Expatriates and corporate‐level international strategy: governing with the knowledge contract

Brian L. Connelly · Michael A. Hitt · Angelo S. DeNisi · R. Duane Ireland

43 citations0/0 files storedManagement Decision

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International Student and Expatriate Challenges International Business and FDI Human Resource and Talent Management

Abstract

Purpose This paper proposes a methodology for governing expatriate assignments in the context of corporate‐level objectives. Design/methodology/approach The approach taken is to envisage expatriate managerial assignments within the theoretical framework of agency theory and the knowledge‐based view of the firm. The paper begins with the view that knowledge acquisition and integration is a primary goal for most expatriate assignments. The relationship between expatriate managers and multinational corporation (MNC) headquarters from an agency perspective are considered and the notion of a “knowledge contract” as a means of governing that relationship is discussed. Four corporate‐level international strategies available to MNCs (global, international, transnational, and multidomestic) are then examined and the extent of agency problems under each strategy is discussed. Findings The paper makes specific predictions about the type of knowledge contract that is most likely to address agency problems for each corporate strategy. Originality/value This research extends agency theory by introducing the knowledge contract as a means of managing agency concerns. This offers a broader range of contract alternatives, moving researchers beyond traditional agency theoretic prescriptions. The research also contributes to the literature on expatriate management by integrating assignment success with research on corporate‐level international strategy. Few authors have recognized organizational strategy as an important unit of study in international human resource management. Doing so, however, has yielded a unique set of contingency relationships that would otherwise be obscured.

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References

1976Theory of the firm: Managerial behavior, agency costs and ownership structure 1996Toward a knowledge‐based theory of the firm 1989Agency Theory: An Assessment and Review 1980Agency Problems and the Theory of the Firm 2009Managing Across Borders: The Transnational Solution 1993Knowledge of the Firm and the Evolutionary Theory of the Multinational Corporation 1989Psychological and implied contracts in organizations 2000Knowledge flows within multinational corporations

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