Abstract

Multinational companies coming to grips with the major challenges of international staffing have developed a new practice. In recent years management scholars observed the assignment of so‐called ‘expatriates of host‐country origin’ (EHCOs), that is, employees of migrant backgrounds in the companies’ parent country sent to work in their country of origin. This paper explores management rationales behind this practice focusing on the posting of employees to transition economies in south eastern Europe. Data from Austrian banks and insurance firms operating in Bosnia and Herzegovina and in Croatia provide the empirical basis. The analysis reveals that headquarters’ management believe that due to their specific competencies EHCOs facilitate the relationship between the headquarters and the subsidiary, enhance resource accrual and offer competitive advantage. As institutional complexity in the host country and the cultural distance between parent and host countries increase, so do the relative advantages of EHCOs for management.

Highlights

  • In a study on international staffing practices, Thite et al (2009) consider the following example

  • Two further companies reported on EHCO assignments, too, but with less strategic intent: employees of BiH background themselves initiated their assignments in FinCo4 and FinCo7

  • The headquarters rely on EHCOs to transfer knowledge and to implement strategic decisions. These findings indicate that EHCOs are seen as especially valuable in subsidiaries in BiH, but far less in Croatian ones because of the different degrees of complexity attached to the host country conditions

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Summary

Introduction

In a study on international staffing practices, Thite et al (2009) consider the following example. When the Germany-based auto components manufacturer Bosch had to fill a management position in a subsidiary in India, the management chose a person of Indian origin who had previously studied and worked in Germany. Thite and colleagues argue that such ‘expatriates of hostcountry origin’ (EHCOs) are especially qualified for key positions in foreign subsidiaries because of their specific knowledge and skills related to both the parent country of a multinational company (MNC) and the host country. While previous research highlights business benefits associated with EHCOs in general, scientific research into concrete management thinking behind this staffing practice is still scarce. Scholarly knowledge of management rationales is crucial to enhance understanding of MNCs’ strategies in international staffing. As Mintzberg (1978) already has pointed out in his classical reading, if we want to gain deeper insight into strategy formation we have to consider both the observable results of managerial decisions and the intentions behind these decisions

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