Expatriates’ Ethical Adjustment and Performance
Otacilio T. Berbert
University of Wisconsin – Oshkosh
Business Ethics - BUS769/MBA763 - Spring 2013

INTRODUCTION

International assignments have become increasingly important for multinational companies. As business goes global, more and more international firms are finding it necessary to send employees as expatriates to live and work abroad. However, expatriation involves a considerable risk for companies regarding the success of expatriate endeavors and the cost of expatriate failures. As Andreason (2003) points out, “the first year costs of sending expatriates on foreign assignments are at least three times the base salaries of their domestic counterparts” (as cited in Wederspan, 1992) and “early studies estimated U.S. expatriate failure at between 25 and 40 percent when the expatriate is assigned to a developed country, and as high as 70 percent when assigned to a still-developing country” (as cited in Tung, 1982). Research indicates that inability to adjust to the foreign environment is the major contributing factor to ineffective performance and premature return of expatriates, rather than a lack of technical competence. As mentioned by Liu & Shaffer (2005), expatriate adjustment has been defined and confirmed as “a multidimensional construct comprising cultural, interaction and work adjustment” (as cited in Black et al., 1991; Shaffer et al., 1999). Adjustment to the new job requirements, with individuals in the foreign country, and to the foreign culture and living conditions abroad are critical aspects of effective expatriate performance. The reviewed literature suggests that adjustment in fact leads to effective assignments, and the differences in the ethical context contribute to an explanation of such high failure rates. In the specific cases of assignments in emerging economies, adjustment often includes acceptance of new and challenging socio-cultural norms, often distinct from the Western ethical canon, creating an ethical dilemma for expatriates. “Expatriates will suffer pressures from both the emerging and the developed economy to either adjust or return home”, as mentioned by Costa (2011). If they are “ethical relativists”, thus accepting the local ethical canon as good in its own context (“When in Rome, do as the Romans do”), adjustment will occur very quickly. However, if they continue to follow the new pattern, there is a risk of becoming ineffective from the home country perspective, as soon as Westerns become aware of eventual “questionable” procedures in the host-country. If, instead, expatriates are “absolutists”, accepting only one way of behaving ethically, they risk being challenged by the host country environment, eventually becoming ineffective. This is definitely an ethical dilemma. Comprehensive integrated models have been proposed to determine major sets of factors that influence international adjustment. Andreason (2003) mentions studies conducted by Shaffer, Harrison and Gilley (1999), focusing on job factors, organizational factors, positional factors, non-work factors and individual factors. All these factors as permeated by ethical dilemmas grounded in the coexistence of two apparently conflicting ethical frameworks, making the overall adjustment process quite challenging, especially when home and host-countries are culturally and ethically distant. Research also supports that the adjustment process begins with effective recruiting. As Graf (2004) points out, “Effective expatriate selection has been identified as a major mechanism to enhance expatriate success” (as cited in Bolino & Feldman, 2000; Kealey, 1996; Solomon, 1996). To date, researchers have investigated a number of personal characteristics and skills (“intercultural competencies”) to be predictive of expatriate performance, to number a few: Intercultural Communication Skills; Intercultural Sensitivity; Interpersonal Competence; Social Problem-Solving Capability; and