Expatriate failure and success are obviously critical and related issues for global firms. Both topics have been intensively examined by IHRM researchers for decades. We will start with the more traditional focus on expatriate failure. Considering the major determinants for expatriate failure clarifies the links to expatriate success. First, there are three questions related to failure:
its definition, the magnitude of the phenomenon, and the costs associated with failure.
What do we mean by expatriate failure?
The term ‘expatriate failure’ has been defined as the premature return of an expatriate (that is, a return home before the period of assignment is completed). In such a case, an expatriate failure represents a selection error, often compounded by ineffective expatriate management policies. There has been some discussion in the literature about the usefulness of defining expa- triate failure so narrowly. For example, an expatriate may be ineffective and poorly adjusted, but if not recalled the person will not be considered a failure. Clearly, an inability to either effectively handle new responsibilities or to adjust to the country of assignment is very likely to contribute to diminished performance levels. These results may not be immediately apparent but can have long-term negative consequences in terms of subsidiary performance. However, if the expatriate remains for the duration of the assignment, to all intents and purposes the assignment will have been considered a success.
Another significant issue is that of expatriates leaving the MNE within the first or second year after repatriation (for more details on repatriation see Chapter 7) because they feel that their newly acquired knowledge is not valued.72 Again, in this case the international assignment would be regarded as a success although it leads to the loss of a valuable employee. On the other hand, a project abroad can be completed early, which could lead to a premature return of an expatriate. According to the above-mentioned definition this would be erroneously clas- sified as a failure. Thus, the traditional definition of premature return of an expatriate that has dominated the literature does not necessarily indicate expatriate failure. Harzing suggests that a definition of expatriate failure should include poor performance as well as repatriation
contact during the selection interviews. There are also differences regarding the professional qualifications and skills of candidates. Many Indian candidates have a very high level of qualifications in natural sciences, while there is a strong demand for German candidates with a degree in mechanical engineering.
There are particular challenges for HR consultants in a dynamic international environment. Dr Hann notes:
“Similar to the requirements for the candidates, the requirements and criteria for a qualified HR consultant in the international business environment are also high”. Notably, multilingualism is important to understand the needs of the customers and those of the candidates. In addition to a professional qualification, entrepreneurial thinking as well as international work experience are essential requirements to find a position in a recruiting company as an external service provider for IHRM.
Source: © Lena Knappert and Marion Festing. Based on personal communication with Ulrich Hann, 8 June 2010.
problems.73 An example of research that adopts this broader definition of expatriate failure (that is, including under performance and retention upon completion of the assignment) is a study conducted by Forster74 on 36 British firms, which concluded:
If we accept that a broader definition of EFRs [expatriate failure rates] is warranted, then it can be argued that the actual figure of those who are ‘failing’ on IAs [international assignments] could be somewhere between 8 per cent and 28 per cent of UK expatriates and their partners.
In the next section we look at the magnitude of expatriate failure in further detail.
What is the magnitude of the phenomenon we call expatriate failure?
The Brookfield Report 2015 provides several indicators for expatriate failure. Firms indi- cated that 5 per cent of expatriate assignments were regarded as failures. The survey also reported that expatriate turnover was about 12 per cent; 20 per cent left while on assign- ment, 25 per cent within the first year upon repatriation, 26 per cent between the first and the second year, and 29 per cent after two years. Comparing these figures to an average annual turnover rate of 12 per cent, these percentages can be considered as relatively high, especially since important investments by the assigning firm are at stake. Locations with the highest expatriate failure rates were China (12 per cent), the UK (10 per cent), and India (9 per cent).75
In the following section we will report some selected results from academic studies on expa- triate failure. First, the analyses show that differences in expatriate failure rates by country of origin of the MNE are relatively low. Second, they indicate the historical development of expa- triate failure rates. We draw on data from the important work by Tung76 on expatriate failure in US, European, and Japanese MNEs, which initiated this discussion in the early 1980s, and recent work by Tungli and Peiperl, which reported figures from Germany, Japan, Britain, and the USA in 2009.77 The results of both studies are presented in Table 5.3.
TABLE 5.3 Expatriate failure rates
Premature return rate
Western Europe
1982 Germany
2009 UK
2009 Japan
1982 Japan
2009 USA
1982 USA 2009 Less than
10%
97% 91% 93% 86% 94% 24% 86%
More than 10% but less than 20%
3% 0% 3% 14% 0% 69% 2%
Equal to or more than 20%
0% 9% 3% 0% 6% 7% 11%
Source: R. L. Tung ‘Selection and Training Procedures of U.S., European, and Japanese Multinationals’, California Management Review, Vol. 25, No. 1 (1982), pp. 57–71 and p. 164; Z. Tungli and M. Peiperl ‘Expatriate Practices in German, Japanese, U.K., and U.S. Multinational Companies: A Comparative Survey of Changes’, Human Resource Management, Vol. 48, No. 1 (2009), pp. 153–171. Reproduced with permission.
As Table 5.3 shows, Tung identified higher expatriate failure rates and a higher percent- age of MNEs reporting more than 10 per cent failure rates in US MNEs than in European or Japanese organizations. The more recent data show that the reported figures have become more similar across the investigated countries and that premature return of expatriates still represents an ongoing challenge.78 Harzing79 has questioned the reported failure rates in the US literature, claiming there is “almost no empirical foundation for the existence of high failure rates when measured as premature re-entry”. More recently, Christensen and Harzing have again questioned the value of the whole concept of expatriate failure, arguing that “it might well be time to abandon the concept of expatriate failure altogether and instead draw on the general HR literature to analyze problems related to turnover and performance management in an expatriate context”.80
From the above discussion we can draw the following conclusions:
1 Broadening the definition of expatriate failure beyond that of premature return is warranted.
Following up broad surveys with interviews with responding firms may assist in this exploration.
2 Regardless of the definition or precise amount of ‘failure’, its very presentation as a problem has broadened the issue to demonstrate the complexity of international assignments. In fact, one could argue that the so-called persistent myth of high US EFR has been a positive element in terms of the attention that has subsequently been directed towards expatriation practices. It has certainly provoked considerable research attention into the causes of expatriate failure.
What are the costs of failure?
The costs of expatriate failure can be both direct and indirect. Direct costs include airfares and associated relocation expenses, and salary and training. The precise amount varies according to the level of the position concerned, country of destination, exchange rates, and whether the
‘failed’ manager is replaced by another expatriate. The ‘invisible’ or indirect costs are harder to quantify in monetary terms but can prove to be more expensive for firms. Many expatriate positions involve contact with host-government officials and key clients. Failure at this level may result in loss of market share, difficulties with host-government officials, and demands that expatriates be replaced with HCNs (thus affecting the multinational’s general staffing approach). The possible effect on local staff is also an indirect cost factor, since morale and productivity could suffer.81
Failure also has an effect on the expatriate concerned, who may lose self-esteem, self- confidence and prestige among peers.82 Future performance may be marked by decreased motivation, lack of promotional opportunities, and perhaps increased productivity to compen- sate for the failure. Finally, the expatriate’s family relationships may be threatened. These are additional costs to organizations that are often overlooked.
Reasons for expatriate failure – and what about expatriate success?
Tung83 is recognized as the first researcher to investigate the reasons for expatriate failure.
Although she found differences according to the country of origin of the MNE, important per- sonal factors were the inability to adapt either on the part of the spouse or the manager. Other family problems, the maturity of the manager and problems coping with higher responsibilities inherent in the position abroad were also noted. The more recent comparative study by Tungli and Peiperl does not indicate any country specificities in the results. It confirms the importance of the first three reasons mentioned in the study by Tung: the inability to adapt by the family or the manager as well as other family issues. However, in addition they also find that firm- specific issues and deficient performance by the expatriate are major reasons for a premature return.84 In his study based on 21 interviews, Lee85 found similar reasons for expatriate failure.
However, he also found that the activities of the MNE itself and support for the expatriates and the families were major success factors for international assignments.86
Efforts to understand the personal factors related to expatriate success,87 as well as how to provide the correct mix of contextual support (mentoring, work design and task sequencing, as well as an understanding of career issues)88 are ongoing.
Finally, the Brookfield Study (2015) reports that spouse/partner dissatisfaction (10 per cent), the inability to adapt (9 per cent), other family concerns (14 per cent), and poor candidate selection (11 per cent) accounted for expatriate failure. In a verbatim comment they confirm the results by Lee that IHRM has an important role in creating successful international assign- ments: “career and talent management (before, during, and after) is the single most important factor in retaining employees after the assignment”.89