Within the corporate domain, most multinationals and SMEs have realised that organisational control is very important to the existence because it provides the necessary managerial functionalities to keep the corporation fully functional. Organisational control has ensured that that is the responsive application of the company's strategic goals while ensuring that these strategies are met and any form of division is ameliorated using the correct standards for effective performance. In the manufacturing world, for instance, it has emerged that corporations are increasingly resorting to the use of international expatriates who not only bring highly skilled labour into the industry but guarantees organizations substantial returns on investments. While focusing on the need to have these expatriates work in various companies, there is an emerging consideration of the need for promoting autonomy. Managers in multinational enterprises (MNEs) have, therefore, identified the need for more control. The current paper will, therefore, provide an in-depth understanding of expatriate adjustment based on a comprehensive literature review on the effect of managerial decisions on autonomy and expatriate management. The chosen sources for investigation have been selected based on their reliability and relevance to addressing the autonomy and expatriate topic.
MNC Subsidiary size and Expatriate Control
Peng & Beamish (2014), suggest that the resource dependency theory, most multinational organisations facilitate their transactions in various markets as influenced by access to, and subsequent use of resources. Most organisations have realised that they are unable to possess all the required resources for their normal functioning to sustain their gradual economic growth and sustainable development. As such, an organisation requires the necessary resources to ensure that it achieves its outlined mandates that focus on success and cool include the need for external acquisition of resources. Resource acquisition, therefore, implies that an organisation must render itself to such sources and becoming dependent on them. The concept of resource dependency theory implies that multinational subsidiaries become prone to the factors that influence accessibility to, and subsequent use resulting into apparent subsidiary power relationship when considering the need for subsidiary control. The issue of subsidiary size is seen as an important influencing factor is reliant on the decisions made at its parent firm.
When a subsidiary is small, it is almost expected that it will continually depend on its parent firm for survival. Hence, a subsidiaries dependence upon its parents for resources implies that the parent will have substantial control over it which in turn may mean having a higher number of expatriates (Peng & Beamish, 2014). Evidently, the power relationship between a subsidiary and its parent firm will continue until such a time when the subsidiary shall have grown significantly to stand on its own. It should, therefore, be noted that an international subsidiary cannot be fully controlled by its parent company because expatriate brings different skill sets and managerial competencies that greatly influenced and dictate how the company operates. Alternatively, increasing the subsidiaries size will inherently make it less dependent on its parent company dance decreasing expatriate staffing levels.
Autonomy and Expatriate Adjustment
Importantly, it has been established that fostering international development remains a global talent that most multinational corporations must have. In order to control international subsidiaries, most of this multinational corporations tend to play a central role in defining global competencies (Takeuchi, Shay & Jiatao, 2008). A parent company can decide to deploy their staff to an international subsidiary because of the feeling that they meet the required competencies. Alternatively, these companies can also resort to employing local staff in those respective countries. To reduce operational costs and facilitate flexibility of integration with the local community. International assignments provide a great opportunity for employees to develop and sharpen their competencies by immersing themselves in an expatriate management environment (Takeuchi, Shay & Jiatao, 2008). Most importantly, employees deployed in overseas subsidiaries are expected to possess skills knowledge and abilities that are necessary for global management. Therefore, recognising the significance of expatriate involvement in management can either mean that accompany benefits or suffers inadequate staffing if it insists on autonomy.
From the prevailing oscillations, it can be deduced that the need for expatriate adjustment is essential for achieving a multinational corporations organisation mandate and the set of objectives meant for maximum profitability. What it means apparent though, is there constantly emerging issue of autonomy at the international stage. Autonomy is the degree to which a multinational organisation provides substantial freedom of autonomy to enable the subsidiary operates under its own discretion through the use of an expatriate manager. In the current business environment, expatriate managers are increasingly gaining recognition for the input hence the need to afford them the requisite decision autonomy within the areas of jurisdiction (Takeuchi, Shay & Jiatao, 2008).
Subsidiary Autonomy and Network Relationships
Based on the need for autonomy, and the expatriate manager can be given the authority to make decisions regarding products design and services (Gammelgaard et al., 2012). These expatriate managers can also be empowered to make minor modifications to products and services to suit customer specifications as desired. Therefore, the decentralization of autonomy in the corporations ensures that expatriates are able to implement changes at the subsidiary level. Most importantly it has also emerged that when autonomy is not fostered, creativity at the individual level is inhibited (Gammelgaard et al., 2012). Therefore, lack of autonomy can potentially lead to weak relationships which ultimately lead to information seeking behaviours and innovation. It should be noted that social construct adds great value to the organisation because of networking. Social actors, therefore, are likely to profit from interactions that lead to a range of interrelated benefits within a competitive business environment. The development of various networks as embodied by the network theory emphasizes on the need to strengthen relationships to ensure that structural barriers within the society are removed to ensure effective integration of the customers in the business locality (Gammelgaard et al., 2012).
Apparently, several benefits accrue when the relationship between actors are strengthened to Facilitate trust-based relationships that have been discovered to decrease transactional costs. Similarly, the industry theory builds on the concept of inclusivity which incorporate market actors to interact within a determined business environment where they learn by adjusting attitudes and adopting workable strategies based on acquired knowledge. Ultimately, but the social and industry theories suggest credible varieties of network relationships that promote frequency of attraction that defines the role of managers in both subsidiary and parent companies (Gammelgaard et al., 2012).
Expatriates and Subsidiary Autonomy
Despite the power balance issue, expatriates are considered as very important constituents of internal resources within the multinational enterprises. The utilisation of expatriates’ experience serves to embody the parent-subsidiary relationship that has often been a subject of scrutiny from international business observers (Tao, Liu, Gao & Xia, 2018). After realising the significance of what expatriates do in subsidiary companies, a multinational enterprise parent company may, therefore, decide to as an expert yet as a particular governance mechanism. The internal control mechanism serves to ensure that a subsidiary fully complies with its parent companies values and the outlined operational priorities. The involvement of expatriates is therefore seen as a very critical component of facilitating the transfer of company-specific secrets and knowledge from the parent firm to the subsidiary. Additionally, it should be recognised that effective communication channels and informal socialization mechanisms enable expatriates to identify areas of weaknesses that need strengthening thereby, communicating with the parent company to find appropriate demolition (Tao et al., 2018). This privileged knowledge that can be shared between expatriates and their parent companies include social corporate information on management styles, conducting business and creating solutions to overcoming local barriers to business. When this is followed, a multinational enterprise parent company will eventually have an effective control over its subsidiary through the expatriates.
Control and Coordination
Alternatively, Legewie (2002) suggest that the value of expatriates in fostering international extensions in productions remains and questionable in a stable environment in most of the industrialized countries in the most unstable environment, expatriates have been crucial in contributing to the levels of flexibility that aim to integrate the local market to the business products or services. However, continued reliance on expert tips has it challenges which are evident in local responsiveness to local problems (Legewie, 2002). For instance, an international brand can fail because of a poor presence in another country with a lack of appropriate personnel to steer its marketing strategies.
Cultural and Bureaucratic Control
Lastly, the ability of a multinational corporation to effectively create a workable balance in controlling its businesses in form of subsidiaries greatly relies on its ability to conduct organisational leadership at the highest level (Fenwick, De Cieri & Welch, 1999). However, since most multinational corporations have continued to rely on transfers, it is high time that they adopted effective management mechanisms that promote inclusion of expatriates in the management of subsidiary companies while providing them with all the necessary tools needed for growth and progress. The issue of autonomy, therefore, should not worry top management because expatriates are able to align with the core values of leadership styles and management borrowed from the parent company.
Conclusion
Most of the parent companies are often in a great dilemma on whether to fully leave the management of subsidiaries to the expatriate or outsource external resources the businesses operate efficiently. The reason why the issue of expatriate management remains contentious is that when the subsidiary becomes bigger with time, there is a possibility that it could become excessively autonomous and bypass the parent company in administrative affairs. However, this is not the case because it has been proven that most expatriates tend to align their management styles to those of the parent company and orphan operates within the confines of values as paused by the parent company. As such it is very important to foster workable relationships between the parent company and its expatriates to facilitate efficient communication and feedback mechanisms that will facilitate remediation of problems identified and establish solutions for them. The use of expatriates will ensure that a company grows and becomes fully reliant while the parent company controls the subsidiary. The only difference emanates from the decentralization of administrative duties which does not necessarily take authority from the parent company.
References
Fenwick, M. S., De Cieri, H. L., & Welch, D. E. (1999). Cultural and bureaucratic control in MNEs: The role of expatriate performance management. In Management International Review (pp. 107-124). Gabler Verlag, Wiesbaden.
Gammelgaard, J., McDonald, F., Stephan, A., Tüselmann, H., & Dörrenbächer, C. (2012). The impact of increases in subsidiary autonomy and network relationships on performance. International Business Review, 21(6), 1158-1172.
Legewie, J. (2002). Control and co-ordination of Japanese subsidiaries in China: problems of an expatriate-based management system. International Journal of Human Resource Management, 13(6), 901-919.
Peng, G. Z., & Beamish, P. W. (2014). MNC subsidiary size and expatriate control: Resource-dependence and learning perspectives. Journal of World Business, 49(1), 51-62.
Takeuchi, R., Shay, J. P., & Jiatao, L. (2008). When does decision autonomy increase expatriate managers' adjustment? An empirical test. Academy of Management Journal, 51(1), 45-60.
Tao, F., Liu, X., Gao, L., & Xia, E. (2018). Expatriates, subsidiary autonomy and the overseas subsidiary performance of MNEs from an emerging economy. The International Journal of Human Resource Management, 29(11), 1799-1826.
