This chapter focuses on expatriate managers and examines Black and Gregersen's idea that, when it comes to successfully managing expatriate managers, there are three best practices: ‘[Successful companies] focus on creating knowledge and developing global leadership skills; they make sure that candidates have cross-cultural skills to match their technical abilities; and they prepare people to make the transition back to their home offices’. In theory, expatriation is supposed to, inter alia, produce managers who have an in-depth knowledge of the MNE, understand the pressures leading to benevolent preference reversal in subsidiaries and can integrate geographically dispersed operations. These ideas will be examined and then criticized using the framework presented in Chapter 1.

Significance

MNEs must develop managers with a broad mental map covering the entirety of the MNE's geographically dispersed operations. This is critical to the MNE's long-term profitability and growth, especially in an era when foreign markets are becoming increasingly important contributors to innovation and cost reduction at the upstream end of the value chain, and to overall sales performance at the downstream end. In fact, managers commanding deep knowledge of internal MNE functioning – including the challenges of simultaneously addressing legitimate business objectives/interests at multiple geographic levels within the firm – represent the MNE's key resource to facilitate international expansion and to coordinate geographically dispersed, established operations. Such managers are best positioned to (a) engage in the international transfer of non-location-bound FSAs from the home nation; (b) identify the need for new FSA development in host countries and facilitate such development; and (c) meld both location-bound and non-location-bound FSAs.