內派管理：將外國子公司員工調回母公司工作。試以三家亞洲公司分析比較 - 政大學術集成

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(1)國立政治大學商學院國際經營管理英語碩士學位學程 International MBA Program College of Commerce National Chengchi University. 碩士論文政治. 大. 立Master’s Thesis. ‧ 國. 學 ‧. 內派管理：將外國子公司員工調回母公司工作。試 sit. y. Nat. 以三家亞洲公司分析比較 er. io. Inpatriation: Integrating Foreign Employees in Home Country. al. n. v i n Ch Corporate HQ, a Comparison of Three Asian Companies engchi U. Student: Israel Gogol Advisor: Professor Tse-Kang Leng. 中華民國一〇五年六月 June 2016.

(2) 內派管理：將外國子公司員工調回母公司工作。試以三家亞洲公司分析比較 Inpatriation: Integrating Foreign Employees in Home Country Corporate HQ, a Comparison of Three Asian Companies. 研究生：高毅紳. Student: Israel Gogol. 指導教授：冷則剛. 國立政治大學. Tse-Kang Leng. 學. ‧ 國. 立. Advisor: 政治大. sit. io. A Thesis. er. Nat. y. 碩士論文. ‧. 商學院國際經營管理英語碩士學位學程. Submitted a to International MBA Program. n. iv l C n NationalhChengchi University engchi U in partial fulfilment of the Requirements for the degree of Master in Business Administration. 中華民國一〇五年六月 June 2016.

(3) Acknowledgements This thesis is the culmination of a long period of studies in the IMBA program in National Chengchi University. The past years have been a wonderful experience which was made available through the efforts and support of the IMBA Program. I would like to thank my advisor Prof. Leng for his support and advice, IMBA director Prof. Samuel Chen and most and foremost, Miss Lichi Ho whose efforts and support can’t be described enough in words. I would also like to thank my wife and family for their long time support during my studies.. 立. 政治大. This thesis is dedicated in loving memory of my father, who unfortunately passed away a few. ‧. ‧ 國. 學. days before my oral defense and did not have the chance to see me graduate.. n. er. io. sit. y. Nat. al. Ch. engchi. i. i n U. v.

(4) Abstract Inpatriation: Integrating Foreign Employees in Corporate HQ. A Comparison of Three Asian Companies By Israel Gogol The globalization of business created a growing demand for internationally capable managers. Due to difficulties in “traditional” international assignments where home country employees. 治政 are sent abroad (expatriate model) companies are looking 大 for alternatives. One of these 立 alternatives is inpatriation, which involves the transfer of subsidiary managers to the HQ and ‧ 國. 學. thus creating international diversity. Inpatriation was chosen as there is a smaller body of. ‧. knowledge in the field which this paper can advance further.. Nat. sit. y. 3 Asian companies and their HRM strategies are compared: Toshiba, Samsung and Acer. Each. n. al. er. io. company implemented a different type of inpatriation and the respective benefits and. i n U. v. downsides are contrasted and discussed. The final chapter includes policy recommendations. Ch. engchi. that point to the recommended courses of action for Chinese and Taiwanese companies who wish to internationalize their business operations and become global players.. Keywords:. HR. management,. Expatriation,. Internationalization. ii. Inpatriation,. Strategy,. Business.

(5) TABLE OF CONTENTS Preface ....................................................................................................................................... 1 Chapter 1: Internationalization and Competitive Advantage .............................................. 4 1.1. Competitive Advantage Building Blocks ......................................................................... 4 1.2. How to Stay at The Top? .................................................................................................. 6. 政治大. 1.3. Cultural Diversity and Competitive Advantage............................................................... 9. 立. Chapter 2: Knowledge Transfer Frame Work ..................................................................... 13. ‧ 國. 學. 2.1. Classification of knowledge: explicit and tacit ............................................................. 13. ‧. 2.2. Knowledge Transfer: Bears, Bees and Spiders ............................................................. 18. y. Nat. io. sit. 2.3. International Assignments: Expatriates and Inpatriates ............................................... 20. er. 2.4. Alternatives for Expatriation and Inpatriation .............................................................. 24. al. n. v i n 2.5. Limitations of Inpatriate Assignments ........................................................................... 27 Ch engchi U Chapter 3: Inpatriation in Asia: 2 Case Studies .................................................................. 33 3.1. Inpatriation in the Samsung Corporation ..................................................................... 36 3.2. Inpatriation in the Toshiba Corporation ....................................................................... 44 Chapter 4: Taiwan and Acer Corporation............................................................................ 52 4.1. Appointment of Gianfranco Lanci ................................................................................. 63 Chapter 5: Conclusion and Discussion ................................................................................. 73 iii.

(6) 5.1. Policy recommendations ................................................................................................ 78 References................................................................................................................................ 81. 立. 政治大. ‧. ‧ 國. 學. n. er. io. sit. y. Nat. al. Ch. engchi. iv. i n U. v.

(7) List of Figures and Tables Figure 1: Main Stages of Developing Corporate strategy for Inpatriation ....................... 35. Table 1: Risk Factors Influencing Chinese and Taiwanese Companies Doing Business Abroad ............................................................................................................................... 9. 政治大. Table 2: Tacit and Explicit Knowledge Matrix .................................................................... 16. 立. Table 3: Key Aspects and Differences Between Expatriates and Inpatriates ................... 21. ‧ 國. 學. Table 4: Comparing Inpatriation Strategies in Toshiba and Samsung ............................. 47. ‧. Table 5: Comparing Inpatriation in Toshiba, Samsung and Acer ..................................... 61. n. er. io. sit. y. Nat. al. Ch. engchi. v. i n U. v.

(8) Preface Internationalization of world business is not a new phenomenon. International trade has been prevalent for centuries; however, 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”. Incremental internationalization sees internationalization as a sequential process in which a company first exports from its home country to the most geographically and psychologically. 治政 proximate countries. Initial success with “similar” countries 大 starts a learning process in which 立 managers’ growing experience and knowledge of foreign markets creates the confidence ‧ 國. 學. needed to expand to other farther markets (Daniels, Radebaugh, & Sulivan, 2013, pp.. ‧. 531-532).. The “born globals” perspective holds that some companies initiate international activity from. y. Nat. er. io. sit. their inception. The born globals regard their domestic market as just one of many opportunities in the world. A key characteristic of born globals is the role of their executives. n. al. Ch. i n U. v. who take a global focus from the outset and intentfully embark on rapid internationalization.. engchi. These 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 and begin operating internationally from inception (Daniels, Radebaugh, & Sulivan, 2013, p. 532) . China can serve as a compelling example to the rapid pace of business internationalization. As the Chinese economy grows and advances we see more and more Chinese companies moving outward and operating in foreign locales or acquiring foreign firms. By the end of 2005 there were more than 6426 Chinese firms operating in 163 countries. In 2005 outbound acquisitions. 1.

(9) amounted to 6.5$ billion, 1900% more than in the year 2000. (Rui & Yip, 2008, p. 213). In 2010 China’s outward FDI reached 68.81 billion US$, a tenfold increase from 2005 within 5 years only. At the same time the number of Chinese businesses operating overseas doubled to 13,000 operating in 16,000 overseas enterprises in 178 countries. (Ministry of Commerce and State Statistics Bureau). Technology makes it easier for executives at HQ and subsidiaries to track global conditions and local performance in real time. Collectively, email, VOIP teleconferencing and other. 政治大. technologies help multinational corporations to respond to a new state of “globality” in which. 立. “business flows in every direction. Companies have no centers; “the idea of foreignness is. ‧ 國. 學. foreign”. The interdependency of activities requires the executives running headquarters to understand the subtleties of country operations and the executives running subsidiaries to. ‧. understand global imperatives. (Daniels, Radebaugh, & Sulivan, 2013, p. 608).. y. Nat. sit. Internationalization has become a way for corporations to achieve competitive advantage.. al. n. competitive advantage.. er. io. Many companies succeed in internationalizing their activities but fail to create sustainable. Ch. engchi. i n U. v. 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. Cross-national teams are a prevalent tool. Developing consensus depends on members engaging common values rather than mechanical compliance with coordination routines or control codes. (Daniels, Radebaugh, & Sulivan, 2013, p. 628). 2.

(10) In this paper I shall discuss Cultural diversity as a way of gaining competitive advantage and the use of Human Resource Management (HRM) strategies of expatriation (sending managers from home country to host country) and in-patriation (bringing in foreign employees to the corporate HQ) as a way to increase the success of internationalization processes. I shall also try to point to recommended courses of action for Chinese and Taiwanese companies who wish to internationalize their business operations and become global players.. 立. 政治大. ‧. ‧ 國. 學. n. er. io. sit. y. Nat. al. Ch. engchi. 3. i n U. v.

(11) Chapter 1: Internationalization and Competitive Advantage 1.1. Competitive Advantage Building Blocks A company has a competitive advantage over its rivals when its profitability is greater than the average profitability of all companies in its industry. It has a sustained competitive advantage when it is able to maintain above-average profitability over a number of years. 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. (Hill & Jones, 2010, p. 74).. 立. 政治大. Competitive advantage is based on distinctive competencies. Distinctive competencies are. ‧ 國. 學. firm-specific strengths that allow a company to differentiate its products from those offered by rivals and/or achieve substantially lower costs than its rivals. Traditional Strategic. ‧. Management literature sees distinctive competencies arising from two complementary sources:. Nat. er. io. sit. y. resources and capabilities.. Resources refer to the assets of a company both tangible and intangible. Tangible resources. n. al. Ch. i n U. v. are physical entities, such as land, buildings, plant, equipment, inventory, and money.. engchi. Intangible resources are nonphysical entities that are created by managers and other employees, such as brand names, the reputation of the company, the knowledge that employees have gained through experience, and the intellectual property of the company, including that protected through patents, copyrights, and trademarks. Resources are particularly valuable when they enable a company to create strong demand for its products, and/or to lower its costs. Valuable resources are more likely to lead to a sustainable competitive advantage if they are rare, in the sense that competitors do not possess them, and it is difficult cult for rivals to imitate. (Hill & Jones, 2010, p. 75). 4.

(12) Capabilities refer to a company’s skills at coordinating its resources and putting them to productive use. These skills reside in an organization’s rules, routines, and procedures, that is, the style or manner through which it makes decisions and manages its internal processes to achieve organizational objectives. More generally, a company’s capabilities are the product of its organizational structure, processes, control systems, and hiring systems. They specify how and where decisions are made within a company, the kind of behaviors the company rewards, and the company’s cultural norms and values. Capabilities are intangible. They reside not so. 政治大. much in individuals as in the way individuals interact, cooperate, and make decisions within. 立. the context of an organization. Like resources, capabilities are particularly valuable if they. ‧ 國. 學. enable a company to create strong demand for its products and/or to lower its costs. (Hill & Jones, 2010, p. 75).. ‧. sit. y. Nat. Four factors help a company build and sustain competitive advantage: superior efficiency,. io. er. quality, innovation, and customer responsiveness. These 4 factors are interrelated and. al. influence each other, customer responsiveness leads to innovation, efficiency supports quality. n. v i n Cproduct etc. Each of these factors is the of a company’s distinctive competencies. These U heng i h c factors can be considered generic distinctive competencies because any company, regardless. of its industry or the products or services it produces, can pursue them (Hill & Jones, 2010, p. 85).. Given that all companies are trying to pursue the same methods to achieve competitive advantage, a key challenge facing firms is sustaining their competitive advantage over their competitors over time. This depends on three factors: barriers to imitation, the capability of competitors, and the general dynamism of the industry environment (Hill & Jones, 2010, p. 95). 5.

(13) 1.2. How to Stay at The Top? Sustaining competitive advantage over time is one of the toughest tasks facing companies. In the next section I shall discuss the case of Japanese firms that have internationalized their operations successfully, but failed to sustain that internationalization over time.. Researchers J. Stewart Black and Allen Morrison Have followed the rise and fall of Japanese companies from the 1970s to the 1990s. Their conclusion is that Japanese firms have been. 政治大 those needed for global leadership. (Stewart Black & Morrison, 2010, p. 99). 立. unable to transform the cultures and processes that propelled their early export led growth into. ‧ 國. 學. There is no doubt that Japanese firms have been successful in pursuing and achieving competitive advantage in the 1980s and the 1990s. This rise is attributed by Stewart Black and. ‧. Morrison to 4 key factors:. sit. y. Nat. Way of doing business - Because Japan is a large, unvaried market, Japanese. io. er. . al. corporations were able to develop substantial asset bases that allowed them to achieve. n. v i n economies of scale and C drive costs while maintaining the high quality that h edown ngchi U. Japanese customers demanded. Over time this provided a powerful export value proposition. In building these efficient manufacturing platforms, Japanese firms created strong corporate policies, practices, thinking, and behaviors, which improved and reinforced their business models. 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. To achieve this, Japanese corporations typically. 6.

(14) sent large teams of experts in The Way overseas rather than hire executives with experience in those markets. (Stewart Black & Morrison, 2010, p. 100) . An isolated domestic market - Over the decades, Japanese companies have faced little competition from foreign rivals inside Japan. Foreign direct investment (FDI) in Japan was between 0.2% and 0.3% of GDP from 1970 through 1995. In 1976 the number of foreign firms in Japan was 1,101; in 1995 it was 1,421—an increase of just 320 companies. This domestic market isolation had its drawbacks as Japanese companies. 政治大. moved overseas. Competing with foreigners primarily via exports provides few. 立. insights into what capabilities are needed for direct “hand-to-hand” combat with them.. ‧ 國. 學. In their home countries competitors possessed a level of expertise and sophistication that was unknown in Japan. (Stewart Black & Morrison, 2010, p. 100). ‧. . A homogenous labor force - a homogeneous and contentious workforce is a great. y. Nat. sit. advantage when working to standardize products and processes, improve quality,. n. al. er. io. reduce defects, and cut costs. Japanese labor is extremely homogeneous. The country. i n U. v. has no significant ethnic minorities or local dialects and very little immigration.. Ch. engchi. Foreign born residents make up about 1.7% of the population In comparison, foreign-born residents in Germany and the USA are about 13%. Moreover, the union structure in Japan, which is enterprise-based in contrast to the industry-based and national union structures typical in the U.S., Canada, and Europe, has kept union interests aligned with those of companies. 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. (Stewart Black & Morrison, 2010, p. 101). . A homogenous management team - Japanese companies’ ability to build strong business models and cultures owes a lot to cohesive and homogeneous leadership. For 7.

(15) instance, at top exporter Matsushita Electric (now Panasonic) during the 1980s and 1990s, senior management teams were entirely Japanese. Virtually all those executives had graduated from one of four universities and then spent their entire careers at Matsushita. In the 68 Japanese firms on the 2009 Global 500, nearly 98% of the listed corporate officers were Japanese. Only Nissan and Sony have increased the role of non-Japanese executives over the past 20 years. (Stewart Black & Morrison, 2010, p. 101)1. 立. 政治大. ‧. ‧ 國. 學. n. er. io. sit. y. Nat. al. Ch. engchi. i n U. v. 1 Arguably Nissan’s diversity was forced on the company when, as a condition for an infusion of cash by their French patner Renault.. 8.

(16) 1.3. Cultural Diversity and Competitive Advantage If we examine Chinese and Taiwanese companies according to Black and Morrison’s criteria we can see that both face the risk of following in Japan’s footsteps and fail in sustaining their international achievements. The following table compares China and Taiwan and their respective risk of businesses failing abroad. Table 1: Risk Factors Influencing Chinese and Taiwanese Companies Doing Business Abroad. 治政 China 大. Criterion / Country. 立 High. Way of doing business. Taiwan. Risk: Relations with Medium Risk: even though. ‧ 國. 學. government, competitors, and the way of doing business is. ‧. customers are unique and “Chinese” Taiwanese firms embedded, and will not travel do. from. the. Nat. y. suffer. n. al. er. io. sit. well (e.g guanxi networks as institutional constraints met a way of doing business, state by Chinese firms (relations. Ch. and. party. iv of n U. control. engchi. businesses and personnel). Isolated domestic market. not. Low. Risk:. The. with. government,. state. control etc.). Chinese Low Risk: The same as in. domestic market is no longer China, foreign companies are isolated, foreign companies now present in almost all are now present in almost all fields fields. and. compete. and. with Taiwanese. compete. with. companies. Chinese companies directly directly in their own territory. in their own territory.. 9.

(17) Homogenous work force. High Risk: The domestic Medium risk: labor. force. homogeneous. is and. fairly force. is. The work predominantly. lacks Chinese, however Taiwan as. power compared with unions allowed large numbers of in the EU and other regions.. foreign workers, mostly in labor intensive industries.. Homogenous Management. High Risk: Top management High Risk: Top management. 政治大. is predominantly Chinese. 立. is predominantly Chinese.2. Even though Taiwan fares better than China, we see that the risks involved with the way of. ‧ 國. 學. doing business and work force and management homogeneity, lead us to realize that an additional crucial factor is missing and needed – diversity.. ‧ sit. y. Nat. When dealing with international companies an additional factor comes into play, cross. io. er. cultural communication. Business involves interaction between people, and international. al. business, naturally, involves people from different national cultures. Each and every one of. n. v i n C hto potential cultural subject e n g c h i U differences:. the business functions is. purchasing supplies,. marketing, distribution, dealing with regulators and offering post-sale support. These cultural differences are not limited to dealing with clients only and are evident also “in-house” when a company HQ needs to manage an overseas subsidiary or when 2 subsidiaries located in different countries need to cooperate with each other. Cross cultural communication is therefore especially necessary for companies expanding into new culturally dissimilar markets 2. Some Companies do hire foreign nationals for top management positions. Taiwanese Acer had an Italian,. Gianfranco Lanci, serve as its CEo from 2005-2011. However Lanci was removed from his post due to different views from a majority of the board members, and could not reach a consensus following several months' of dialog.Lanci later moved to the ranks of Chinese competitor Lenovo.. 10.

(18) overseas.. One of the ways to gain this capability is by fostering cultural diversity. 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. 政治大. greater customer responsiveness and also sharing ideas that lead to greater efficiency,. 立. innovation and quality.. ‧ 國. 學. Ultimately almost any distinctive competency can be imitated by a competitor. The critical. ‧. issue is time: the longer it takes competitors to imitate a distinctive competency, the greater. sit. y. Nat. the opportunity the company has to build a strong market position and reputation with. io. er. customers. The longer it takes to achieve an imitation, the greater is the opportunity for the. al. imitated company to improve on its competency or build other competencies, thereby staying. n. v i n C(Hill 2010, p. 96). one step ahead of the competition. h e&nJones, gchi U. An aptitude for cross cultural communication and cultural diversity is difficult to imitate due to its intangible nature. Tangible resources such as buildings and production lines are visible to competitors and can be purchased on the market. Cross cultural know-how is not easily transferable. Technical knowhow can move from company to company with employees, conversely, 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. It is harder for outsiders to discern them and they are not dependent on one person, but is the product of how numerous individuals interact within a unique organizational setting. In such cases, hiring 11.

(19) people away from a successful company as a way to imitate its key capabilities may not be helpful. (Hill & Jones, 2010, p. 97).. Cultural Diversity is difficult to create and to maintain. In the following chapter I will examine a few Human Resource Management strategies that can help foster cultural diversity.. 立. 政治大. ‧. ‧ 國. 學. n. er. io. sit. y. Nat. al. Ch. engchi. 12. i n U. v.

(20) Chapter 2: Knowledge Transfer Frame Work The previous chapter discussed the role of cultural diversity in creating a competitive advantage for a company with international operations. However, merely having a culturally diverse workforce will not suffice.. We should also make sure that there is sufficient. communication and knowledge transfer between the different parties. For example: employing Americans in the USA headquarters and Chinese in the Chinese subsidiary is not necessarily a source of competitive advantage. The 2 units need to actively share thoughts and. 治政 ideas and transfer knowledge between them to gain competitive 大 advantage. 立 ‧ 國. 學. The following chapter will introduce a framework to examine knowledge transfer in multinational corporations. The chapter will also introduce the role of international. ‧. assignments and international assignees in allowing knowledge transfer within the firm.. er. io. sit. y. Nat. 2.1. Classification of knowledge: explicit and tacit. Knowledge can be classified as explicit knowledge, that can be codified and written down (for. n. al. Ch. i n U. v. example in user manuals) and Tacit knowledge which requires a middleman to introduce the. engchi. new information by guidance or by setting an example (Swimming for example is impossible to learn from a user manual and requires another person to serve as an instructor).. Tacit or explicit is a useful distinction to understand the broad categories of knowledge. Tacit knowledge resides in the individual knower.. Because knowledge is often acquired. over a period of time and through a process of experiences, the knower may have little ability to abstract that knowledge and articulate it in a formal way. Explicit knowledge is knowledge that can be codified and made systematic in a way that can be easily shared by being written down in operating manuals, scientific formulas, computer programs, etc. (Roberts, 2012, p.. 13.

(21) 25). The process of converting tacit knowledge into explicit knowledge is expensive, time consuming and depends on the tacit knowledge ability of the other side how to interpret the meaning in the same way. For example etiquette and manners in a different culture can be written down as rules but still require some tacit knowledge of how and when to use them appropriately. Organizations managing individual knowledge holders may or may not choose. 政治大 knowledge is made explicit, it is easier to transfer throughout an organization; however there 立 to attempt to capture the tacit knowledge of individuals in order to make it explicit. When. ‧ 國. 學. are limits to an organization’s ability to capture tacit knowledge in an explicit form. for example, managers in a firm with extensive knowledge of an overseas market.. Imagine,. While the. ‧. firm could commission the managers to develop some helpful instructions and manuals for. sit. y. Nat. others to follow, it is unimaginable to attempt to codify all of this socially embedded. io. n. al. er. knowledge into explicit instructions. (Roberts, 2012, pp. 25-28). i n U. v. Since tacit knowledge can only be transferred from one context to another via a knower, the. Ch. engchi. role of human resources in the transfer of this type of knowledge is extremely important. For multinational corporations, the firm’s knowledge, and the efficiency by which it is created and transferred internally, is a main source of competitive advantage (Roberts, 2012, pp. 28-29).. It is clear that the knowledge that is brought into a firm by new employees is tacit knowledge. Explicit knowledge would be purchased by a firm as a product.. For example, a domestic. firm could purchase foreign technology in the form of hardware or software. Unlike explicit knowledge which can be codified and transferred without regards to context, tacit knowledge is understood by individuals who are embedded in situations, which are embedded in. 14.

(22) organizations, which are embedded in societies. (Roberts, 2012, p. 30).. In this context it is noteworthy to mention aerger and acquisition of foreign firms as another example of acquiring tacit knowledge. In an M&A the acquiring company doesn’t only retains tangible assets like production lines and equipment but can also tap into the acquired firms tacit knowledge embedded within its employees, work procedures, market knowledge. etc.. In that sense a M&A is the quickest way for a firm to acquire knowledge.. 政治大. Because so much of an individual’s knowledge is embedded in a context which has. 立. taken-for-granted routines and techniques, it is often impossible to explicitly codify that. ‧ 國. 學. knowledge in a way that can be transferred beyond the environment in which it was created. The way in which organizations are ‘organized’ shapes and partially determines knowledge.. ‧. Since tacit knowledge is socially embedded, it very. sit. Nat. a different institutional environment.. y. This can make it difficult to explicitly transfer knowledge into an organization that operates in. n. al. er. io. often requires an understanding and appreciation of the society in which it was developed.. i n U. v. Thus, tacit knowledge that “is deeply embedded within the context in which it was created. Ch. engchi. tends to be resistant to both movement and receipt”. (Roberts, 2012, p. 31). Flowing from the idea that tacit knowledge can be socially embedded; a further distinction can be made within tacit knowledge by considering the degree to which tacit knowledge could, even theoretically, be made explicit. Some types of knowledge remain tacit because it is far too complex for people to make use of the knowledge in its explicit form.. Often the. complexity of this knowledge makes it impractical to be used by human actors in its explicit form.. An apprenticeship model of learning often typifies this type of tacit knowledge.. It is. not so much that the knowledge of the skilled trade could not, at least theoretically, be made. 15.

(23) explicit; it is that the complexity of the tasks involved would make the following of explicit instructions an overly complex task for a person to process and act upon.. On the other. hand, there is knowledge which cannot be made explicit. Some knowledge has to be known tacitly “because it is located in the human collectives and, therefore, can never be the property of any one individual”. This is collective tacit knowledge.. Such knowledge comes about. through a series of historically embedded human experiences, and thus cannot be decomposed into parts (Roberts, 2012, p. 31). 政治大 Apart from being divided into tacit and explicit, knowledge can also be classified as 立. ‧ 國. 學. independent or collective. Independent knowledge is knowledge which has existence independent of human actors.. ‧. The following table is a representation of the continuum between tacit and explicit knowledge. y. Nat. sit. and the continuum between independent knowledge (knowledge of things independent of. n. al. er. io. human societies) and collective knowledge.. Ch. i n U. v. Table 2: Tacit and Explicit Knowledge Matrix. Tacit. engchi. Independent. Socially collective. Technical knowledge (e.g.. Social knowledge. engineering and finance. (managerial, cultural,. know how). market knowledge). 16.

(24) Operating manuals,. (limited) videos and. software. training materials like stories and articles explaining social. Explicit. phenomena. This knowledge can be 政治大 imported into the organization in an explicit form. The purchasing of ready to use 立 The bottom left box shows independent explicit knowledge.. ‧ 國. 學. technologies, such as software, would typify this type of knowledge.. This knowledge. requires low interaction intensity meaning that it can be transferred with minimal involvement. ‧. of other human actors.. This is knowledge. sit. y. Nat. The top left box shows knowledge that is independent tacit knowledge.. io. al. er. that is brought to the organization by individuals as tacit knowledge simply because the. n. complexity of that knowledge is too great to be made explicit.. Ch. engchi U. v ni. The top right box shows. socially collective tacit knowledge. This knowledge is brought to the organization as tacit because the performance or demonstration of that knowledge involves a deep knowledge of socially embedded conventions.. There are limits on making such knowledge explicit. because it is rooted in historically embedded human experiences. This knowledge requires a high level of interaction intensity. The knowledge in the bottom right box is explicit socially collective knowledge. Collective tacit knowledge can have some aspects that can be made explicit. Manuals on how to show respect to customers in China compared to customers in the USA can be written to help guide employees.. The point remains that making collective knowledge explicit has strict. 17.

(25) limitations. (Roberts, 2012, pp. 31-34). The table shows us that knowledge transfer of collective knowledge and independent tacit knowledge is difficult and requires human interaction. 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 resources the firm has to exploit. As diversity among workgroup members’ knowledge sets increases, the workgroup has a richer If firms can 政治大 create situations that allow individuals with diverse backgrounds to share their knowledge, 立 pool of information and logic to draw from when creating its solution set.. 2.2. Knowledge Transfer: Bears, Bees and Spiders. Nat. y. ‧. ‧ 國. a more optimal solution. (Roberts, 2012, pp. 32,41). 學. they can facilitate richer problem solving searches, which opens the possibility of developing. sit. Having understood the nature of knowledge we can now proceed to discuss international. er. io. assignments and their influence on knowledge transfer within the MNC.. al. n. v i n C assignments The initial reason for international need for better coordination U h e n g cishthei company’s and control. Researchers Harzing and Reiche use the metaphors of bears, bees and spiders to explain the different role of the international assignees in this context.. The traditional international assignment model is that of expatriation, a parent country manager who is sent to a subsidiary to manage it. Expatriates are employed to provide personal/cultural control in both a direct and an indirect way. They can serve to replace or complement HQ centralisation of decision-making and direct surveillance of subsidiaries by HQ managers.. This role is dubbed by Harzing and Reiche “bear control” due to its. authoritative nature. Expatriates can also be used to realise control based on socialisation and 18.

(26) the creation of informal communication networks. The role of expatriates in socialisation is referred to as “bumble-bees”. Organizational bumble-bees fly “from plant to plant” and create cross-pollination between the various off-shoots. Weaving an informal communication network is of course the role of expatriates as “spiders”. (Harzing & Reiche, 2010, p. 17). Bees serve as knowledge transmitters whereas spiders serve as boundary spanners. These link previously unconnected individuals from MNC units. “Spiders” broker between the social ties they have established at the HQ and the social ties they maintain at their home unit. These. 政治大. cross unit ties offer an opportunity to be further used in the future for other cross unit. 立. exchanges. (Reiche S. , 2011, p. 367). For example, employees may also share their contacts. ‧ 國. 學. at one unit with individuals from the other unit, either because it is demanded of them or because they expect benefits from doing so. By connecting these previously unconnected. ‧. individuals with each other, the cross-unit ties become a “public good”. (Reiche S. , 2011, p.. er. io. sit. y. Nat. 372). al. The bears, bees and spiders serve as carriers of knowledge between their home and host units.. n. v i n C h attempts to capitalize This is mainly due to MNCs’ growing on business opportunities in engchi U developing and emerging economies. To offset their lack of experience in these culturally and. institutionally more distant environments, MNCs face the challenge of accessing and applying local knowledge. While the transfer of people is only one of many mechanisms to initiate knowledge flows in organizations, a large part of the knowledge transferred across MNC units is highly context-specific and tacit in nature. Contextual and tacit knowledge cannot be codified in written documents but requires the knowledge sender and recipient to interact directly in order to adapt the knowledge to the recipient’s context and clarify the meaning. (Harzing & Reiche, 2010, pp. 18-19). 19.

(27) 2.3. International Assignments: Expatriates and Inpatriates The globalization of business created a growing demand for internationally capable managers. In parallel the nature of international assignments changed and more options became available to firms in addition to the traditional expatriation model. The literature quotes several factors that lead to a decline in the willingness to accept assignments abroad. First is the issue of dual-career couples – Where the spouse is unwilling to give up his career while abroad. Second, if in the past an overseas assignment was a chance to travel abroad and see the world,. 政治大. in today’s world international travel is much more accessible, and people can experience other. 立. cultures without relocating their families. In addition, sending out expatriates can be very. ‧ 國. 學. costly. Increasingly, companies are therefore looking for alternatives to expatriation. (Harvey M. , Hartmann, Mayerhofer, & Moeller, 2010, pp. 260-261) (Harzing & Reiche, 2010, p. 20).. ‧. sit. y. Nat. This has led to the emergence of other types of international assignments: inpatriate,. io. al. n. and Reiche).. er. short-term (also called flexpatriate), self-initiated and virtual transfers (Harvey et al, Harzing. Ch. engchi. i n U. v. Inpatriation - One alternative to expatriation is inpatriation, which involves the transfer of subsidiary managers to the HQ for a specific period of time. This would allow key subsidiary managers to get to know the workings of the parent company and build up informal communication networks. It also allows the HQ to introduce the subsidiary managers into the corporate culture in a more direct way than would be possible by the transfer of expatriates. Inpatriation is also a useful option if tacit knowledge needs to be transferred from subsidiaries to the HQ and it has the added advantage of exposing parent company managers to an international perspective. Harzing and Reiche predict that the use of inpatriates, especially in European and US multinationals, will increase in the future. (Harzing & Reiche, 2010, p. 21). 20.

(28) Despite their similarities expatriates and inpatriate differ along several dimensions: . Status differences:. Expatriates possess the status and influence related to their role as. HQ representatives. Coming from the MNC’s periphery, inpatriates are, on the contrary, unlikely to receive the same level of respect. . Cultural adjustment challenges:. Inpatriates not only need to adjust to the national. culture but also need to be socialized into the MNC’s HQ corporate culture. Indeed,. 政治大 foreign nationals. Expatriates, in contrast, often impose elements of the HQ corporate 立 learning the HQ corporate culture is considered an important motive for inpatriating. ‧ 國. . 學. culture upon the subsidiary they are sent to.. Different corporate mentality: The use of inpatriates also increases the cultural. ‧. diversity and multicultural staff composition at the HQ, thereby fostering a geocentric. sit. y. Nat. approach to the allocation of human resources in MNCs. In contrast, the use of. io. n. al. er. expatriates reflects an ethnocentric view towards international staffing.. i n U. v. The following table summarizes the key aspects and differences between expatriates and inpatriates:. Ch. engchi. Table 3: Key Aspects and Differences Between Expatriates and Inpatriates Expatriate Definition. Inpatriate. Employees sent by headquarters to Employees work in a subsidiary in a foreign transferred country for a period of time headquarters (generally 2 to 5 years). Recruitment. are. the. MNE. from. a. subsidiary. Existing managers within a firm Managers. 21. to. who. recruited. from.

(29) are sent abroad. foreign subsidiaries. Knowledge of home Extensive. Little knowledge. country environment Knowledge. of Extensive. organizational. Less or Similar. logics. and routine Knowledge of foreign Limited country environment. 立. 政治大. contribution Headquarters. to the organization. coordination. and Transfer. of. foreign. 學. control. subsidiaries competencies to headquarters. Transfer. of. knowledge. ‧. ‧ 國. Potential. Extensive. from. y. Nat. Transfer. of. national. knowledge. n. al. er. io. sit. headquarters to subsidiary. Ch. engchi. i n U. v. endowments. from. institutional. environments. Access. foreign. to. foreign. social. networks Knowledge transfer. Intra-firm. knowledge. transfer Intra-firm knowledge transfer. in wholly owned subsidiaries Transferring Inter-firm knowledge transfer (In from. 22. knowledge.

(30) JV & Alliances). a. foreign. institutional. environment into the firm High – HQ representatives. Status. Lower – Outsiders coming from the periphery. Cultural Adjustment. Need to adjust to host country Need to adjust to both host culture. Import the HQ culture to country culture and New the subsidiary.. Corporate Mentality. corporate culture. 政治大. Ethno-centric : HQ nationals know Geo-centric:. 立. Who uses this method. and collaborative approach.. 學. Vast majority of MNCs deploy Some MNCs (most often expatriate managers. from Europe). ‧. ‧ 國. best what to do. an integrated. The table above highlights the main benefits and challenges of expatriation VS. Inpatriation.. y. Nat. sit. Both ways contribute to knowledge transfer within the organization however inpatriation. n. al. er. io. seems to be more suitable for creating diversity within the MNC. Bringing people from the. i n U. v. subsidiaries to the HQ will be more useful in creating diversity for the following reasons:. Ch. engchi. 1. The HQ is where policies and strategies are drafted and decisions are taken. Bringing people to the HQ to take part in the decision making process will ensure that strategies and decisions are formed with a diverse team to begin with, and not just implemented at the subsidiary as the HQ’s fiat. 2. HQ usually sends a limited number of expats per subsidiary (especially if there are many subsidiaries). A limited number of expats is not enough to create the “critical mass” needed for true cultural diversity. However, inpatriation allows HQ to bring relatively more people (even if only a few representatives of each subsidiary) and thus. 23.

(31) create this critical mass of people that will allow the MNC to have a more culturally diverse body. Inpatriation as a strategy of achieving cultural diversity is the topic of this paper and will be explored further in following chapters. Several other forms of international assignments are well worth mentioning.. 2.4. Alternatives for Expatriation and Inpatriation Harvey argues that some expatriates (though this might be true for inpatriates as well). 政治大. integrate and prefer for various reasons to emigrate to a new culture, while other expatriates. 立. prefer to return their family to their home country. Short assignments, cross-border exchanges,. ‧ 國. 學. or assignments as part of multinational work teams and global commuting are likely to become the preferred modes of global assignment in the future, because they do not require. ‧. relocation. In particular, the increased use of global task teams as mechanisms for. y. Nat. sit. coordination and integration creates more opportunities for a more multinational focus than. n. al. er. io. the more typical fixed-term expatriate assignment. (Harvey M. , Hartmann, Mayerhofer, &. i n U. v. Moeller, 2010, p. 261). Below is a short description of these additional types of international assignments.. Ch. engchi. Short term assignments (Also called flexpatriates) - Short-term assignments are an alternative to expatriation that helps MNCs to contain their costs. The literature commonly refers to short-term assignments as postings between 1 to 12 months in length (In contrast to several years for traditional expatriate or inpatriate). The assigned manager is usually unaccompanied by his/her family, thereby avoiding the disruption of relocating entire families. Moreover, selection and preparation procedures for short-term assignments tend to be more informal and ad hoc. Short-term assignments are particularly useful when specific skills need to be. 24.

(32) transferred, for example in the scope of multinational project work, or particular problem-solving needs arise or if the destination country has extremely harsh conditions. Apart from the increased cost effectiveness, short-term assignments also require less bureaucratic effort and can be executed in a more flexible and timely manner. At the same time, research has highlighted that short-term assignees may fail to develop effective relationships with local colleagues and customers. (Harzing & Reiche, 2010, p. 23). 政治大 home unit to a foreign unit on a weekly or bi-weekly basis. These are strenuous assignments 立. Commuter assignments – These are assignments in which the individual commutes from his. ‧ 國. 學. for both the employee and his family and therefore are unlikely to be maintained over an extended period of time (Harzing & Reiche, 2010, p. 24). In some cases these commuter. ‧. assignments can “mature” into relocation assignments where the employee moves his family. sit. y. Nat. abroad to avoid frequent travel.. n. al. er. io. Self-initiated assignments - While the traditional view of international assignments has been. i n U. v. to focus on the employing organization to initiate the transfer, a growing number of assignees. Ch. engchi. make their own arrangements to find work abroad, facilitated by the introduction of free movement of labour in the European Union and other economic regions. In contrast to the aforementioned types of assignments, these so-called self-initiated assignees are employed on local work contracts. Research of self-initiated assignees shows that their primary motivation is to move abroad due to an interest in internationalism and poor employment situations at home. Self-initiated assignees tend to see their relocation as a more permanent move. Overall, given the increased need for international and cross-culturally experienced personnel, self-initiated assignments can serve as an additional important complementary staffing option for both domestic and international organizations. (Harzing & Reiche, 2010, p. 24) 25.

(33) Virtual Assignments -Companies have begun to make use of virtual assignments in order to address the needs for decentralization and global integration of work processes, in a more flexible way. A virtual assignment does not require the individual to physically relocate to a foreign organizational unit but rather distributes international responsibilities between several units. The growth of virtual assignments has been facilitated by improvements in information technology over the last decade to the extent that whole teams now regularly collaborate and. 政治大. communicate via email, telephone and videoconferencing. Despite the many advantages of. 立. virtual assignments that often exceed those of short-term assignments, face-to-face. ‧ 國. 學. communication remains crucial in many circumstances, thus limiting the use of virtual work arrangements. (Harzing & Reiche, 2010, p. 25). ‧. sit. y. Nat. Since expatriation fulfills many roles, these four alternatives are unlikely to completely. io. er. replace expatriates. However, they are often a cheaper alternative to expatriation, especially in. al. the case of virtual transfers, and it is much easier to involve a large number of managers. n. v i n C h assignments thanUit is through expatriation. Moreover, through short-term postings or virtual engchi each alternative form of transfer may also serve distinct purposes that are directly related to the successful operation of the company, which is why they are instruments that should form part of the repertoire of any MNC.. (Harzing & Reiche, 2010, p. 25). This chapter introduced the framework for knowledge transfer in MNCs. Knowledge can be divided into explicit knowledge and tacit knowledge. Whereas explicit knowledge is easily written down and can be transferred from unit to unit tacit knowledge is too complex to convert into an explicit form and requires a human middleman for its successful transfer. The need for human mediation in the transfer of tacit knowledge is especially important when 26.

(34) collective knowledge is concerned. International assignments which transfer employees between HQ and subsidiaries can form a medium for this knowledge transfer. This knowledge transfer can be allegorically referred to as “bear” assignments (authoritative control minded), “bee” assignments (cross-pollination between different units) and “spider” assignments (focusing on creating networks between units). Traditionally international assignments focused on expatriation. However as the need for more and more internationally capable managers grew so did grow the reluctance of employees to uproot their families and move. 政治大. abroad. There are a few other types of international assignments which complement. 立. expatriation, inpatriates, short term assignments and even virtual assignments.. ‧ 國. 學. 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. sit. y. Nat. resources the firm has to exploit. As diversity among workgroup members’ knowledge sets. io. al. n. creating its solution set.. er. increases, the workgroup has a richer pool of information and logic to draw from when. Ch. engchi. i n U. v. 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.. The next chapters will introduce some of the obstacles standing in the way of successful inpatriation and will introduce inpatriation as practiced in Korea and Japan as a basis for comparison with Taiwan.. 2.5. Limitations of Inpatriate Assignments In the previous chapters we discussed the motives for inpatriation in MNCs. These include 27.

(35) among others building up relationships with HQ staff, developing future generations of management, learning the corporate culture, fostering communication and exchange between the HQ and the subsidiary, transferring and acquiring market-related knowledge, transferring technical knowledge, and receiving technical training. We have also discussed the nature of the knowledge being transferred and the inpatriates importance in transferring tacit knowledge.. 政治大 the stage of globalization of that organization. The demand for diversity and the resulting 立. The need for foreign nationals as inpatriates will vary based upon the type of organization and. ‧ 國. 學. increase in the ‘liability of foreignness’ is related to the need for varying viewpoints and. perspectives from globally diverse sources of information. This is of particular importance in. ‧. situations where there is a need for globally diverse tacit knowledge in order to develop. sit. y. Nat. effective strategies for the organization. The greater the cultural distance and the level of. io. er. difference in economic development between two countries the higher the need for inpatriate. al. input. Moreover, as organizations globalize their operations, the need for a wider variety of. n. v i n C hNovicevic, Buckley, input/knowledge will grow. (Harvey, e n g c h i U & Fung, 2005, p. 9). Apart from the benefits of inpatriation in diffusing knowledge between subsidiaries and HQ and creating new social networks between the individuals in the HQ and the subsidiaries, we must focus our attention on some of the limitations and problems that can occur. A better understanding of these limitations will help us examine inpatriation case studies and draft policy recommendations.. The obstacles facing knowledge transfer by inpatriates can be examined from 2 perspectives: from the point of view of the inpatriate itself and his attitude towards the company and from. 28.

(36) the point of view of the company’s and its attitude toward the inpatriate and his mission.. Reiche defines knowledge transfer from inpatriates to HQ staff in terms of two dimensions: inpatriates’ effort to transfer their knowledge to HQ staff, and HQ staff effort to acquire this knowledge from inpatriates. These two dimensions recognize that both parties in the exchange relationship can make an effort to transfer or acquire knowledge about the inpatriates’ home subsidiary. For example, an inpatriate may take the initiative to transmit information about a. 政治大 ask the inpatriate about the typical customer in their home country. Either way, knowledge 立. typical customer in their home country to HQ staff, or, alternatively, a HQ staff member may. ‧ 國. 學. transfer has occurred once the inpatriate describes the typical customer in their home country to the HQ colleague. In addition, the knowledge that both parties make an effort to transfer is (Reiche S. , 2011, p. 9). ‧. likely to be tacit and complex in nature. Nat. sit. y. Knowledge transfer is not automatic but also depends on specific catalysts: the recipient’s. n. al. er. io. ability to utilize the acquired knowledge (commonly referred to as absorptive capacity). For. i n U. v. knowledge to be successfully diffused, HQ staff needs to be able to interpret and make sense. Ch. engchi. of the information they obtain from inpatriates. This processing is particularly important in a cross-cultural context, where information entails many culture-specific cues. At the firm level, “absorptive capacity” can be defined as “the ability to recognize the value of new information, assimilate it, and apply it to commercial ends”.. (Reiche S. , 2011, p. 10). Further, whether knowledge transfer occurs not only depends on the recipient’s ability to acquire the knowledge but also on whether actors are willing to initiate the transfer. Individual perceptions of absorptive capacity may influence individual knowledge transfer activities. For example, if inpatriates consider the HQ to have low absorptive capacity, inpatriates will less. 29.

(37) likely diffuse their subsidiary knowledge to HQ staff. In this case, inpatriates will consider the knowledge transfer to be a waste of time because the knowledge is less likely to be understood by HQ staff. As a result, inpatriates will less likely make an effort to transfer knowledge (Reiche S. , 2011, p. 2). Inpatriates differ from parent-country expatriates in various ways. For example, evidence suggests that inpatriates experience substantially different adjustment processes in the host. 政治大 inpatriates are also likely to possess fewer sources of influence and credibility in the host unit 立. country compared to expatriates. Given their status as outsiders of the MNC parent firm,. ‧ 國. the organization recognized by HQ staff.. 學. than expatriates. This will make it more difficult for inpatriates to have their unique value for (Reiche S. , 2011, p. 6). ‧. Given inpatriates’ status as newcomers to the HQ, HQ staff may not regard inpatriates as. y. Nat. sit. credible or valuable sources of knowledge and therefore refrain from making an effort to. n. al. er. io. acquire knowledge from them. Internal politics might also play a role: inpatriates may be. i n U. v. tempted not to diffuse certain subsidiary-related knowledge to the HQ to maintain their home. Ch. engchi. subsidiary’s strategic position within the overall MNC network. It is also possible that inpatriates may seek to withhold information from certain HQ colleagues to receive a reputation as subject matter experts from senior management and use this status to ensure their employability within the MNC. Importantly, once inpatriates broker cross-unit ties and transfer their subsidiary-specific knowledge for HQ staff to leverage these cross-unit ties, they effectively reduce their own unique value in the MNC. To maintain their employability, inpatriates may thus feel inclined to keep their unique knowledge to themselves (Reiche S. , 2011, p. 13). 30.

(38) In contrast to expatriates, who represent the home country overseas, the process of acculturation by which the inpatriate becomes a loyal corporate manager requires assimilation into the organization and the parent’s country culture. The inpatriate is expected to become a parent country manager in language and lifestyle, yet play a double role as a host country national when returning to her or his home country. The ability of the inpatriate to meet the expectations of the HQ culture is necessary for the inpatriate to prove worthy of corporate confidence and be accepted. This anticipation can cause stress and conflict among inpatriates.. 政治大. Though expatriates also undergo an acculturation process in a new country, no one expects. 立. them to give up on their culture; inpatriates on the other hand must join the dominant culture. ‧ 國. 學. to be credible (Harvey M. , Hartmann, Mayerhofer, & Moeller, 2010, p. 263).. ‧. Newcomers to a company might also encounter stigmas and reservation from the existing. sit. y. Nat. employees. This is especially true when foreign employees are concerned. Home country. io. er. employees might ask themselves questions like: “Who are these foreigners? Why are they here? How will they impact my job?” And “When will they go back home”? The resistance. al. n. v i n C hmanagers might possibly toward the integration of inpatriate e n g c h i U turn into an unspoken form of ethnocentric stigmatization and stereotyping. If such cultural bias becomes widespread it can. impact negatively not only the future contributions of these inpatriate managers but also the image of organizations attempting to infuse diversity into their management. (Harvey, Novicevic, Buckley, & Fung, 2005, pp. 1-2).. An additional consideration is the potential stress on the inpatriate after encountering HQ stigmas and its impact on the inpatriates performance (e.g. low self-esteem, depression, lack of motivation etc.) (Harvey, Novicevic, Buckley, & Fung, 2005, p. 8). 31.

(39) 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).. 政治大 An additional consideration is the inpatriate’s will to go back to his home country. When the 立. ‧ 國. 學. material/political conditions in the inpatriate’s home country are worse than in the HQ the. inpatriate might not be willing to return to his country of origin and will try to find ways to. ‧. stay abroad, even if it means leaving the company.. y. Nat. n. al. Ch. engchi. 32. er. io. how they cope with these limitations and obstacles.. sit. The following chapter will discuss several case studies of inpatriation and will try to examine. i n U. v.

(40) Chapter 3: Inpatriation in Asia: 2 Case Studies 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. Pluralism evolves when distinct ethnic, religious or cultural. 治政 groups and their alternatives views of thoughts, opinions 大 and actions are accepted and 立 tolerated within a society. When a management team recognizes pluralism it indicates the ‧ 國. 學. 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 domestic and inpatriate managers in the pluralistic organization embrace. y. Nat. er. io. sit. shared norms of cooperation amongst themselves. This shared mindset is conducive to developing alternatives in solving problems, nurturing pride in collaborative work and. n. al. Ch. i n U. v. ultimately, celebrating successes in global initiatives. Furthermore, a pluralistic climate of. engchi. 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. 33.

(41) newcomers to an organization on their perceived degree of difference (Harvey, Novicevic, Buckley, & Fung, 2005, p. 8). Harvey et al. propose a managerial process for addressing inpatriate managers “Liability of foreignness” in home-country organizations. (Harvey, Novicevic, Buckley, & Fung, 2005, pp. 10-12). It shows the main stages of developing a corporate strategy for the successful inpatriation of. 政治大. foreign managers. First the company must assess its need for inpatriation. This need varies. 立. according to the targeted strategic markets and their cultural distance. The greater the. ‧ 國. 學. cultural/economic distance of between HQ and subsidiaries the higher the probability of inpatriate managers being stigmatized by domestic managers and not accepted by them.. ‧. Companies should therefore choose the countries where inpatriate managers are recruited. y. Nat. sit. from, so that there will be less likelihood of domestic managers stereotyping and stigmatizing. n. al. er. io. incoming inpatriate managers. The next stage should be to evaluate where the organization. i n U. v. stands relative to diversity and acceptance of foreigners in the organization. In doing so,. Ch. engchi. human resource management professionals can determine the level of change that must take place or the successful integration of inpatriate managers into the organization. It is obvious that there needs to be a socialization process established for the inpatriate managers to assist them in adjusting to the home-country/organization. For the socialization process of inpatriate managers to be effective, a complementary training program should be put in place for the home-country nationals. An additional effort should also be made to support the successful integration of the inpatriate’s family. Once set in motion, this program should be assessed on a regular basis. 34.

(42) The following diagram summarizes this process:. Assessment of the present/future level of need for inpatriation. Determination of strategic markets and cultural distance / novelty. 立. 政治大. Assessment of cultural acceptance of diversity in the home country organization. ‧ 國. 學 ‧. Development of dual socialization process for inpatriates and home country nationals. sit. y. Nat. io. n. al. er. Development of support package for the inpatriate and his family. Ch. engchi. i n U. v. Monitoring the program and feedback Figure 1: Main Stages of Developing Corporate strategy for Inpatriation Literature suggests that inpatriation is more common in European MNCs (Roberts 9) (Reiche B. S., 2006, p. 1573) However there is also plenty of anecdotal evidence about inpatriation in Asian firms, large Japanese corporations such as Sony, Toshiba. and Matsushita have. actively internationalized their top management since the early 1990s (Harvey M. , Hartmann, Mayerhofer, & Moeller, 2010, p. 262) (Harvey, 1997, p. 394). In the following chapter I shall introduce 2 cases of 2 corporations, Toshiba (Japan) and Samsung (Korea) and their use of inpatriation in order to achieve diversity. Japan and Korea. 35.

(43) will serve as a base for comparison with Taiwan.. Japan is a good candidate as it is a major power house for international business and an example of an export led economy that ascended to the top but was unable to maintain its leading position. Korea’s Samsung corporation has enjoyed a steady rise in the past few years and is today’s one of the world’s leading brands. Like Japan and Taiwan Korea is an export led economy. Together with Taiwan it is one of the four Asian Tigers and similarly focused on. 政治大 sector). This paper will examine the Toshiba’s and Samsung’s international recruitment 立 goods manufacturing (unlike Hong Kong and Singapore who focus more on the service. ‧ 國. 學. programs and will compare it to the process suggested by Harvey. Learning from Samsung’s and Toshiba’s experience can serve as a useful guide for Taiwanese companies and help draft. ‧. policy recommendations.. y. Nat. sit. 3.1. Inpatriation in the Samsung Corporation. n. al. er. io. For two decades now, Samsung has been grafting Western business practices onto its. i n U. v. essentially Japanese system, combining its traditional low-cost manufacturing prowess with. Ch. engchi. an ability to bring high- quality, high-margin branded products swiftly to market. Samsung realized this change was needed and that its continued success requires turning away from what made them successful. Samsung introduced a focus on innovation into an organization focused on continuous process improvement. Into a homogeneous workforce, Samsung introduced outsiders who could not speak the language and were unfamiliar with the company’s culture. Into a Confucian tradition of reverence for elders, Samsung introduced merit pay and promotion, putting some young people in positions of authority over their elders. (Khanna, Song, & Lee, 2011, p. 142). 36.

(44) Samsung’s ascent from a low cost manufacturer to a branded company began in the early 1990s. Lee Kun-Hee, Samsung’s chairman, Lee spotted an opportunity in the reluctance of Japanese companies—the analog market leaders—to adopt digital technology, which consumers were flocking to in cameras, audio equipment, and other electronic products. This opened the door for Samsung to surpass its rivals if it developed the agility, innovativeness, and creativity to succeed in the new digital market. For those qualities Lee looked to the West. In 1993, he launched the New Management initiative to import Western best practices related. 政治大. to strategy formulation, talent management, and compensation into Samsung’s existing. 立. business model. The aim was to markedly improve marketing, R&D, and design while. ‧ 國. 學. retaining core strengths in manufacturing, continuous improvement, and plant operations. Execution of this mix-and-match strategy took three broad forms:. ‧. y. sit. io. n. al. er. practices.. Nat. • A formal process to identify, adapt, and implement the most appropriate Western best. i n U. v. • Steady efforts to make Samsung’s culture more open to change by bringing outsiders in and sending insiders abroad.. Ch. engchi. • Intervention by Lee to protect long term investments from short-term financial pressures.. To compete outside its home markets, Samsung would need to move beyond its well-integrated system to engage with non-Koreans in non-Korean contexts. That meant introducing practices inconsistent with the status quo (Khanna, Song, & Lee, 2011, p. 143). Samsung’s management knew that introducing change will not be easy. New initiatives were carefully measured and if resistance was too strong, the company delayed adoption, modified. 37.

(45) the practice, or abandoned it. This careful approach to importing Western business practices (such as performance based compensation) reduced disruption, but also slowed progress. Lee sought to increase receptivity to ideas from elsewhere. This was done in 2 ways: by bringing new people from outside and sending insiders abroad (Khanna, Song, & Lee, 2011, p. 144).. Bringing outsiders in:. Samsung traditionally hired only ethnic Koreans, in order to mediate the cultural gap.. 政治大. However, even these recruitments were met with resistance within the company. Promotions. 立. at Samsung had always come from within, the newcomers were perceived to be (and actually. ‧ 國. 學. were) taking advancement away from existing managers.. Not surprisingly, these managers. closed ranks, setting the newcomers up to fail by withholding important information,. ‧. exaggerating their mistakes, and excluding them socially. This reaction was in part justified:. Nat. sit. y. At first, some of Samsung’s recruits had a poor grasp of what was expected of them, and. n. al. er. io. sometimes they were actually more junior than the company had intended. What’s more,. i n U. v. success is contextual—to some degree. New hires had performed well in their previous jobs. Ch. engchi. because of their familiarity with the system. The tightly knit nature of Samsung’s culture was a separate issue and they did not perform as well. This needed special attention (Khanna, Song, & Lee, 2011, p. 145).. Samsung chairman Lee paid special attention to improve the quality of recruits and their reception. Several changes were made in order to ease the induction of new employees and encourage (and even force) their acceptance by their peers.. Beginning in the early 1990s, Samsung sent international recruiting officers (IROs) abroad to familiarize themselves with foreign talent. And in 2002, Lee made 30% of the annual 38.

(46) performance appraisal of Samsung affiliates’ CEOs dependent on hiring and retaining foreign talent. Newcomers were eased into the organization by having them serve in an advisory capacity in their first months to get to know something of their colleagues, the culture, and the business before taking up their posts. A formal mentoring program was instituted in which newcomers met with their respective CEO at least quarterly to give and receive feedback (Khanna, Song, & Lee, 2011, p. 145).. 政治大 cultural, social, and political tensions, all of which were magnified by the language barrier. To 立. Samsung’s efforts to recruit and retain non-Korean MBAs and PhDs were hindered by. ‧ 國. 學. help assimilate these recruits, Lee in 1997 ordered group headquarters to set up a unique internal management consulting unit, the Global Strategy Group (GSG), which reports Its members—non-Korean graduates of top Western business and. ‧. directly to the CEO.. sit. y. Nat. economics programs spend fully two years in GSG and are required to learn rudimentary. io. er. Korean before taking up their posts. Even so, many of them have eventually been assigned to. al. overseas subsidiaries, usually in their home countries. Of the 208 non-Korean MBAs hired. n. v i n into GSG since it was created C and till 2010, 135 were still working for Samsung as of he ngchi U. December 2010. The most successful are those who have taken the greatest pains to fit into the Korean culture. (Khanna, Song, & Lee, 2011, p. 146) The mission of GSG is to “enhance Samsung’s business performance and global reach while developing a pool of talented global managers that can act as strategic advisers to Samsung Group executives. The objectives of GSG are:. 39.

(47) 1. Develop a Pool of global managers. The exposure of professionals within GSG to management within the affiliate companies builds an internal resource of global managers with a deep understanding of Samsung and Korea. 2. Enhance Samsung's Business Performance. The activities of the GSG support the overall business performance of the Samsung Group and contribute to continuous improvement by providing innovative ideas and an external perspective on leading issues.. 政治大. 3. Globalize Samsung. Collaboration between senior management within Samsung and. 立. the GSG contributes to the acceleration of Samsung Group’s existing globalization. ‧ 國. 學. efforts.. ‧. (Samsung Corporation). y. Nat. sit. New GSG members participate in a 2-week orientation session to introduce them to Samsung. n. al. er. io. and GSG history, policies, and practices. This initial 2-week orientation includes visits to. i n U. v. Samsung facilities across Korea as well an introduction to Korean culture and history. New. Ch. engchi. Global Strategists have the opportunity to form strong bonds with their classmates and also interact with current members and alumni. Following this 2-week orientation, new Global Strategists also participate in a number of additional training sessions throughout their first 6 months in GSG. These sessions include more detailed introduction to the operations of Samsung Electronics and other Samsung affiliates. Furthermore, functional training covers topics such as problem structuring and project management skills in a Samsung context (Samsung Corporation).. As more people from GSG are assigned to different Samsung units, their Korean colleagues. 40.