This document summarizes a research article about defining and measuring expatriate return on investment (ROI) for companies. The authors propose that expatriate ROI can be defined as the net benefits to a firm from an international assignment after accounting for associated costs. They also hypothesize that human resource activities like selection, training and support can impact expatriate ROI by increasing or decreasing costs and benefits. Finally, the authors argue that calculating ROI requires considering multiple factors and may differ depending on the purpose of the assignment, so one standardized formula is not sufficient.

1. 68 YVONNE M. MCNULTY (AUSTRALIA) AND PHYLLIS THARENOU (AUSTRALIA)
Int. Studies of Mgt. & Org., vol. 34, no. 3, Fall 2004, pp. 68–95.
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YVONNE M. MCNULTY AND PHYLLIS THARENOU
Expatriate Return on Investment
A Definition and Antecedents
Abstract: Expatriate return on investment (ROI) is undoubtedly an important topic,
as evidenced by the considerable efforts of multinational corporations (MNCs) to
find cost-reducing alternatives to long-term international assignments. Yet no stud-
ies exist examining how expatriate ROI may be calculated and what factors may
increase or decrease expatriate ROI for the firm. The purpose of this article is to
advance our understanding of expatriate ROI by examining the following: (1)
What is expatriate ROI, and how can it be defined, and (2) What are the anteced-
ents of expatriate ROI in terms of the human resource (HR) activities that would
increase or decrease ROI. In addressing the research questions, the article formu-
lates hypotheses to guide future research to develop an understanding of expatri-
ate ROI. It does so by adopting a multidisciplinary approach and considering the
context of an assignment’s purpose. The article covers the following: (1) a pro-
posed definition of expatriate ROI, (2) the importance of an effective system of HR
activities and its expected impact on ROI, (3) factors that should be considered in
order to improve the accuracy of ROI calculations, and (4) why “one best” ROI
formula may not result in a meaningful rate of return. It is intended that the find-
ings of this article will enable scholars and practitioners to have a framework by
which to advance research in this important area.
The costs associated with a long-term international assignment, defined as the
relocation of an employee abroad by a firm for a year or more (Boyacigiller 2000;
Yvonne McNulty is a Ph.D. candidate in international management at the Department
of Management, Monash University, Australia. Correspondence: c/o Department of
Management, Monash University, PO Box 197, Caulfield East, VIC 3145, Australia
(tel.: 610-337-0606; fax: 312-803-1932; e-mail: ymcnulty@thetrailingspouse.com).
Phyllis Tharenou is the dean of research at the University of South Australia, Division
of Business, North Terrace, Adelaide SA 5000 Australia (tel.: 61-8-8302-0223; fax: 61-
8-8302-0904; e-mail: Phyllis.tharenou@unisa.au).
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