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Chapter 5: Conclusion and Discussion
In the past pages we have discussed inpatriation as an HRM strategy to increase the success of a company’s internationalization. Our times have seen a tremendous increase in both scale and scope of international business and what was once an incremental process has become an immediate course of action for many companies who are now coined “born globals”. A key characteristic of born globals is the role of their executives who take a global focus from the outset and intentfully embark on rapid internationalization. In this paper we have seen the immense importance of the role played by Samsung’s Lee Kun Hee and Acer’s Stan Shih in pushing their companies towards greater internationalization.
These global firms take advantage of technological advances and ongoing globalization of markets, falling trade barriers, growing demand for specialized products and the improvement in communication technologies. As a result the executives running headquarters must understand the subtleties of country operations and the executives running subsidiaries in their turn must also understand global imperatives.
The primary objective of a firm’s strategy is to achieve a sustained competitive advantage, which in turn will result in superior profitability and profit growth. Sustaining this competitive advantage over time is one of the toughest tasks facing companies.
Researchers J. Stewart Black and Allen Morrison have examined the failure of Japanese companies to sustain their competitive advantage following their meteoric rise in pursuing and achieving competitive advantage in the 1980s and the 1990s. Black and Morrison attribute the initial Japanese successand its subsequent failure to 4 factors:
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Business model – achieving economies of scale and maintaining a high quality with low cost. However, while their ways helped Japanese companies grow exports, they hurt the firms’ new operations in foreign markets. Many Japanese executives assumed that the key to success abroad was replicating Japanese practices in their foreign affiliates.
Isolated domestic market – Japanese firms had no foreign competition at home which enabled their growth, however THIS domestic market isolation had its drawbacks as Japanese companies moved overseas. Competing with foreigners primarily via exports provides few insights into what capabilities are needed for successful operation in foreign countries an in direct competition with local firms.
A homogenous labor force - a homogeneous and contentious workforce is a great advantage when working to standardize products and processes, improve quality, reduce defects, and cut costs. But a uniform and cooperative labor force at home does nothing to prepare a company for managing the diverse and often combative workforces in foreign countries.
A homogenous management team - Japanese companies’ ability to build strong business models and cultures owes a lot to cohesive and homogeneous leadership.
As we can see, half of these factors have to do with people. In order to avoid the pitfalls of having an over homogenous team diversity is needed both among workers and managers. By bringing together people of diverse backgrounds, perspectives and experiences, companies often gain a deeper knowledge of products and services and how to create and deliver them.
(Daniels, Radebaugh, & Sulivan, 2013, pp. 94-95). Diversity therefore can assist a company achieve competitive advantage by helping it achieve greater customer responsiveness and also
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sharing ideas that lead to greater efficiency, innovation and quality.
Business internationalization brings with it the challenges of cross-cultural communication.
Adjusting to a new business environment, new cultures and overcoming language barriers. In reality, the values and outlook of managers, especially those from culturally dissimilar countries often differ. Different values impose boundaries that undercut coordination and control systems. Therefore managers use a variety of techniques to preempt these threats.
Many advocate arranging closer contact among managers from different countries to unify values. (Daniels, Radebaugh, & Sulivan, 2013, pp. 608,628).
An aptitude for cross cultural communication and cultural diversity is difficult to imitate due to its intangible nature. Cross cultural communication is a capability and as such is based on the way in which decisions are made and processes are managed within a company.
In this paper I have discussed the use of in-patriation as a way to introduce diversity to an organization and increase the success of the internationalization processes. We have compared 3 Asian companies who practice inpatriation in similar yet albeit different ways and tried to draw conclusions that might be useful for other firms trying internationalize their operations.
One of the main benefits of international assignments is knowledge transfer. Knowledge can be divided into explicit knowledge and tacit knowledge. Whereas explicit knowledge is easily written down and transferred , tacit knowledge is too complex to convert into an explicit form and requires a human middleman for its successful transfer. Hence the great importance on choosing the right type of international assignment and assignee.
Since knowledge is a key resource for firms, if firms are able to manage knowledge well, then the more depth and diversity of knowledge that individuals bring to the firm, the more
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resources the firm has to exploit. As diversity among workgroup members’ knowledge sets increases, the workgroup has a richer pool of information and logic to draw from when creating its solution set.
Out of the types of international assignments, inpatriation seems to be the one most suitable for firms to create situations that allow individuals with diverse backgrounds to share their knowledge, creating cultural diversity that will assist the firms gain competitive advantage.
Harvey et al argue that It is questionable how effective inpatriates will be if they were to return to their home country, how much long-term multi-cultural acceptance this will bring to the organization, and whether this is an example of “tacit cultural imperialism”. The end result of this may be to create a singular global business culture rather than one that incorporates different mindsets and evolutionary paths. Harvey supports the use of flexpatriate assignments as a more functional approach if there is a need to understand the dynamics of emerging markets. (Harvey M. , Hartmann, Mayerhofer, & Moeller, 2010, p. 263).
The globalization of markets presents a difficult challenge for organizations attempting to compete in the global marketplace. In response to global opportunities, organizations are shifting from economies of scale to economies of scope and attempting to develop global mindset through management diversity. The development of a pluralistic global mindset is perceived by some to be the ultimate means to differentiate an organization’s competitive posture on an on-going basis.
When a management team recognizes pluralism it indicates the acceptance of alternative thoughts, opinions and actions within the organization’s culture. The benefit of pluralism is that it fosters an environment of mutual respect. Diversity thrives on pluralism when both
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domestic and inpatriate managers in the pluralistic organization embrace shared norms of cooperation amongst themselves. This shared mindset is conducive to developing alternatives in solving problems, nurturing pride in collaborative work and ultimately, celebrating successes in global initiatives. Furthermore, a pluralistic climate of diversity-based success is ultimately sustained with increased profit and satisfaction of both consumers and employees.
(Harvey, Novicevic, Buckley, & Fung, 2005, p. 2)
Newcomers to a foreign country face social and cultural hurdles, this is true both for businesses and individuals. In the international business literature this phenomenon is dubbed
“liability of foreignness”. Implementing a structured process to reduce the ‘liability of foreignness ’’ would add competitive advantage to an organization. Home country organization should make a sustained effort to reduce the impact of the ‘liability of foreignness’ through recognizing the tendency for home-country nationals to judge newcomers to an organization on their perceived degree of difference (Harvey, Novicevic, Buckley, & Fung, 2005, p. 8).
Though the paper compared 3 Asian companies, its main findings are universal: the importance of mentoring, a common language and exploring the option of returnees can be implemented in France as well as in Taiwan, Japan or Korea. However, in the scope of this work I haven’t touched the underlying cultural differences between each country. Taiwan, Japan and Korea are all collectivist societies with many cultural similarities (Confucianism for example is the big influencing factor in all 3 societies), could these cultural factors have an impact on successful internationalization? Will companies coming from individualistic societies internationalize their operations more easily? Will inpatriation be easier in a western company as opposed to an Asian company? These questions merit further research.
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5.1. Policy recommendations
One of the goals if this paper is try to point to recommended courses of action for Taiwanese companies who wish to internationalize their business operations and become global players.
In this aspect I believe that the main obstacle is the language barrier.4
In her article “Global Business Speaks English” Harvard professor Tsedal Neeley calls multinational companies to adopt English as the corporate language in order to facilitate communication and performance across geographically diverse functions and business endeavors. Neeley brings as an example Rakuten, Japan’s largest online market place.
Rakuten CEO, Hiroshi Mikitani, declared in 2010 that English will be the company’s official language5 in order to achieve its growth goals and overseas expansion. According to Neeley adopting English has allowed Mikitani to create a remarkably diverse and powerful organization recruiting talent from around the globe. (Neeley, 2012)
Taiwanese companies can of course adopt English as their language of business and internal communication; however this is not easy and will almost meet strong resistance from employees. Other problems that might arise are status loss and resentment among employees who do not speak English well, uneven proficiency in English that might disrupt collaboration for both native and non-native speakers etc.
An easier solution for Taiwanese companies will be to recruit candidates who speak Chinese.
Based on the findings of this research, hiring Taiwanese returnees is one recommended course
4 This was echoed in the American Chamber of Commerce “business climate report” mentioned in chapter 4.
Taiwan’s non English friendly environment was ranked as the worst aspect of living in Taiwan.
5 Mikitani also declared that Japanese employees who do not reach English proficiency within 2 years will be demoted or dismissed.
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of action. However, one might argue that hiring returnees is not “truly” inpatriation, after all these are home country nationals returning to their home country. I would like to propose an additional recommendation that might be relevant to Taiwanese companies: the option of recruiting overseas students studying in Taiwan.
According to the Ministry of Education’s data, there are about 40,000 international students studying in Taiwan (Ministry of Education, Republic of China, 2012). These students can serve as a pool for potential candidates for Taiwanese companies. The benefits of this option are clear, the Taiwanese company is spared relocation costs and can recruit students that have already underwent a process of acculturation during their studies in Taiwan. Having grown accustomed to the local language and culture their transition into the working environment might be shorter and easier compared to a new comer. This could also be a good opportunity for Taiwanese businesses to broaden their international experience by recruiting people from countries
A possible downside of recruiting foreign students is their lack of industry knowledge and work experience. This is a valid concern for business managers but it too can be mitigated.
Graduate business programs like NCCU’s IMBA program accept students with at least 2 years of relevant work experience. Recruiting an IMBA graduate could therefore bring with it potential benefits for Taiwanese businesses. Businesses can also use the IMBA program as part of the development program for overseas employees. Taiwanese businesses wishing to develop their overseas talent can offer them the opportunity to attend graduate school in Taiwan. The time spent in Taiwan can be used not just for studies but also for working in the company and getting to know its employees and culture. After completion of the program these employees can either return to their home countries or stay in Taiwan. Being a
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developed country, Taiwan offers many benefits to students from emerging markets, and will also appeal to students from developed countries who wish to focus their attention on business in Asia.
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