Emerging Giants, Aspiring Multinationals and Foreign Executives: Leapfrogging, Capability Building, and Competing with Developed Country Multinationals
Human Resource Management
Abstract
The phenomenon of emerging market organizations appointing foreign executives from distant cultural contexts to headquarter positions has stirred public and academic interest. Emerging giants, aspiring multinationals, and even local organizations that focus entirely on domestic markets have joined the global hunt for management talent. This article reports why foreign executives from significant cultural distance are appointed to local headquarter positions, what they contribute, and why these positions are not filled with local executives. Data is sourced from in-depth interviews with two sample groups in organizations founded and headquartered in Malaysia (46 foreign executives from 13 countries and 25 host-country peers from three local ethno-cultural groups). Triangulation of dyadic data from these two sample groups reveals a dichotomy between the initial reasons for which foreign executives are appointed and the continued reasons why some of these executives remain in their positions.
... 2013) and limited top management talent (Arp, 2014;Meyer & Xin, 2018;Peng, 2012). Therefore, EMFs are less likely to be equipped with extensive international knowledge and other ownership-specific advantages. ...
... Their interactions with foreign firms and exposure to international norms and practices are also limited in their home country. Third, most emerging markets are characterized by underdeveloped institutional regimes and factor markets (Hitt et al., 2004;Hoskisson et al., 2013) and limited top management talent (Arp, 2014;Meyer & Xin, 2018;Peng, 2012). Given these constraints, EMFs usually have limited international knowledge (Banerjee et al., 2015;Luo & Bu, 2018), which leads them to benefit less from internationalization than more developed market firms that have advanced international knowledge (Kirca et al., 2012). ...
... Host-country stakeholders may also hold negative stereotypes against EMFs due to the liability of origin (Bartlett & Ghoshal, 2000;Guillén and García-Canal 2009;Luo & Tung, 2007Luo & Zhang, 2016). However, many EMF managers lack cross-cultural management skills (Arp, 2014;Meyer & Xin, 2018). Conflicts and misunderstandings due to unconscious cultural blindness, lack of cultural knowledge, projection of Content courtesy of Springer Nature, terms of use apply. ...
Although emerging market firms (EMFs) seek to undertake aggressive cross-border mergers and acquisitions (M&As), many of the announced deals are not finalized. This study examines how the prior failure of EMFs to complete cross-border M&As may influence the likelihood of completing future deals. Challenging the conventional wisdom that failure is the mother of eventual success, we argue that EMFs’ prior failure experiences may instead reduce the likelihood of their completing a subsequent deal. Moreover, the negative effect of prior failure experience is conditioned on firm capabilities to learn and the institutional contexts of the subsequent deals. Specifically, if EMFs have successfully completed cross-border M&A(s) or achieved a high degree of internationalization, they can learn more effectively from prior failure experience. Prior failure experience can be even more detrimental when the subsequent deal is carried out in an institutionally distant or more developed market. Based on over 30 years of data on cross-border M&As announced by EMFs, mostly from Asia, our analyses strongly support these propositions.
... For example, some studies posit that foreign entrepreneurs are able to access advantageous resources unavailable to local rivals, such as resources from coethnic communities (Abrashi-Smajli and Baum 2017; Kulchina 2016a; Hernandez and Kulchina 2020) and knowledge and opportunities from their global networks (Joardar and Wu 2017). Expatriates may also have a higher level of creativity and reflexivity, which helps them to identify market niches, trigger innovation processes, or promote organizational change (Leung et al. 2008;Sethi and Judge 2009;Joardar and Wu 2017;Arp 2014). ...
... Previous research has demonstrated that foreigners usually experience more disadvantages in the workplace, such as more potential barriers in recruitment and competency assessment (Rozkwitalska and Magier-Łakomy 2015;Fang et al. 2013), lower salary increases (Mezias and Mezias 2007), and a greater likelihood of being scapegoated (Arp 2014). As Thams and Rickley (2024) indicate, foreign CEOs are more likely to experience dismissal for firm underperformance than local peers. ...
This study investigates the impact of top management team (TMT) foreignness on corporate greenwashing. Drawing on social identity theory, we argue that foreign TMT members, suffering more from individual liability of foreignness (LOF), adopt a more cautious approach to uncertain environmental disclosures and are more concerned with preventing corporate misbehaviors. These lead foreign TMT members to communicate companies' environmental initiatives in a more honest manner, thereby effectively reducing corporate greenwashing. We further propose that the negative relation between TMT foreignness and greenwashing will be strengthened when a firm faces higher earnings pressure and operates in a less marketized environment, as these conditions exacerbate individual LOF on foreign TMT members. Empirical analysis of a sample of Chinese listed companies from 2010 to 2022 confirms our arguments, suggesting that hiring foreign executives can be an effective strategy for mitigating greenwashing, particularly in contexts where individual LOF is more pronounced.
... However, a foreign TMT member can moderate such risk aversion and accelerate digital transformation. Most of the foreign executives hired by local firms are talent that have proved their management ability abroad and have successful management experience [61]. Existing research argues that based on foreign executives' confidence obtained from a successful management career, they tend to have higher self-evaluations and less negative conceptions of uncertainty [62,63]. ...
... By integrating and utilizing scarce overseas resources, they can enhance the resource level of firms and provide them with the extensive resources required for digital transformation [67]. Additionally, when attracting executives with high salaries, firms tend to hire foreign executives with successful management experience and strong professional abilities [61]. Such executives have advanced management methods and decision-making experience, with a deep understanding of business models and philosophies [6,52]. ...
This study investigates the effect of foreign executives on firms’ innovation performance and the mediation role of digital transformation in Chinese-listed firms from 2011 to 2021. Our findings indicate that the presence of foreign executives in top management teams promotes firms’ innovation performance by enhancing digital transformation. Further analyses show that foreign executives contribute significantly to improving firms’ radical innovation performance rather than incremental innovation performance. We also examine the moderating effect of negative performance feedback and financing constraints between foreign executives and innovation performance, finding that foreign executives can promote innovation performance particularly in firms with negative performance feedback and weak financing constraints.
... Nelson, 2016), or how these addressed the guiding questions (e.g. Arp, 2014). ...
... We found that authors using a notation system to indicate emphasis (e.g. using bold or italics) sought to emphasise certain words for analytic purposes, rather than to indicate emphasis by the speaker (e.g. Arp, 2014;Byron and Laurence, 2015). In addition, we found that notation practices using three consecutive dots ('…') had unspecified uses (e.g. ...
Purpose-The aim of this review paper is to identify the methodological practices and presentational styles used to report interview-based research in 'leading' management and organisation journals.
Design/methodology/approach-This paper reviews a sample of 225 articles using qualitative interviews that were published in management, human resource management, organisational behaviour, and international business journals listed in the Financial Times 50 list between 2009 and 2019.
Findings-The review found diversity and plurality in the methodological practices used in these studies and the presentational styles used to report interview research.
Originality-To make sense of this plurality, we map these practices and styles against the onto-epistemological paradigms identified by Alvesson (2003; 2011). The paper contributes to calls for philosophical diversity in the evaluation of qualitative research. We specifically articulate concerns about the use of practices in interview-based studies that derive from the positivistic logic associated with quantitative research.
Practical implications-The findings are expected to help doctoral students, early career scholars, and those new to using qualitative interviews to make decisions about the appropriateness of different methodological practices and presentational styles. The findings are also expected to support editors, reviewers, doctoral examiners, and conference organisers in making sense of the dissensus that exists amongst qualitative interview researchers (Johnson et al., 2007). These insights will also enable greater 'paradigmatic awareness' (Plakoyiannaki and Budhwar, 2021, p. 5) in the evaluation of the quality of interview-based research that are not restricted to standardised criteria derived from positivism (Cassell and Symon, 2015).
... The initial appointment of foreign executives in local organizations (FELOs) advanced the corporate organizers' preferred interactions for the purpose of competing in local and international markets, even when MNOs structured businesses possessed a distinct advantage (Arp, 2014). Local organizations utilizing obligated FELOs over the short term integrated knowledge provided as the result of expatriate's expertise when strategies required a robust competitive response (2014). ...
... Multinational firms personnel worked in various political, cultural, legal, and economic environments (Robinson & Stocken, 2013). A more precise understanding of motivations, values, and traditions allows expatriate managers and local managers to interact and implement mutually beneficial business strategies (Arp, 2014). In addition to the use of established business strategies, representatives of global organizations often utilized constructs associated with centralization and a parent-headquarters approach (Thomas, & Peterson, 2014). ...
This article explores the role of multinational organizational (MNO) structures and the influence associated with identified constructs, development strategies for businesses, and principal-agent theory. Consideration of the authority exercised by principal-agents in MNO structures reviewed included many concepts including Home region focus, centralization influences, expatriates’ strategies, and distantly located executives’ roles within organizational structures. The review of the positive control mechanisms reviewed produced perspectives of successful business strategies related to the utilization of MNO structures. This paper offers a focused study and descriptions of a practical research approach designed to provide a comprehensive view of Multinational organizations. The content may assist researchers interested in researching this topic.
... LOPATs' mentoring should emphasise effective adjustment into long-term living and working in the host country, and in dealing with potential loss of identification with the MNCs' home country organisation and with potential pejorative perceptions of having 'gone native.' Foreign executives in local organisations (FELOs) represent another type of expatriate who, as a free agents, are hired by a local organisation that recognises and values the individual's expertise for leading local company operations (Arp, 2014;Arp, Hutchings, & Smith, 2013;Linder, 2019). FELOs are selected by these local companies who want to 'buy' talent to support rapid company growth rather than commit the time and considerable effort needed to 'make' or develop talent from within. ...
This chapter investigates the role of mentoring in fostering expatriate professional development, focusing on overcoming unique challenges such as cultural differences, language barriers, and geographical distance. Despite mentoring's recognized benefits in career advancement and learning, as well as overall organizational development and improvement for enhancing organizational productivity and performance success, its application in the global arena remains under-explored. Through a comprehensive review of existing literature, this chapter examines the limited but growing attention on expatriate mentoring in various important expatriate career categories, providing a nuanced understanding of intercultural mentoring relationships and mentoring dynamics within MNCs. This review underscores the importance of peer mentoring and developmental networks in facilitating successful international assignments. The chapter concludes with practical recommendations for organizations and policymakers and outlines future research directions to enrich the understanding of expatriate mentoring's impact on global talent management.
... Finally, growing international exposure of firms that operate in the region is not necessarily associated with positive employee outcomes. Emerging market multinationals are more likely to complement their existing management team with foreign executives (Arp, 2014) and may discourage their employees' aspirations for internal career development (Alvarado-Vargas, Hermans, & Newburry, 2020). ...
Business environments characterized by volatility challenge the idea of sustained investments in human capital that underlies much SHRM research. We adopt a stakeholder perspective to explore how employees and managers (i.e. internal stakeholders), as well as investors, governments, suppliers, distributors and clients (i.e. external stakeholders) affect SHRM in Latin America. We argue that information regarding stakeholder needs and access to stakeholders’ resources allows for more effective reconfiguration of organizational capabilities. Within a sample of 1,643 respondents we find that the extent to which organizations consider internal and external stakeholders in strategic decision making is positively associated with implementation of HPWPs. We discuss the implications for HRM in the region and offer suggestions for internationally oriented SHRM research.
How successful emerging market firms are in their internationalisation to either other emerging or developed markets largely depends on their staffing practices. Emerging market firms face several challenges both domestically and internationally in this respect. The chapter highlights some of these challenges, including the lack of skilled employees in emerging markets, short internationalisation history and inexperience in internationalisation at firm and individual levels, limited opportunities for indirect learning about internationalisation, a negative country of origin image and the related domestic and international employee recruitment and retention issues. It also briefly addresses how these challenges are reflected in emerging market firms’ international staffing practices, such as putting the focus on local talent recruitment process or searching for alternative international staffing practices to address the deficiencies in domestic and international labour markets.
This chapter focuses on the interactions between mezzo and micro levels of analysis: i.e. it discusses the firm–employee relationship in terms of the clashes of interests and identities. The results from my empirical study demonstrate that the clashes in interests within and across levels of analysis and the related multilevel narratives trigger identity work at the level of the individual. I thus first discuss how agency theory, which deals with the principal–agent relationships, conflicts about priorities by different parties to these relationships, and the related power struggles, can inform the impact of multilevel narratives on assignment outcomes for inter-employee, inter-assignee, inter-entity, and firm–employee collaboration (see Sect. 10.1). Since role transitions, social categorisation, and identity work are featured more prominently in the study, these are the focal part of my theorising and, as such, the primary theoretical contribution of the empirical study. In the second part of the chapter (i.e. Sect. 10.2), I therefore discuss how my findings contribute to role (transition), social categorisation, and social identity theories by showing the particularities of role transitions, social categorisation, and identity work for international assignees (and to a limited extent their colleagues and business partners) and their implications for international assignment management in the context of emerging market firms.
In this article, we review similarities and differences in articles in the research field of international and comparative human resource management (HRM), published in Human Resource Management over the past 60 years. The extensive review and analysis, based on 189 conceptual articles, reviews, and empirical studies, identified several trends. First, the two distinct research streams in this research field (HRM in MNEs and comparative HRM) have grown over the decades and moved from conceptual articles in the beginning to almost exclusively empirical studies in more recent years. Second, in addition to the two research streams, in more recent years we identified a third research stream that combines elements of HRM in MNEs and comparative HRM research. Third, the research field has become more feminized, with an increasing number of female (first) authors, and has become more international, with more authors affiliated with non‐US universities in the more recent time periods. Finally, while the research streams show some differences in the content of their research, we do not find evidence that the streams developed in isolation. Based on our analysis, we provide suggestions for future research on international and comparative HRM and identify current implications for HR practitioners.
There is strong evidence that work experience abroad can be very valuable for developing global competencies for career success in today's global economy-whether one's career is at home or abroad. However, career research has been notably silent in providing career models for gaining international experience for developing these competencies. In addition, the international management literature has taken a mostly corporate perspective, with little attention about what individuals can self-initiate to advance their international career interests. This study explores various career path strategies, based on the actual experience of 48 current American expatriates in five major cities in East Asia, for gaining international business experience, which appears to be vital to the development of global competence. The result of this exploratory research is the development of a comprehensive, validated taxonomy or model of "pre-international" career path strategies and activities for gaining international business experience. It is hoped that this work will begin to advance the development of a much neglected line of career research related to self-selected or self-initiated expatriation. This research also can potentially provide useful guidance to individuals as they plan for developing global competence through obtaining foreign work experience.
Foreign executives in local organisations (FELOs) of culturally distant countries are a rare international management phenomenon that differs significantly from expatriate assignments in the subsidiaries of multinational organisations. The phenomenon has not been systematically researched, although media reports and executive search firm publications see it as ‘fairly new, highly visible, and sometimes controversial’ with demand for FELOs in Asia ‘likely to continue’. The purpose of this research is to address the gap in the literature through a systematic investigation of the FELO phenomenon. It adopts a qualitative approach to examine what and when foreign executives contribute to local organisations, why they are appointed, and how cultural distance is bridged. To achieve its purpose, the study analyses data from in-depth semi-structured interviews with foreign executives (n=46) from 13 countries and their local colleagues (n=25) from various cultural backgrounds, in organisations founded and headquartered in Malaysia. Dyadic data is used for the triangulation of findings, while non-dyadic data, socio-biographical data, as well as ‘between’ and ‘within’ group analysis, adds to the richness of the findings and is utilised to establish typologies. The research setting allows the exploration of organisational and individual perspectives across multiple cross-cultural boundaries in a single language common to all participants. Utilising this heterogeneity of perspectives, the study identifies differences between FELOs and other phenomena (such as expatriate assignments), and distinguishes country-specific influences from those that are generalisable to FELO workplaces in other settings. The key findings of the research include that FELOs are initially appointed for temporary roles and their hard skills, and to help open foreign markets, enhance organisational reputation and portray internationalisation. Assumptions about the remuneration of FELOs are a potential source of resentment from host-country nationals, although many FELOs are learning- and experience-driven rather than motivated purely by income. The research further suggests that some FELOs remain in their positions due to their soft skills, progress with the internationalisation of the local organisations for which they work, and because of a unique ‘in/out group’-status that has developed based on their host-country involvement. For many FELOs, this involvement includes engagement in local industry associations, private relationships with host-country nationals, and bridging roles between groups of local colleagues. The originality, theoretical contribution and significance of this research lie in its exploration and analysis of an international cross-cultural workplace phenomenon that has been overlooked by research primarily focused on expatriate assignments. In distinguishing between individual (that is, psychological) and collective (that is, socio-cultural) distance, the study helps to explain how cultural distance can be asymmetric and contingent on direction. It generates new insight on the theoretical constructs of ‘degree of internationalisation’ and the ‘global mindset’ of management teams. The study also holds important practical implications, as it elucidates the career-paths and career-capital of the individuals involved in the FELO phenomenon, and the contribution these individuals make to local organisations through leverage of their unique ‘in/out group’-status. Table of contents released for public access by author.
Numerous studies have examined the effects of diversity on team performance under a variety of circumstances, but little attention has been directed to the national composition or the international qualifications of top management teams. The results of three exploratory studies of the extent of internationalisation among boards of directors and executives from samples of the largest multinational corporations (MNCs) based in the United States, Europe, and Asia are presented. The findings clearly show that European MNCs have a greater proportion of internationally qualified personnel on both their boards of directors and within the executive ranks than do USA-based companies. In both the USA and European samples, executives were more likely to have international qualifications than directors, while data from the Asian sample suggest that directors might be more likely to have international qualifications.
The shift from circumscribed careers to boundarylessness confronts us with a problem outside our previous experience. No norms and few models exist to tell how to evaluate, plan, review, analyze, promote, or otherwise live out a boundaryless career. Change dominates over stability. But of all changes, the most fundamental are changes in assumptions about the way the world works, and what we mean by the terms we use.
International assignments have become an important part of managers' careers and are considered one of the most effective leadership development tools. Yet, studies consistently show that companies fail to integrate international assignments with long-term career development and succession planning and that a substantial percentage of expatriates leave the company upon completion of the international assignment. A total of 1,779 international assignees participated in a study that examined the factors associated with expatriate turnover intentions. The results indicate the importance of differentiating between two types of international assignments—developmental (or learning-driven) and functional (or demand driven)—to understand expatriates' turnover intentions. While we found turnover intentions to vary depending on whether assignments are developmental or functional, the three sets of predictors of turnover intentions are similar. They are (1) lower satisfaction with company support, (2) higher repatriation concerns, and (3) lower career advancement opportunities within the company (relative to opportunities available outside the company). We discuss the implications for research and practice.
This study investigates the impact of various top management team characteristics on firm international diversification. Relying on data from 126 firms in the electronics industry, we find that certain top management team characteristics are related to international expansion. Specifically, results indicate that lower average age, higher average tenure, higher average elite education, higher average international experience, and higher tenure heterogeneity are associated with firm international diversification. The study reinforces the importance of top management team composition in internationalization decisions and suggests further research in this context.