Expatriate Return on Investment : A Definition and Antecedents

Abstract

Expatriate return on investment (ROI) is undoubtedly an important topic, as evidenced by the considerable efforts of multinational corporations (MNCs) to find cost-reducing alternatives to long-term international assignments. Yet no studies exist examining how expatriate ROI may be calculated and what factors may increase or decrease expatriate ROI for the firm. The purpose of this article is to advance our understanding of expatriate ROI by examining the following: (1) What is expatriate ROI, and how can it be defined, and (2) What are the antecedents of expatriate ROI in terms of the human resource (HR) activities that would increase or decrease ROI. In addressing the research questions, the article formulates hypotheses to guide future research to develop an understanding of expatriate ROI. It does so by adopting a multidisciplinary approach and considering the context of an assignment's purpose. The article covers the following: (1) a proposed definition of expatriate ROI, (2) the importance of an effective system of HR activities and its expected impact on ROI, (3) factors that should be considered in order to improve the accuracy of ROI calculations, and (4) why "one best" ROI formula may not result in a meaningful rate of return. It is intended that the findings of this article will enable scholars and practitioners to have a framework by which to advance research in this important area.