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Unit 12: Basics of International HRM

While the staffing policies described here are well known among both practitioners and scholars notes
of international businesses, some critics have claimed that the typology is too simplistic and that
it obscures the internal differentiation of management practices within international businesses.
The critics claim that within some international businesses, staffing policies vary significantly
from national subsidiary to national subsidiary; while some are managed on an ethnocentric
basis, others are managed in a polycentric or geocentric manner. Other critics note that the
staffing policy adopted by a firm is primarily driven by its geographic scope, as opposed to its
strategic orientation. Firms that have a very broad geographic scope are the most likely to have
a geocentric mind-set.

Note Geocentric staffing approach is always better as it is compatible with both
global and transnational strategies.

self-assessment

Fill in the blanks:
1. A .................. staffing policy seeks the best people for key jobs throughout the organization,
regardless of nationality.
2. Host-country nationals have limited opportunities to gain experience outside their own
country and thus cannot progress beyond .................. in their own subsidiary.
3. The .................. that may result from a polycentric approach can also be a force for inertia
within the firm.
4. Research identifies three types of staffing policies in .................. businesses: the ethnocentric
approach, the polycentric approach and the geocentric approach.

5. A .................. staffing policy recruits host-country nationals to manage subsidiaries while
parent-country nationals occupy key positions at corporate headquarters.
6. .................. National belongs to the country where the subsidiary is located

7. .................. National belongs to the country where the firm has its headquarters
8. .................. Nationals belongs to any other country and is employed by the firm.

12.3.3 Dependence on expatriate managers

Two of the three staffing policies we have discussed – the ethnocentric and the geocentric – rely
on extensive use of expatriate managers. Expatriates are citizens of one country who are working
in another country. Sometimes the term expatriates is used to identify a subset of expatriates who
are citizens of a foreign country working in the home country of their multinational employer.
Thus, a citizen of Japan who moves to the United States to work at Microsoft would be classified
as an expatriate. With an ethnocentric policy, the expatriates are all home-country nationals
who are transferred abroad. With a geocentric approach, the expatriates need not be home-
country nationals; the firm does not base transfer decisions on nationality. A prominent issue in
the international staffing literature is expatriate failure—the premature return of an expatriate
manager to his or her home country. Research suggests that between 16 and 40 percent of all
American employees, sent abroad to developed nations, return from their assignments early, and
almost 70 percent of employees sent to developing nations return home early.
According to the Study of US, European and Japanese multinationals prepared by R.L. Tung for
US multinationals, the reasons for higher expatriate failure, in order of importance, were

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