Acquiring overseas market knowledge: a comparison of strategies of expatriate and immigrant employees
| Date | 18 January 2011 |
| Published date | 18 January 2011 |
| DOI | https://doi.org/10.1108/15587891111100813 |
| Pages | 77-97 |
| Author | Peter Enderwick |
| Subject Matter | Strategy |
Acquiring overseas market knowledge:
a comparison of strategies of expatriate
and immigrant employees
Peter Enderwick
Abstract
Purpose – This conceptual paper starts from the recognition that internationalisation of business is an
information-intensive process and aims to investigate two key modes for the acquisition of knowledge:
expatriates and immigrant employees.
Design/methodology/approach – The paper sets out a conceptual framework which examines nine
popular modes of knowledge acquisition essential to the internationalisation process and their
comparative strengths and weaknesses. This is coupled with a more intensive evaluation of the relative
merits of the two strategies of expatriates and immigrant employees.
Findings – The analysis suggests that the modes of expatriates and immigrant employees can both be
cost effective and yield high levels of relevant knowledge underpinning internationalisation. However,
there are key differences between the two and it may be more useful to consider them as complements
rather than simply substitutes. The strength of expatriates is their considerable knowledge of the home
market, industry and firm. Their weakness is the need to gradually acquire overseas market knowledge.
The strength of immigrant employees is their knowledge of overseas target markets. Their weaknesses
are limited understanding of the home country business system, the firm and even the industry.
Research limitations/implications – The paper has several limitations. It is conceptual in nature and
tentative in assessment. It does not consider all available knowledge gathering modes. To fully
understand this process more research is required, particularly work that extends the narrow case
approach typically used.
Practical implications – The analysis suggests that different information gathering modes offer
different advantages with none clearly superior in all situations. A similar situation appears to also hold
for the modes of expatriates and immigrant employees and the two modes may be more usefully
considered as complements.
Originality/value – The key contribution of the paper is in evaluating these two modes from the
perspective of market knowledge and diffusion.
Keywords Overseas trade, Knowledge management, Expatriates, Immigrants, Employees
Paper type Conceptual paper
Introduction
Within the field of business internationalisation there is widespread agreement that successful
internationalisation demands considerable information inputs (Wiedersheim-Paul et al., 1978;
Barkema et al., 1996; Liesch and Knight, 1999). Critical to success in overseas markets is
knowledge of consumers, suppliers, competitors, government policies and local business
practices. Firms planning to internationalise, particularly small and medium sized enterprises
(SMEs), enjoy a number of options in the acquisition of relevant knowledge. The principal
options include public information agencies, overseas missions and fairs, export
intermediaries, diaspora relationships, knowledge agreements, strategic alliances,
business acquisitions, expatriate staff and immigrant employees. These alternatives vary
significantly in terms of their cost, effectiveness, and information specificity.
DOI 10.1108/15587891111100813 VOL. 5 NO. 1 2011, pp. 77-97, QEmerald Group Publishing Limited, ISSN 1558-7894
j
JOURNAL OF ASIA BUSINESS STUDIES
j
PAGE 77
Peter Enderwick is a
Professor of International
Business based at
Auckland University of
Technology, Auckland, New
Zealand.
For SMEs a number of the possible options, particularly alliances and acquisitions, are
likely to be too costly. Similarly, reliance on public agencies such as overseas trade and
investment promotion bodies, missions and fairs, and diaspora relations, is unlikely to
provide the volume and specificity of knowledge required for effective internationalisation
decisions. Other options, particularly knowledge agreements and export intermediaries
generate little useful knowledge for the producer as they pass responsibility for
international operations to other organisations. Two options which may offer effective
knowledge creation at an acceptable cost are the use of expatriates and immigrant
employees. The intention of this paper is to critically assess these two options and to
evaluate their effectiveness in contributing to the knowledge requirements for firm
internationalisation. The key research questions to be addressed are the extent to which
the options of expatriates and immigrant employees provide effective means for acquiring
overseas market knowledge, to examine critical differences between them and to discuss
their relative advantages and disadvantages. The primary motivation for this paper is the
absence of any comparable comparison of these two modes despite their apparent
attractiveness (see Figure 1).
The discussion is organised around five major sections. The next section sets out the
relevant literature and identifies the knowledge requirements for internationalisation. This
is followed by a comparative assessment of the nine principal knowledge creation
modes outlined earlier. Section four focuses on two key modes – expatriate staff and
immigrant employees – and discusses their comparative effectiveness. These two were
selected because they appear to offer efficient and cost effective methods for the
acquisition of overseas market knowledge. We offer some tentative assessment of the
relationships between these modes and how the potential benefits they offer can be
maximised. The final section offers concluding thoughts and an outline of future possible
research paths. While the discussion does not go so far as suggesting a general
framework for deciding on appropriate information gathering modes, it does highlight
the potential contribution of immigrant employees in the internationalisation process as
well as apparent complementarities between the modes of expatriates and immigrant
employees.
Figure 1 Relative market knowledge acquisition modes
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