Expatriation strategies for the adaptation of employment modes to different market economies

Abstract

Despite the strategic importance of expatriation for multinational companies (MNC) and its relevance for managing the workforce of overseas subsidiaries, how expatriation strategies are associated with the adaptation of employment modes to different market economies has only rarely been examined. This exploratory study combines three different bodies of literature, the Varieties of Capitalism approach, the international business literature and the expatriation literature, to examine the employment modes of 76 subsidiaries of U.S. MNCs in a Coordinated Market Economy (Germany), a Hybrid Market Economy (Switzerland), and a Liberal Market Economy (United Kingdom). We find substantial differences in the expatriation strategies of MNCs depending, first, on the differences between the institutional environment of the parent company and that of the subsidiary and, second, on the international focus of the MNC. By exploring the variations between these factors we explain four expatriation strategies of idiosyncratic associations with the adaptation of employment modes: ambiguous expatriation, substantive expatriation, substantive non-expatriation and balanced non-expatriation. We hence provide first insights into how expatriation and the adaptation of employment modes to market economies can be effectively combined.