Differentiation between inpatriation and expatriation: Factors of success and failure of inpatriation

Term Paper, 2011

23 Pages, Grade: 1,5


Table of contents

1. Introduction
1.1. Proceeding and Methodology

2. Differentiation between inpatriation and expatriation
2.1. Three types of assignees
2.2. Special differences
2.3. Purposes and reasons of inpatriation and expatriation
2.4. Advantages of inpatriates and expatriates

3. The inpatriation process (inpatriate)
3.1. Determinants in knowledge sharing
3.2. Motives, expectations and concerns of the inpatriate and his family
3.2.1. Employee viewpoint
3.2.2. Spouse viewpoint
3.3. Preparation by the inpatriate
3.4. Cultural challenge
3.4.1. Culture shock coping tips

4. Inpatriation process (company)
4.1. IHRM department
4.2. Preparation of the inpatriation
4.2.1. Need assessment
4.2.2. Anticipation of problems
4.2.3. Correction of expectations
4.3. Assistance/Support for the inpatriate
4.4. Inpatriate training

5. Success and failure of inpatriation

List of literature

1. Introduction

In the globalized world the competition gets aggravated and multinational companies (MNCs) seek out for new practices to stay competitive. One solution is cognitive and cultural diversity, implemented by multicultural management teams. Nevertheless a prerequisite is that international human resource management (IHRM) and the strategic goals of the organization will be linked (Harvey, Speier, Novicevic 1999b). This is necessary for the development of a distinctive competency, which constitutes a competitive advantage through diversity. Diversity prevents groupthink and facilitates a repertoire of different strategic choices, which is crucial to stay competitive.

To approach this goal, MNCs avail themselves of international assignments, meaning to require an employee (manager) to work abroad for a specific purpose. The different purposes of international assignments will be examined in chapter 2.3.

There are two typical forms of international assignments: expatriation and inpatriation.

This paper examines the inpatriation process, concerning:

- the different assignee types
- the differentiation between inpatriation and expatriation
- the purpose of international assignments, especially inpatriation
- the advantages of inpatriation compared to expatriation and vice versa
- motives, expectations and challenges of inpatriation from different points of view
- preparation by the inpatriate
- cultural challenges (culture shock) and coping tips
- preparation, assistance/support and training for the inpatriate and factors which have to be considered

This paper will conclude what factors make the inpatriation successful, and what can lead to failure.

With this research work we give a focused answer on the research questions:

1. “Where are the most significant differences between inpatriation and expatriation?”
2. “What are the recommended actions in the inpatriation, relating to the inpatriate and the company, which decide on its success or failure?”

1.1. Proceeding and Methodology

During the process of working out the content of this paper, we gathered information from the recommended literature, academic books, journals and databases, our lectures and several trusted internet sources. We found out that all literature uses different spellings, either impatriation or inpatriation. The term impatriation originates in the Romanic language, whereas inpatriation is the Anglophone term and is internationally used. Therefore we decided to use the spelling inpatriation in this paper.

Challenges in writing occurred during gathering information, because there is rather any research on this formof assignment, especially regarding the challenges and problems of inpatriation. Furthermore, the fact that there are many similarities between both forms of international assignments made it sometimes difficult to differentiate between inpatriation and expatriation.

2. Differentiation between inpatriation and expatriation

Nowadays inpatriation plays an increasingly important role in the internationalization strategies of MNCs and is used as an alternative to expatriation.

But it should be noted, that there are many similarities between inpatriation and expatriation. For exampleboth, are managerial executives working abroad on a semi permanent to permanent basis. Additionally both assignees experience challenges and issues in the acculturation and assimilation process and pass through a culture shock, living and working in a new country/environment.

The following section points out the differences between inpatriates and expatriates.

2.1. Three types of assignees

Parent Country National (PCN)

A Parent Country National is an expatriate. He is a manager of a multinational company and he is sent from the headquarter to a foreign subsidiary on an international assignment (Briscoe, Schuler, Claus 2009). The expatriate is a citizen of the parent country. The parent country is defined as the country, where the headquarter of the MNC is situated. His transfer to another country, where the foreign subsidiary of the MNC is located, mostly lasts for one to three years (Harzing 2003).

An example for an expatriate is an executive manager working in Gerlingen in Germany, which is the headquarter of the Robert Bosch GmbH, who is sent to a subsidiary in the USA.

Host Country National (HCN)

A Host Country National is an inpatriate. Often the terms local nationals or local hires are used synonymously (Briscoe, Schuler, Claus 2009). The HCN is a subsidiary manager of a MNC in the host country andis relocated to the headquarter of the parent company for a specific period of time, usually between 6 and 36 month. The local national is a citizen of the host country, which is defined as the country, where the foreign subsidiary is located (Briscoe, Schuler, Claus 2009, Harzing 2003).

With reference to our last example, the inpatriate would be the subsidiary manager, who is sent from the USA to Gerlingen in Germany. Here it has to be noted, that inpatriates are usually nationals of a developing country (for further information see chapter 2.2 & 2.4).

Third Country National (TCN)

A Third Country National is a manager, who works temporarily on an international assignment in a foreign subsidiary. In contrast to the PCN and HCN, he is neither a citizen of the country in which the headquarter is located nor a citizen of the assignment country (Reynolds 1997). But his country of origin is familiar with the host country, the country where the subsidiary is established.

To get back to our previous examples: The TCN would be a Canadian manager of a subsidiary of the German company, who is sent to a foreign subsidiary in the USA.

Several laws and treaties govern which country's labor laws and taxation apply to them (US Legal 2010).

To sum up the most important distinction between expatriation and inpatriation is, that inpatriation is defined in transferring host-country nationals from the foreign subsidiary to the headquarter(McNulty, De Cieri, Hutchings 2009) and expatriation is defined in transferringparent country nationals from the headquarter to a subsidiaries(Sparrow 2007).

2.2. Special differences

Both, the inpatriate and the expatriate take on boundary-spanning activities and help to reduce information asymmetries between the HQ and its subsidiaries (McNulty, De Cieri, Hutchings 2009). But there are special differences needed to behighlighted:

First, expatriate managers transferring to a foreign subsidiary often receive benefits in monetary and career form. When they arrive in the foreign subsidiary they often have the status as a headquarter representative, accompanied by the position of having power due to experience and knowledge about the parent company.

The inpatriate may not be acknowledged the same status, power and respect depending on the perceived importance of the subsidiary, where the inpatriate is from (Harvey 1997). This disparity in status also results from higher responsibilities in the subsidiary and a lack of the corresponding status in the parent company (Harvey 1997).

Secondly the adjustment challenges for the inpatriates are higher than for expatriates. The inpatriate does not only face acculturation difficulties concerning a new environmental culture, he also needs to be socialized into the corporate culture of the headquarter. These higher adjustment problems concerning the external and organizational environment, implicate a different support infrastructure and training, which should be given by IHRM (Harvey, Speier, Novicevic 1999a). These special support/training requirements will be examined further in chapter 4.

In contrast, expatriates do not have to acclimate to the organizational culture, because they often impose the HQ corporate culture on the foreign subsidiary they have been sent to(Reiche 2007). This is one of the goals of expatriation: to “import” the corporate culture of the parent company into the subsidiary, aiming in a cultural consistency of the MNC.

Thirdly, inpatriation fosters cultural and cognitive diversity. The inpatriates are temporarily integrated into the top management team of the HQ, whereas expatriates coordinate with their HQ team (Reiche 2007). The reasons are different purposes of expatriation and inpatriation: the aim of expatriation is to control the subsidiary, for which an intense contact to the HQ management team is necessary.

Fourthly, the country of origin of expatriates and inpatriates is differently. Expatriates often come from Western Countries, because many MNCs have a European or North American cultural heritage, which explains that the HQ is located in a Western country.

In comparison with expatriates, inpatriates arein the most cases from developing countries, where many subsidiaries are located, especially because of cheaper production opportunities and less labor costs (Harvey, Speier, Novicevic 1999a).

Fifthly, concerning expatriation another issue exists, known as the dual-career problem. In 80 to 90% the family of the expatriate will be transferred as well for the duration of the foreign assignment, when it is longer than one year. Usually the spouse also strives for a career, but in the parent countries there are often limited working allowances, which can make it impossible for the spouse to carry out his/her occupation. By contrast this dual-career issue is generally not given in inpatriate families, because in developing countries it is not typical that women carve out a career (Harvey, Speier, Novicevic 1999a).

Sixthly, the purposes for the use of inpatriation and expatriation are often different.

The use of inpatriation is generally speaking learning-driven, whereas expatriation is mostly demand-driven. This will be examined in chapter 2.3.


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Differentiation between inpatriation and expatriation: Factors of success and failure of inpatriation
European School of Business Reutlingen
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Differentiation between inpatriation and expatriation. Main part: 1. The inpatriation process from the inpatriates side:(expectations, motivation, concerns and preparation, culutre shock). 2. The inpatriation process from the company side. 3. Conclusion: Success Factors for inpatriation.
Quote paper
Marleen Stein (Author)Barbara D. (Author), 2011, Differentiation between inpatriation and expatriation: Factors of success and failure of inpatriation, Munich, GRIN Verlag, https://www.grin.com/document/172813


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