Expatriates of Host‐Country Origin in South Eastern Europe: Management Rationales in the Finance Sector

• Published date: 01 September 2019
• DOI: http://doi.org/10.1111/emre.12294
• Date: 01 September 2019
• Author: Renate Ortlieb,Almina Bešić

Expatriates of Host-Country Origin in South

Eastern Europe: Management Rationales in

the Finance Sector

ALMINA BEŠIĆ

1

and RENATE ORTLIEB

2

1

ICF, London, UK

2

University of Graz, Austria

Multinationalcompanies coming to grips with the majorchallenges of internationalstaffing have developed a new

practice. In recent years management scholars observed the assignment of so-called ‘expatriates of host-country

origin’(EHCOs), thatis, employees of migrant backgrounds in the companies’parent country sent to work in their

country of origin. This paper explores management rationales behind this practice focusing on the posting of

employees to transition economies in southeastern Europe. Data from Austrianbanks and insurance firms operating

in Bosnia and Herzegovina and in Croatia provide the empirical basis. The analysis reveals that headquarters’

management believe that due to their specific competencies EHCOs facilitate the relationship between the

headquarters and the subsidiary, enhance resource accrual and offer competitive advantage. As institutional

complexityin the host country and the culturaldistance between parentand host countries increase,so do the relative

advantages of EHCOs for management.

Keywords: International staffing; expatriation; skilled migrants; host country effect; south eastern Europe;

multinational companies

Introduction

In a study on international staffing practices, Thite et al.

(2009) consider the following example. When the

Germany-based auto components manufacturer Bosch

had to fill a management position in a subsidiary in

India, the management chose a person of Indian origin

who had previously studied and worked in Germany.

Thite and colleagues argue that such ‘expatriates of host-

country origin’(EHCOs) are especially qualified for key

positions in foreign subsidiaries because of their specific

knowledge and skills related to both the parent country

of a multinational company (MNC) and the host country.

Additionally, EHCOs were especially likely to accept an

international assignment (Thite et al., 2009). So, the

question arises, is this relatively new practice a ‘golden

parachute’in international staffing? And, while the study

of India suggests that EHCOs may be particularly

effective in the context of emerging markets, what role

does the host country context play inEHCO assignments?

This article considers these questions, aiming to identify

management rationales behind EHCO assignments in

two different host countries.

While previous research highlights business benefits

associated withEHCOs in general, scientific research into

concrete management thinking behind this staffing

practice is still scarce. However, scholarly knowledge of

management rationales is crucial to enhance under-

standing of MNCs’strategies in international staffing.

As Mintzberg (1978) already has pointed out in his

classical reading, if we want to gain deeper insight into

strategy formation we have to consider both the

observable results of managerial decisions and the

intentions behind these decisions.

Several studies examined management rationales

behind the use of expatriates and locals, for instance

Fayol-Song (2011); Harzing et al. (2016); Kühlmann

and Hutchings (2010); Mäkalä et al. (2009). However,

with the exception of Thite et al. (2009), none of these

studies considered the special group of EHCOs.

This article addresses this knowledge gap, thereby

focusing on MNCs with subsidiaries in transition

economies in south eastern Europe (SEE). We chose this

Correspondence: Renate Ortlieb, University of Graz, Department of

Human ResourceManagement, Elisabethstr. 50, 8010 Graz,Austria.

E-mail renate.ortlieb@uni-graz.at

DOI: 10.1111/emre.12294

©2018 The Authors European Management Review published by John Wiley & Sons Ltd on behalf of European

Academy of Management (EURAM)

This is an open access article under the terms of the Creative Commons Attribution License, which permits use,

distribution and reproduction in any medium, provided the original work is properly cited.

European Management Review, Vol. 16, 55 7–681, (2019)

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