PAPER FINAL

UNIVERSITY OF AGDER
School of Business
Kristiansand, Norway
UNITED STATES EXPATRIATE MANAGERS: REASONS FOR
FAILURE
An Examination of the Reasons for Failure among United States Expatriate
Managers taking International Assignments for One Year or Longer
Hallie Exall
ORG 409
International Management
Professor Joyce Falkenberg
Fall 2013

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TABLE OF CONTENTS
INTRODUCTION AND DEFINITIONS……………………………………..…...…………PG. 3
THEORETICAL FRAMEWORK……………………………………………………...…….PG. 4
EXPATRIATION SELECTION ………………………………………………...…..………PG. 5
REASONS FOR FAILURE………………………………………………………....……….PG. 9
FAILURE AFFECT ON MULTINATIONAL CORPORATION ………..………......……PG. 12
CONCEPTUAL MODEL…. . . …………………………………….……………....………PG. 13
FINDINGS & CONCLUSION …………………………………………………......………PG. 15
BIBLIOGRAPHY …………………………………………………………..………………PG. 16

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INTRODUCTION& DEFINITIONS
I will be studying the reasons that expatriate managers, who have lived and worked in the
United States for the majority of their career, leave their one-year international assignments
early, as well as the challenges that they face when they come back to the United States. I will
then be discussing possible solutions to decrease the likelihood of expatriate failure, and
prevention techniques that multinational corporations can use when sending managers abroad.
The purpose of this paper is to understand the challenges that US managers face when placed
abroad for more than one year, and the reasons for which they leave their assignment early or
have repatriation problems.
I define expatriation as “employees transferred from their native country to a host country
to work for the ﬁrm’s international operations” (Siljanen, 2009, Pg. 1469). With this in mind, it
is important to study why expatriate managers have such a high likelihood of leaving their
assignments early. When I refer to expatriate failure, I am defining this as when a manager
leaves their assignment earlier than the proposed date of expected return, and/or has problems
when they come back to their home assignment. This can be for a variety of reasons, such as
poor selection, lack of training, spousal issues, adaptation problems, personal and cultural
characteristics, and other variables. Expatriation success is thus defined as the integration of the
expatriate with the local culture of the host country, and motivation to continue working for the
corporation prior to repatriation.
The global business environment is constantly changing, and is headed to resemble more
of a converging culture, thus defining globalization. As multinational corporations (MNCs) are
expanding globally, the need for expatriate managers is increasing. There are several variables

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affecting the success of these international assignments, many of which can be controlled and
possibly eliminated.
THORETICALFRAMEWORK
There are three main theories that will be used to describe why and how MNCs use
expatriates, and the reasons in which expatriates leave their assignments early. These theories are
The Agency Theory (Harvey; Speier; Novecev, 2010), Expectancy Theory (Harvey; Speier;
Novecev, 2010), and Role Conflict Theory (Shaffer and Harrison, 1998, Pg. 111).
Agency Theory is concerned with the problems associated between the principal (MNC)
and agent of the principal (expatriate). By understanding the needs of the principal, it can help
identify the most effective pool of candidates to draw from when selecting expatriate managers.
The theory is divided into human behavior and performance outcome which both have
monitoring problems associated with them. This can relate to the control issues that MNCs might
experience if they do not choose a parent-country national for the expatriate assignment. Two
characteristics of successful expatriate coordination with the company are asymmetry in
knowledge and goal congruency. As Harvey, Speier, and Novecevic (2010) found, “when goal
congruency is low and information asymmetry is high between a parent and subsidiary, selection
of managers for foreign assignments should be from an expatriate candidate pool.” (Harvey;
Speier; Novecev, 2010, Pg. 903). This pool of candidates would include all possible expatriates
that show interest in taking the assignment. Agency theory can thus help a corporation choose
whether to use a third-country national, expatriate, inpatriate, or local national to manage their
foreign subsidiary. (Harvey; Speier; Novecev, 2010)

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The Expectancy Theory can help determine the amount of motivation a potential
expatriate would have in accepting a foreign assignment. This theory can be used simultaneously
the personality traits discussed below when selecting potential expatriates for assignments. The
three interdependent factors are valence, instrumentality and expectancy (Harvey; Speier;
Novecev, 2010, Pg. 906). Valence refers to how much the employee values specific performance
outcomes and rewards. Instrumentality refers to the fact that that employee expects their
performance to lead to those specific rewards, where expectancy refers to the employee’s belief
that the amount of effort they exude will lead to a certain level of performance. These three
characteristics will thus determine how satisfied they are with their expatriate assignment.
(Harvey; Speier; Novecev, 2010)
Role Conflict Theory is helpful in understanding the tradeoffs that expatriates have to
make when taking international assignments. This may be useful in selecting candidates who feel
that they would be able to balance their family life with a foreign assignment, and also for the
reasons that the expatriate may leave their assignment early (Shaffer and Harrison, 1998). As
discussed later, spousal conflicts and family issues are a main contributor to the failure of
expatriates.
EXPATRIATION SELECTION
Expatriation selection is an important variable that can affect the success of the
assignment. When it comes to selecting an expatriate, one first might ask, “Why not hire a
manager in the host-country to manage the subsidiary, rather than sending one abroad?” After
all, sending a manager abroad comes with great costs to the company. There are three

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classifications to hiring international staff to manage a foreign subsidiary. The staff can consist
of parent-country nationals (PCN), host-country nationals (HCN), and third-country nationals
(TCN). Each staffing policy has advantages and disadvantages to working in the country of
assignment (Reiche and Harzing, 2009). The Agency Theory can also help choose which
applicant pool would be most effective for finding a successful expatriate that aligns with the
goals of the company (Harvey; Speier; Novecev, 2010).
For firms using an ethnocentric staffing approach, PCNs are chosen for international
assignments (Deresky, 2014). These people have worked for the company for an extended period
of time, and thus know the corporate culture, policies, and employees, which can have a large
impact on the success of the assignment. This provides greater control for the company when
managing the foreign subsidiary from the home country. Although this control is great, there are
also drawbacks to sending an employee abroad. These drawbacks consist of high costs of
training, problems with adaptation with the local culture, family adjustment issues, and many
other variables that can negatively impact the success of an expatriate assignment (Reiche and
Harzing, 2009).
HCNs are those who are hired in the host country of the subsidiary taking a polycentric
staffing approach (Deresky, 2014). These employees are more knowledgeable about the local
customs and traditions, cultural variables, business practices, and can also relate more to the
employees who will be working in the subsidiary that they manage. They are also less expensive
to hire, however they may cause coordination and communication problems (Deresky, 2014).
TCNs are also a good choice for a global staffing approach because there are a greater number of
applicants to choose from, they can bring new perspectives to the company, and are less
expensive than the other two options (Deresky, 2014). So why do multinational corporations

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choose an ethnocentric staffing approach by internally selecting people from headquarters to fill
the international assignments?
One of the major reasons that PNC are used for international assignments is that of
maintaining control of the corporation (Deresky, 2014). When sending a manager who has lived
and worked in the parent country for an extended period of time, they are more familiar with the
communication style of the company, which makes it easier to control the foreign subsidiary and
get things accomplished (Deresky, 2014). The opportunity provided to an expatriate can also be
regarded as an incentive to take the assignment due to the international experience that they will
gain while abroad (Reiche and Harzing, 2009). If the expatriate returns to their home country
after a successful assignment, and decides to remain at the corporation, pay-offs are large. The
former expatriate could then bring new expertise, encourage international assignments to other
employees, and be a possible candidate for future assignments (Reiche & Harzing, 2009). When
selecting an applicant, the first characteristic that should be sought in a potential expatriate
would be motivation to accept a foreign assignment. The Expectancy Theory can then draw upon
the three theoretical characteristics that should be present in the applicant: valence,
instrumentality and expectancy (Harvey; Speier; Novecev, 2010). Once those are examined, the
mind set dimensions can be analyzed. Selecting the right kind of person for an overseas
assignment can largely affect the success of the expatriate.
Mind Set Dimensions
There are three major mind-set attributes that must be examined when selecting
successful expatriates: intellectual capital, psychological capital, and social capital. Mansiyr
Javidan defines intellectual capital as the “knowledge, skills, understanding, and cognitive

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complexity [of the expatriate]”. He defines psychological capital as the “ability to function
successfully in the host country through internal acceptance of different cultures and a strong
desire to learn from new experiences”. Lastly, Javidan defines social capital as “the ability to
build trusting relationships with local stakeholders”. (Javidan, 2010, Pg. 2) in Deresky, 2014
Personality Dimensions
Personality dimensions are certain individual characteristics and traits that individuals
have (that may be helpful in having a successful expatriate assignment). In 2000, a sample of 96
US managers of MNCs with “extensive experience on staffing and managing expatriate
managers” was used to examine how much the Big 5 personality dimensions correlate with
expatriate success (Ones and Viswesvaren, 2000, Pg.6). Conscientiousness was found to be the
most important dimensions when choosing managers for international assignments. Openness to
experience was found to be the second more important dimension. The third most important
variable was the emotional stability of the expatriate, followed by extraversion and
agreeableness. All five of these dimensions had an effect on how well the expatriate adjusted,
created relationships with locals, and had success with their job performance. (Ones and
Viswesvaren, 2000)
There are four other personality characteristics that an individual should have that are
important in determining the success of the expatriate assignment. Although not much research
has been conducting regarding the direct relationship between personality dimensions and
expatriate success, it is safe to say that these dimensions are prevalent in successful expatriates.
Further examination could be done concerning this topic as regarded to expatriate failure. Black,
1990; Church, 1982; Mendenhall & Oddou, 1985; Shaffer et al., 2006 (in Caligiuri; Tarique;

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Jacobs, 2009) define these four other personality characteristics as: “1) to be open and receptive
to learning the norms of new cultures, 2) to initiate contact with host nationals, 3) to gather
cultural information, and 4) to handle the higher amounts of stress associated with the ambiguity
of their new environments” (Caligiuri; Tarique; Jacobs, 2009, Pg. 253).
Other Key Dimensions
There are other obvious skills and experiences that a potential expatriate should possess.
These include past international experience, language skills, managerial experience, length
within the company, and other fundamental characteristics that may be culturally contingent on
where the expatriate will have their assignment (Young, 2011). If the expatriate possesses these
skills and experience, they are more likely to have a successful expatriate experience.
REASONS FOR FAILURE
The failure rates associated with expatriates leaving their assignments early have major
negative consequences on the MNC, consisting of sunk costs and unmet business objectives.
Recent studies show that expatriate assignments fail about 20% of the time (Dale, 2003).
Although this number may seem low to some, the magnitude of repercussions resulting from this
failure is large for the success of the corporation. Naik proposes seven main causes, other than
poor selection, for expatriate failure listed below:
1. Selection based on headquarters criteria rather than assignment needs
2. Inadequate preparation, training, and orientation prior to assignment

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3. Alienation or lack of support from headquarters
4. Inability to adapt to local culture and working environment
5. Problems with spouse and children – poor adaptation, family unhappiness
6. Insufficient compensation and financial support
7. Programs lacking for career support and repatriation
*Reference (Naik, 2013, Pg. 1)
The first cause of expatriate failure has to do with selection. Careful attention must be
directed at this stage to select the most qualified and culturally adaptable person for the
assignment. Many times, companies focus too much on criteria for their home country (such as
technical skills and area expertise) rather than focusing on international assignment needs (such
as host-country communication styles, and knowledge about international assignments). One of
the largest ways to prevent expatriate failure after selection would then be through training and
preparation. For an expatriate with an assignment for more than one year, they will be
experiencing immersion into the culture, and training needs to be very extensive (Medenhall,
Dunbar and Oddou,1987 in Lecture Notes, Falkenberg, 2013). Training an expatriate that will be
at there assignment for 1-3 years should consist of an assessment center, field experience,
simulations, sensitivity training, language courses, cultural courses, stress reduction techniques,
and other cultural development techniques (Medenhall, Dunbar and Oddou, 1987)
The lack of support from headquarters can be detrimental to expatriate success. When a
manager leaves their home assignment to move to a foreign country and experiences lack of
home support, culture shock will not be mitigated properly, and they may feel as if they have
been forgotten and/or not as important as they once were. This can cause problems with focusing
on their assignment and can create feelings of helplessness and regret. This can then lead to the

fourth dimension, inability to adapt, because of the lack of support from home. As an expatriate
manager abroad for more than one year, they must learn to immerse themselves in the culture
and adapt their management style to fit the local cultural expectations and needs. Inability to do
this can result in failure to manage and motivate, as well as failure to connect with the local
people.
Possibly one of the most important reasons for expatriate failure consists of the family
problems that arise and are associated with international assignments. Not only does this affect
the expatriate’s willingness to accept an assignment, but it also remains one of the main reasons
for leaving an assignment early (Brown, 2008). In fact, “61 percent of respondents noted that the
impact on family issues on early returns from assignment was very critical or of high
importance” (Deresky, 2014, Pg. 322). In today’s United States culture, both of the spouses are
more likely to have their own careers. When one of the spouse is assigned manage abroad,
attention must be given to the other spouse to ensure that the family stays united and is well
trained. If once spouse feels that they are giving up their career so that the other can go on an
international assignment, resentment may be present, and internal family issues may arise. This
is where Role Conflict Theory should be examined. The conflicting roles of balancing family life
with work life in international assignments is difficult, and should be mitigated as best as it can
(Shaffer and Harrison, 1998). Training the other spouse can help mitigate this conflict, and is just
as important for expatriate assignments as training the expatriate. (Deresky, 2014)
Compensation is very important for international assignments, and can change depending
on local cultural norms and competitive needs of the corporation. For PCNs, compensation
should consist of maintaining the same standard of living as at home, plus any other costs
associated with their international assignment (Deresky, 2014).

The last reason for expatriate failure may be inadequate programs for repatriation and
career support after they arrive to their home country. The reality is that the expatriate
remembers their home country to be one way, which is often different than what they expected
when returning. They may experience reverse culture shock, experiences that are hard to share,
and compensation issues upon arrival (Deresky, 2014). The issue regarding re-entry into their
home company is one at large. Although the expatriate may not have left their assignment early,
they still may feel that the corporation has not done enough to help reincorporate them with the
corporate environment, and may thus leave the company (Deresky, 2014). Among the variables
discussed above, an expatriate’s lack of motivation and personality, may also contribute to the
reasons for expatriate failure.
FAILURE AFFECT ON MULTINATIONAL CORPORATION
The inability of a corporation to successfully select, train, assist, and reintroduce an
expatriate can be both costly and detrimental to its success as a business. Naik proposes four
main negative effects of expatriate failure on MNCs:
1. Substantial monetary costs
2. Damage to the MNC’s image in the host country
3. Personal tragedies of employees who may have sold their homes, left jobs they liked, and
find themselves back in the home country branded as failures
4. Damage to the firm’s reputation, loss of employee morale, and disrupted relationships
with local nationals
*Reference (Naik, 2013)

The monetary costs associated with an expatriate leaving their assignment early are large.
After spending the money and time training the expatriate, and supporting them in their
international assignment, many sunk costs arise as a result of early return. If the manager decides
not to stay with the company upon return, the MNC is losing valuable human capital to a
potential competitor company. This is why it is important for MNCs to support the expatriate at
all stages of the assignment.
There may also be considerable damage to the image of the company in the host country
if the manager leaves early and the MNC is unable to fill the position quickly. Many employees
will be left with limited direction, and the company may fail to continue to meet regular business
objectives. If the host-country employees see that headquarters is not supporting an expatriate,
they may not want to work for the company anymore and may also leave once the expatriate
leaves (especially if a personal relationship is formed between the two).
Once an expatriate returns home, they may have trouble finding happiness that they once
experienced before taking the international assignment. If the employee is not satisfied with their
job once they return, they may also leave the company, which can lead to a high degree of
turnover, as well as damage to the MNC’s reputation. Employee moral may decrease, which can
have a domino effect on the internal and external success of the company.
CONCEPTUALMODEL
The model below explains how the theories mentioned above (expectancy, role conflict,
and agency theories) correlate to the variables that cause expatriate failure. As shown below,

there are many variables that can cause expatriation failure. These include mind-set dimensions,
personal skills and experiences, problems caused by headquarters, family problems with
adaptation, and inability of the expatriate to adapt. The last two of these variables are correlated
with the length of the assignment. The personal skills and experiences, and training from
headquarters are also correlated with the inability of the expatriate to adapt, because the more
international skills and experience that he has, and the better quality of training he is given, the
more likely he will be able to adapt to a new environment.

FINDINGS & CONCLUSION
Multinational corporations need to pay close attention to the ways in which they select,
train, transition, and reintroduce expatriates to the company and culture. Host-country cultural
variables play a key role in determining the success of the expatriate, along with the personality
dimensions of the potential expatriate. Globalization is underway, and in order to compete,
companies must use expatriates to build international subsidiaries and grow the corporate
culture.
One area of study that I found lacking in current expatriate research was the recent
expatriate failure rates, and solid theoretical framework to support the findings. Although
research is lacking, there has been many studies on expatriation that give insight to the reasons
that expatriates leave their assignments early.
The purpose of this paper was to understand the challenges that US managers face when
placed abroad for more than one year, and the reasons for which they leave their assignment
early. I found that some of these reasons include inadequate training and preparation, lack of
support, adaptability, family problems, compensation, and poor expatriate programs. I have also
concluded that the MNC can decrease the likelihood of these issues from arising by
implementing proper selection variables, training programs, and expatriate support techniques.
The research question, which I propose should be studied more to understand the current issues
facing today’s expatriates, is: “Are the Big 5 personality dimensions directly correlated with
United States expatriate failure during an overseas management assignment?”

BIBLIOGRAPHY
Brown, R.J. (2008). Dominant stressors on expatriate couples during international assignments.
The international journal of human resource management, 1-18.
Caligiuri, P., Tarique, I., & Jacobs, R. (2009). Selection for international assignments. Human
resource managementrReview, 19(3), 251-262.
Dale, T. (2003). Considering an expat assignment? Velocity, Volume 5 (No. 1), 32-35.
Deresky, H. (2014). Cross cultural negotiation and decision making. International management:
Managing across borders and cultures. Essex, England: Pearson. (Original work
published 1988)
Harvey, M., Speier, C., Novecevic, M. (2010). A theory-based framework for strategic global
human resource staffing policies and practices. The international journal of human
resource management, 898-912.
Javidan, M., Teagarden, M., Bowen, D. (2010). Making it overseas. Harvard business review
2-6.
Naik, V. (2011). 7 Major Causes of Expatriate Failure in International HRM. Retrieved 09.13
from http://www.shareyouressays.com/about-site.
Ones, D. S., & Viswesvaran, C. (1999). Relative importance of personality dimensions for
expatriate selection: A policy capturing study. Human Performance, 12(3&4), 275-294.
Reich, S., Harzing, A. (2009). International assignments. International human resource
management. 3-6.
Shaffer, M., Harrison, D. (1998). Expatriates’ psychological withdrawal from international

assignments: work, nonwork, and family influences. Personnel psychology. 87-113.
Siljanen T., Lamsa, A. (2009). The changing nature of expatriation: Exploring cross-cultural
adaptation through narrativity. International human resource management. Volume 20
(No. 7), 1468-1480
Young, R. Cross-cultural skills: Essential for expatriate success. The chronicle of higher
education. Retrieved 10.13 from http://chronicle.com/article/Cross-Cultural-Skills-
/128782/

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