Replacing Expatriates with Local Managers: An Exploratory Investigation into Obstacles to Localization in a Developing Country

Abstract

This paper examines the issue of localization or the replacement of expatriates with host country staff following a period of staff development in a developing country, namely Papua New Guinea (PNG). Whilst the use of expatriates appears to be increasing in the PNG private sector, ineffective employer localization programmes remain in PNG. This situation demands operational interventions. The aim of this study was to determine obstacles to localization in private sector organizations in PNG. A total of 114 PNG senior managers responded to a survey designed to determine the factors that were perceived to hinder localization practices. Results suggest that a significant number of managers identify the prevalence of said obstacles, which were categorised into (i) socio-economic circumstances; (ii) recruitment and selection; (iii) local staff performance; (iv) lack of training and development; and (v) compensation. A diagnostic model of localization has also been proposed. The model provides a detailed process for redesigning a localization programme for a developing country. Policy recommendations are also offered for implementation of a more strategic localization programme.Expatriation has traditionally been considered the most common form of international career advancement and mobility, and is a significant career decision for those embarking on such roles. Fish and Wood (1997) identified some critical factors such as professional development, monetary satisfaction and international career support that motivated managers to undertake cross border assignments. As more and more multinational organizations assign staff to cross-border assignments, researchers have become concerned with the many challenges that are associated with cross border assignments. An important challenge of recent times -resulting

Localization of management in multinational enterprises in developing countries: a case study of policy and practice

“…Therefore, until the government of Ghana enforces the law on localization and strengthens its monitoring role, industry will continue to be dominated by Western technical management skills. It could be deduced from the talent behaviour of MNCs in industry, and supported by outcomes of various studies (including Bhanugopan & Fish, ; Fayol‐Song, ; Selmer, ) that the policy will be a failure if MNCs are left to their own volition. This is because MNCs may see localization as an unnecessarily costly exercise and an attempt to render expatriate managers redundant by giving away their jobs to locals that they develop.…”

“…The main objective has been identified as training and developing locals for the required competencies and efficiency to replace expatriates. The definition, used by Bhanugopan and Fish (), emphasizes competencies and efficiency more generally, going beyond replacement. It calls for conscious efforts to identify, train, develop and retain locals.…”

The moral challenge of expatriate employment in developing countries

“…To be sure, indigenization did not only occur in Nigeria. It also informed national business policies in the United Arab Emirates (Forstenlechner 2008;Al-Lamki 2005), Papua New Guinea (Bhanugopan & Fish 2007) and many other developing countries.…”

“…Four main arguments have been put forward to explain the moral problem of expatriate employment in developing countries, namely that the practice: 1) is premised on the injustice of wage discrimination (Toh & DeNisi 2005;Chen, Kraemer, and Gathii 2011;Oltra, Bonache, and Brewster 2013;Bonache, Sanchez, and Zarraga-Oberty 2009), 2) produces undesirable outcomes (Carr, McLoughlin, Hodgson, and MacLachlan 1996), 3) disregards contextual aspirations and historical memory (Bhanugopan & Fish 2007;Akinsanya 1980Akinsanya , 1994Ogbuagu 1983;Rood 1976) and 4) perpetuates external domination and control (Smiley 2010;Manji & O'Coill 2002).…”

Quantitative and Qualitative Assessment of Job Role Localization in the Oil and Gas Industry: Global Experiences and National Differences

“…However, there are multiple reasons why companies should not and cannot localize all job roles. Reasons for which range from a shortage of people with the required qualifications, training and experience within the local labour market and because companies benefit from expatriates sharing their knowledge with local workers and for their understanding of parent company corporate culture and strategy [35,[56][57][58].…”