an organiza-tion, but classroom instruction and exercises can only advance organizations so far; to truly become global, advocates believe that organizations must send their staff on overseas assignments in order to bridge these gaps between cul-tures in real time and in the real world.

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As early as the mid-1970s, widely disseminated texts in international busi-ness studies proclaimed the pragmatic necessity of acquiring sensitivity to and dexterity with cultural differences—that nationalistic worldviews were coun-ter-productive to the business goals of productivity and profitability:

Bloc infusions of alien culture, such as in the case when corporate for-eign-based affiliates are imbued with American corporate culture under headquarter pressure, is often counterconstructive or even toxic to the indigenous cultural patterns. Mutilating the established structure tends to weaken and unstabilize the social climate, increase anomie, and induces hostility not only against the methods and conduct but also the ultimate objectives of the American culture. (Kolde, 1974, p. 84)

As can be seen, this appeal to respect and working within the varied cultural contexts faced by MNCs was constructed within an ethnocentric framework. Kolde’s advice about respecting the cultures of foreign-based affiliates is not intended to deny his readers’ unquestioned perceptions of the importance or even the relative supremacy of American culture; rather, he advocates that we should respect other cultures not because they are in any way better than or even equal to ours, but because the costs of displacing locals from their cul-tural contexts is higher than any benefits gained by attempting to instill in them our own “superior” culture. The goal of these texts was not to adjust the group’s or individual’s worldview, but rather to confer a new set of cul-tural skills that would allow more effective functioning within alien cultural environments. Changes in group’s or individual’s worldviews may well occur over time because of these cross-cultural relationships, but this was not the primary purpose of these texts and training sessions, which were designed for the short-term goal of rendering these relationships with foreign associates more effective and productive through cultural sensitivity. The changes that would probably occur over time in managers’ worldviews were a consequence of these improved and presumably more frequent cross-cultural contacts.

This skill of deploying cultural empathy in the service of an organization’s goals is an important step in the larger process of moving beyond one’s own cultural limitations toward being more comfortable in a multitude of social settings—in other words, becoming cosmopolitan. In order to create an em-pathetic relationship, the person attempting to penetrate a foreign cultural environment must possess an in-depth understanding of the values, norms, and behavior patterns of the host culture. Just as importantly, they must thor-oughly understand their own cultural behavior and beliefs so as to modify or suppress them as necessary to facilitate the cross-cultural exchange. This pro-cess must take place at both the individual and organization levels, involving the utilization of a vast complex of information systems and communication skills:

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To successfully cross national boundaries, a firm must develop infor-mation processing and control capabilities so as to coordinate activities across diverse environments, and it must develop the skills of turning into and interpreting strategic signals specific to a foreign environment. In this process, firms unlearn practices typical of their home countries. (Barkema, Shenkar, Vermeulen, & Bell, 1997, p. 427)

This process of “unlearning” allows individuals to detach themselves from their cultural biases and opens them to the possibility of existing and oper-ating in other social settings; it allows them to become cosmopolitan in this new sense of the term: “Managers who know themselves and their abilities well are better able to use their abilities to obtain reinforcement. Thus people may be driven to understand themselves [better]” (Lee & Larwood, 1983). In constructivist terms, cross-cultural programs seek to show trainees both the ways that culture structures the behavior of the “other” and the ways that we are structured by our own cultural assumptions and patterns.

culturally aware orGanIzatIonS

Expatriation is a multidirectional process in MNCs of all sizes, though the cost of these international transferees is high: “estimates of average annual expatri-ate expenses are between $150,000 and $250,000 or up to $1 million over a typical four-year posting”16 (Gates, 1996, p. 11). Studies also cite survey figures that indicate that “more than 2/3rds of survey respondents reported that ex-patriates cost three or more times their salary. Meanwhile, the expat workforce is rising rapidly. Expatriate numbers are expanding while the majority of sur-veyed companies have shrinking or stable workforces (ibid., p. 7). Certainly corporations expect large returns from their investments in order to engage in such costly endeavors as sending their workforces abroad. This rising trend is partly the result of the expectation that the skills developed through overseas assignments are precisely the ones needed to prosper in a globally competitive environment (Ferraro, 1998, pp. 157–158). As a result of these improvements in the requisite cultural skills acquired through expatriate assignments, “com-panies send their best, fast-track managers and senior executives for global assignments” (Marquardt, 1999, p. 20).

Yet it is not just the expatriated manager who profits from the broadening experiences of foreign assignments: both those who take part in these assign-ments and those with whom the overseas assignees work gain new insights and skills. Both expatriots and local employees benefit from being part of the process of “brain circulation” that occurs when MNCs bring cultures into close contact and create cross-cultural environments within foreign locations.

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Multinational corporations bring not only people into new cultures, but new culture to their people. This process of “bringing in the best man in the world regardless of his nationality” (Perlmutter, 1969, p. 14) creates multinational work teams at both the home office and subsidiary locations around the globe; as a result, there are no more “domestic” or “overseas” locations within MNCs: “Highly trained workers and engineers (of many nationalities) work in labora-tories and factories throughout Europe, Japan, and the United States, but they are also found increasingly in the hotbeds of technology such as India, Israel, Russia, and Taiwan” (Kogut, 1998, p. 162).

In order to succeed in a globalized business environment, managers are trained in developing a multicultural worldview. In a global business environ-ment in which cultural boundaries are crossed both outside and within the organizational structures of MNCs, the lack of a cosmopolitan viewpoint is not only damaging to the corporation, it is damaging to one’s career:

[C]ertain universal qualities and attributes (e.g., integrity, sensitivity, cul-tural empathy, flexibility) are becoming prerequisites for competent man-agers home and abroad. . . . it means that global managers must have a ba-sic understanding of global events and/or be attentive to the concerns and beliefs of people from other cultures. Ethnocentrism, arrogance, cultural prejudice, and prejudgment hinder managers’ progress on local, national, regional, or global levels. (Ali, 2000, p. 224)

The need to create a cosmopolitan workforce has become a truism in both the study and practice of global business. Multinational corporations are striv-ing to create a corps of employees that can operate efficiently in any cultural environment, without becoming detached from their own cultural contexts. The creation of this type of organizational culture involves developing par-ticular skill sets and corporate experiences:

The qualities of globally competent managers [are] as follows: (1) under-standing the worldwide business environment from a global perspective; (2) learning about many cultures; (3) working with and learning from people from various cultures simultaneously; (4) creating a culturally synergistic organizational environment; (5) adapting to living in many foreign cultures; (6) using cross-cultural international skills on a daily basis; (7) treating foreign colleagues as equals; and (8) willingness to transpatriate [participate in expatriate assignments] for career and or-ganizational development. (ibid., p. 221)

One of the key tools that MNCs employ to move their organizations from a provincial ethnocentric (or even geocentric/transnational) mindset is the use of expatriate assignments. These assignments, of either long or short duration, are essential for broadening the horizons of employees. As a result, expatriate

36


assignments are now considered a normal and expected aspect of career-devel-opment paths in MNCs: “For a vast number of personnel, the overseas assign-ment has become a standard requirement in career progression in our smallest to our largest multinational organizations” (Baruch & Altman, 2002, p. 239).

concluSIon

We return, finally, to the question that informs and structures this article: “Why do multinational corporations participate in highly skilled migration?” It is clear from the volume of highly skilled migration within MNCs17 and the level of attention and resources this issue is given both by practitioners and researchers that MNCs are interested and actively involved in the pro-cess. The answer to this question, the question of motivation, has evolved over the course of centuries. There have always been two dimensions to this issue: the tactical and strategic functions of expatriation. During all the time that organizations have internationalized, the tactical dimension has remained largely the same: to manage and/or problem-solve within the local subsidiary. No matter which phase of internationalization is considered, the immediate objective for the home office to send its own people abroad is to exert and maintain control over the foreign subsidiary and to ensure the smooth opera-tion of the MNC (Edstrom & Galbraith, 1977; Harzing, 2001b; Jaeger, 1983; Paik & Sohn, 2004).

While the tactical mission of expatriation has remained essentially constant (although its specific form has changed), the strategic functions of overseas assignments have seen a dramatic reimagining as the dominant model of in-ternationalization has evolved over time. In the “national champion” model of internationalization, the expatriate was selected and deployed according to the foreign-service model, which regarded the semi-permanent posting abroad as an essential component in the process of making “them” (the locals) more like “us”—of spreading the home-office and home-culture way. The rise of the transnational model of MNCs brought with it the “geocentric men,” who fashioned themselves into cultural innovators, developing artificial “third cul-tures” in an attempt to denationalize the earlier model.

The current global model is an attempt to create socially adroit organiza-tions that develop from within the cross-cultural skills believed necessary to respond to local needs while achieving global economies of scale. Expatriates and expatriation are central elements in the development and dissemination of the desired “global mindset” throughout organizations. These foreign as-signments are considered critical not just to the competitiveness of the orga-nization, but also to its very survival.

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The answer to the question of why MNCs participate in highly skilled mi-gration is, therefore, one of self-perceived necessity. The actual necessity is not important here, even if such a thing could ever actually be ascertained in any testable way. It is beyond academic-research’s capacity to create an experiment to discover whether today’s global business environment actually requires MNCs to send personnel on overseas assignments in order to survive. For constructivists, however, this is a moot point, because identity-formation—the ongoing process within both individuals and social collectives of deciding who they want to be—precedes the process of interest-formation—the attempt to specify what they want to do. For MNCs today, the dominant discourse that drives collective identity-formation processes is the desire to become global. Set within the context of an increasingly dynamic and competitive globalizing world, being global—individually and collective—is viewed by senior manage-ment of MNCs as the only way to remain viable. Expatriates and expatriation are requisite components for survival in the global economy. As Jack Welch, the former CEO of General Electric and a leading proponent of the concept of the “global corporation” once remarked:

The Jack Welch of the future cannot be like me. I have spent my entire career in the U.S. The next head of General Electric will be somebody who spent time in Bombay, in Hong Kong, in Buenos Aires. We have to send our best and brightest overseas and make sure they have the training that will allow them to be global leaders who will make GE flourish in the future. (quoted in Black et al., 1999, p. 1)

Multinational corporations participate so vigorously in highly skilled migra-tion because they believe they have no other choice due to the causal power of norms.

noteS

1. For an overview of recent scholarship in this area, see Cornelius, Espenshade, and Salehyan (2001), Kaptsch and Pang (2006), and Maffioletti, Todisco, and Tra-nomontana (1993).

2. For a discussion of policy options on highly skilled migration, see Lowell and Findlay (2001) and Martin, Abella, and Kuptsch (2006).

3. Constructivism forms the foundation of a global-governance approach to the study of world politics.

4. Future studies may undertake to investigate the public pronouncements of MNCs through press releases, commentaries and interviews with senior executives, an-nual reports, and so on, but these are beyond the scope of this present article.

5. The impact of the current economic crisis on the continued reliance on interna-tional assignments by MNCs is not yet known. Prior recessions have led to a de-

38


crease in overseas postings, but this article contends that the demands for MNCs to continue to pursue global interests are much higher today than during previous economic downturns.

6. As discussed more thoroughly in Counihan and Miller (2006). 7. A risk still existing as illustrated by the demise of Britain’s Barings Bank in 1995,

apparently due to the actions of one rogue trader in Singapore. 8. Other researchers saw in this period of U.S. business dominance a third stage in

the historical evolution of international business: a stage even further divisible into the immediate post–World War II period of near-total U.S. hegemony, and a second period of the reassertion of European and Japanese economic might be-ginning in the mid-1960s (Jones, 1996).

9. International business writers advocating such positions were Galbraith and Ed-strom (1976), Gonzalez and Negandhi (1967), Grubel and Scott (1966), Hays (1974), Miller (1960, 1972), Reynolds (1972), and Zeira (1975).

10. Researchers such as Barnet and Muller (1974), Kindleberger (1969), Maisonrouge (1975), and Perlmutter (1969).

11. Equated to the “transnational” used in this article.12. Synthesizing the international business literature across time is rendered difficult

by the fact that the same terms are utilized by different authors at different times to represent different ideas. As this paragraph illustrates, Bartlett and Ghoshal’s “transnational” organization is the equivalent of what this article terms the “glob-al” organization.

13. By the senior managements of MNCs according to their widely disseminated pub-lic statements.

14. See, for instance, Florida and Kenney (1991), Harrison and Carroll (1991), and Jaeger (1983).

15. Thanks to an anonymous reviewer who correctly pointed out that internation-alizing corporations have also depended heavily on members of entrepreneurial diasporas (Chinese, Indians, Lebanese, and Jews, among others) that served this bicultural nexus for generations.

16. Although these data are over a decade old, the dollar figures cited by Gates’s re-search are still widely cited in both the academic and popular literature in the international human-resource management field.

17. For specific data on the scale, scope, and current trends in business expatriation, refer to recent reports produced by expatriate-consulting firms such as GMAC Global Relocation Services’s 2008 “Global Relocation Trends Survey Report,” ORC Worldwide’s 2008 “Dual Career and International Assignments Survey,” and Mer-cer’s 2008 “International Assignment Survey.”

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articles

ANDRÉ CORRÊA D’ALMEIDA, University of Colorado Denver

André Corrêa d’Almeida is a Ph.D. candidate in the School of Public Affairs at the University of Colorado Denver (UCD). His current research interest is the role of lead-ership and social networking in poverty-relief policies in African countries. He has published research in several areas of social economics such as immigration and public accounting and national employment strategy. He also has teaching experience in ap-plied mathematics, project management for nonprofit organizations, economic aspects of immigration, and project management and decision-making tools. He has received a research activity award from UCD, a summer scholarship from George Washington University, and a scholarship award from the Portuguese Foundation for Science and Technology. He can be reached at <[email protected]>.

CHRISTOPHER COUNIHAN, University of Delaware

Christopher Counihan recently received his Ph.D. in international relations from the University of Delaware, after spending nearly a decade underwriting group insurance for highly skilled migrants for American International Group, CIGNA Worldwide, and Alianz Worldwide Care. He currently teaches at the University of Delaware, Saint Jo-seph’s University, and Immaculata University. He can be reached at <[email protected]>.

PáL GERMUSkA, 1956-os Intézet Közalapítvány, Budapest, Hungary

Pál Germuska is the secretary of the 1956-os Intézet Közalapítvány (Institute for the History of the 1956 Revolution) in Budapest. He teaches the history of technology for doctoral candidates at the Social History Doctoral Program of the Eötvös Loránd University in Budapest. He is a historian of economics and technology, with research interests in the history of urban development, military industry, and the industrial and economic policy of the socialist period. In 2004, he joined the Tensions of Europe (ToE) network, and during 2007–08 he was an international scholar of the Society for the History of Technology. He can be reached at <[email protected]>.

LIU YANQIONG, National University of Defense Technology, Changsha City, Hunan Province, China

Liu Yanqiong is a lecturer in the Humanities and Social Sciences School of the National University of Defense Technology in Changsha City, Hunan Province, China. She is

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Why Do Multinational Corporations Participate in Highly Skilled