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The International Journal of Human Resource Management 8:4 August 1997 Pre-expatriation: the role of HR factors in the early stages of internationalization Denice E. Welch and Lawrence S. Welch Abstract While there has been considerable research on the early stages of inter- nationalization, HRM aspects have not generally been part of this work, even though many of the important variables revolve around the key people involved and such aspects as their knowledge and networks. In this article, the somewhat neglected area of HRM and intemationalization before full-scale expatriation is examined. From the limited available research, it would appear that, within companies, many of the emerging HR issues in early intemationalization are dealt with as and when they arise, in a relatively ad hoc matiner, often through the maiketing department. It is argued that there is potential for a more substantial role to be played by HR staff, but this may well depend on the development of more intemationally oriented HR staff as a starting point. Keywords Intemationalization, human resource management, pre-expatriation There has been considerable research on intemational human resource management (IHRM) issues with respect to intemational companies assigning staff to new and/or existing foreign operations (see, for example, Tung, 1982; Mendenhall and Oddou, 1985; Brewster, 1991; Welch, 1994). In the main, this has led to a research and literature focus on expatriation and staffing policies, centred on companies with a network of foreign subsidiaries and the accompanying heavy IHRM demands. Even in the investigation of newly intemationalizing companies, the research emphasis has tended to remain on expatriate management issues (Forster and Johnsen, 1996). In an earlier paper (Welch and Welch, 1994), we argued that this focus provides a very limited perspective on the extent of IHRM demands on intemationalizing companies, with regard to the range of operation methods that companies are increasingly required to use in order to develop and service foreign markets, and to the duration and nature of assignments. However, even when these aspects are considered, companies typically are assumed to be well along the intemational path.. To some extent, this is understandable, given that there is often little or no formal HR department involvement in the early stages of intemationalization. What still tends to be overlooked, though, is the role played by people during these early stages, and an appreciation of the impact of personnel policies and practices on the development of the company's intemational competencies and capabilities. This is despite the fact that, in one of few studies on this issue, Gomez-Meija (1988: 501) concluded: 'human resource management strategies have a significant effect on a firm's subsequent export performance' (see also Hendry, 1996). Concurrently, there has been a substantial body of research into the inter- nationalization of companies. While much of the focus has been on multinationals, there has also been a stream of research that has been concemed with the process by which companies itiitiate and develop intemational business operations (Johanson and Vahlne, 1977; Welch and Luostarinen, 1988; Buckley and Ghauri, 1993). Although a 0985-5192 © Chapman & Hall 1997
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Pre-expatriation: the role of HR factors in the early stages of internationalization

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Page 1: Pre-expatriation: the role of HR factors in the early stages of internationalization

The International Journal of Human Resource Management 8:4 August 1997

Pre-expatriation: the role of HR factorsin the early stages of internationalization

Denice E. Welch and Lawrence S. Welch

Abstract While there has been considerable research on the early stages of inter-nationalization, HRM aspects have not generally been part of this work, even thoughmany of the important variables revolve around the key people involved and such aspectsas their knowledge and networks. In this article, the somewhat neglected area of HRMand intemationalization before full-scale expatriation is examined. From the limitedavailable research, it would appear that, within companies, many of the emerging HRissues in early intemationalization are dealt with as and when they arise, in a relativelyad hoc matiner, often through the maiketing department. It is argued that there ispotential for a more substantial role to be played by HR staff, but this may well dependon the development of more intemationally oriented HR staff as a starting point.

Keywords Intemationalization, human resource management, pre-expatriation

There has been considerable research on intemational human resource management(IHRM) issues with respect to intemational companies assigning staff to new and/orexisting foreign operations (see, for example, Tung, 1982; Mendenhall and Oddou,1985; Brewster, 1991; Welch, 1994). In the main, this has led to a research andliterature focus on expatriation and staffing policies, centred on companies with anetwork of foreign subsidiaries and the accompanying heavy IHRM demands. Even inthe investigation of newly intemationalizing companies, the research emphasis hastended to remain on expatriate management issues (Forster and Johnsen, 1996). In anearlier paper (Welch and Welch, 1994), we argued that this focus provides a verylimited perspective on the extent of IHRM demands on intemationalizing companies,with regard to the range of operation methods that companies are increasingly requiredto use in order to develop and service foreign markets, and to the duration and natureof assignments. However, even when these aspects are considered, companies typicallyare assumed to be well along the intemational path.. To some extent, this isunderstandable, given that there is often little or no formal HR department involvementin the early stages of intemationalization. What still tends to be overlooked, though, isthe role played by people during these early stages, and an appreciation of the impactof personnel policies and practices on the development of the company's intemationalcompetencies and capabilities. This is despite the fact that, in one of few studies on thisissue, Gomez-Meija (1988: 501) concluded: 'human resource management strategieshave a significant effect on a firm's subsequent export performance' (see also Hendry,1996).

Concurrently, there has been a substantial body of research into the inter-nationalization of companies. While much of the focus has been on multinationals,there has also been a stream of research that has been concemed with the process bywhich companies itiitiate and develop intemational business operations (Johanson andVahlne, 1977; Welch and Luostarinen, 1988; Buckley and Ghauri, 1993). Although a

0985-5192 © Chapman & Hall 1997

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number of the studies conducted in this area have identified key behavioural infiuenceson intemationalization, human resource issues connected with the process generallyhave remained in the background.

In this article, we extend the analysis of 'people' issues in the earlier stages ofintemationalization. On the basis of this analysis, the human resource managementimplications are discussed and suggested avenues for further research outlined.

The intemationalization process

Early research on the pattems of intemationalization by companies demonstrated thatthe prxx;ess often evolved over a long period of time, with gradual development inforeign-maiket commitments as represented by: the mode of operation (e.g. exportingvia agent first, sales subsidiary later and then fully operating subsidiary); range ofmarkets entered (cultural and geographical distance); and sales objects (products,services, systems, know-how (Johanson and Wiedersheim-Paul, 1975; Luostarinen,1979)). Although more recent evidence indicates a speeding up in this process, thegeneral pattem still appears to be one of evolution rather than revolution (Nordstrom,1991; McKinsey, 1993).

As a part of the overall process, the early phases of intemational entry anddevelopment by companies have been the subject of widespread research, in partbecause of the attempt to understand the base on which ongoing intemationalization isbuilt (Welch and Wiedersheim-Paul, 1980). There has also been broader governmentconcem at the policy level to improve the participation rate and long-term performanceof domestic companies in intemational operations (DFAT, 1995).

Research on the initial entry process consistently shows that a high proportion ofcompanies stait intemational operations in a relatively unplanned way - often throughunsolicited inquiries or orders and in general through the intervention of outside changeagents. This seems to hold for many service companies as well as manufacturing firms(Bilkey and Tesar, 1977; McCosker and Walker, 1992; Hendry, 1994; LEK Partnership,1994).

Despite the seemingly haphazard way intemationalization often evolves, research hasidentified certain common infiuences on the ability and preparedness of companies toextend intemational activities. Important factors that are emphasized are: intemationallyrelevant experiential knowledge and its impact on leaming; information fiows; companyand individual networks; risk and uncertainty; commitment; and control. These factorsare in part produced through preceding intemational operations, thus creating areinforcing loop: for example, the networks with key agents, clients, govemmentofficials and the like, that the company creates when entering a foreign market, becomepart of the foundation for continued operations in that market (Benito and Welch,1994). The characteristics and background of the key decision-makers have also beenemphasized in this literature as they critically infiuence the role, and filter the impact,of the above factors. These infiuences are, of course, intenelated: for example, withimproved knowledge and understanding of how to operate in a particular maiket, theretends to be a lowering of risk perception so that extended intemational involvementbecomes more feasible (Welch and Luostarinen, 1988). A study of US companies foundthat 'the export behaviour of smaller firms follows a learning curve with competence,knowledge and confidence increments accumulated marginally in successive phases'(Y^rak, 1985: 81). Implicitly, it is within and through individuals that a company

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404 Denice E. Welch and Lawrence S. Welch

leams and thereby acquires a foundation upon which further international activities maybe built.

While the role of the key decision-maker is stressed in this early work, this has notbeen extended to an investigation of related personnel aspects, such as the implicationsfor HR strategies in terms of staff selection, training and other support activities.Clearly, though, if the above model of intemationalization operates as suggested, theprocess depends on the way in which people incorporate information, build and usenetworks in foreign markets, and gain experience, knowledge and know-how. Forexample, as Bjoricman and Kock (1995: 527) have stressed on the basis of their studyof foreign firms in China, 'organizations do not have guanxi [connections, relation-ships], it is the employees of the organization'. At one level, this is recognized in theintemationalization literature, but it is treated almost as a given in terms of the way inwhich intemationalization tends to be analysed: the focus is on 'the firm', rather than onthe people who constitute the firm.

Information flows and networks

Where information fiows and networks have been examined in the intemational context,personnel issues again tend to remain in the background. For instance, research hasshown the critical role informal information fiows play in the development ofintemational business operations (e.g. Benito et al., 1993; Marschan et al., 1996;Macdonald, 1996). Again, the role of people as the instigators and conduits of theseinformal fiows is discussed seemingly in the abstract Many questions remain regardinghow individual characteristics and bias infiuence the gathering, processing and usage offoreign maricet information, and the relationship between company policies andindividuals' approach to informal information activity.

The related area of study of intemational inter-company relationships and networkshas included an emphasis on actor bonds (individual and company) as a key element ofthe way in which networks evolve (Ford, 1990; Easton and Araujo, 1992; Hdkanssonand Snehota, 1995). Actor bonds' in this context are, however, treated in an almostimpersonal way. Emotions, feelings, and the backgrounds of the individual actors havelittle place, as the focus of this body of research remains on the company's requirementsof 'access to the counterparts, their resources, and activities, and thus a condition foreffective leaming and capability development... Companies need bonds' (HSkanssonand Snehota, 1995: 264). Moreover, the company network is considered to operatethrough activity links and resource ties. While actors are regarded as pivotal, there hasbeen little research into the people themselves: for example, the individual actor's ownpersonal relationships; their role in creating contacts that may develop into exportorders; and when and how personal networks are used as information sources andconduits. There is nothing automatic about this process (HaUen, 1992; Marschan et al.,1996).

The importance of personal networks would seem to undeiiie, in part, recent findingson the nature of inward-outward connections in intemationalization (Welch andLuostarinen, 1993; Koriionen et al., 1996). This research indicates that companies oftenbegin intemational operations through inward intemational activities (for example,importing products or technology) that then lead to possibilities for outward operations(such as exporting). In a study of the intemationalization patterns of Finnish industrialSMEs, it was found that 54.4 per cent began intemational operations on the inward side- mainly product imports (Korhonen et al., 1996). While no causality can be assumed.

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there are indications of possible inward to outward connections in other studies. Theexperience of one Australian company is pertie^s illustrative of how these coruectionsmight arise:

High Tech Auto Tools commenced operations as an importer of equipment forautomotive garages. Through the importing business the proprietors built up personalcontacts in the industry overseas which subsequently facilitated the estabUshment ofintemational distribution networks for the export of a product based on an Australianinvention.

(DFAT, 1995: 23)

The study of Australian SME exporters revealed that personal contacts in general werean important factor in stimulating the first move into exporting activities (DFAT,1995).

The above findings concur with earlier studies of initial exporting behaviour whichindicated that the background of individuals, including their set of contacts, can beimportant in facilitating the export entry process. As such, the movement ofpeople intoand out of companies may be critical to the exporting base of particularly small firmswhere staff resources are limited. The experiences of a smsJl Australian company(OzGreen) illustrate this point (McGaughey et al., 1997). OzGreen commencedoperations as an exporter of asparagus to Japan. The ability to do so was based on theprior experience and personal contacts of the founders, both in the export market and inthe domestic asparagus industry. The company changed hands seven years later. Theincoming managing director brought a new network of personal contacts that he wasable to activate to expand and diversify OzGreen's intemationalization. A similarfinding regarding the impact of incoming top management behaviour in small firms isnoted by Bacon et al. (1996).

Early interaationaiization and HRM

When regarded from a HR perspective, individuals assume a different role in theprocess of intemationalization: they take 'centre stage'. Individually, and combined intomanagement teams, people have, to varying degrees, intemational negotiation skills,knowledge of foreign mukets and customers, and technical know-how. People generateformal and informal information fiows through their personal and company channelsand networks. These become important assets for the intemationalizing company, partof its human ci^ital (or human resouree competencies (Kamoche, 1996)). While thismay appear obvious, it is curious that the relevant literature has developed with almostno consideration of the requirements and consequences in terms of HRM. This sectionattempts to draw out some of the HR implications of the early stages ofintemationalization.

At the outset, if the company has had little or no intemational involvement of anyform - for example, decision-maker overseas visits - in the event of a fortuitous exportorder, it is unlikely that the company will have in place any HR preparation for thedemands of intemational operations. There may not even be a formal HR department,due to the size and nature of the enterprise (such as a small family-owned company). Ofcourse, if the company is using a trading company or domestic export agent, in the shortto medium term, there will be no real demand for staff on the intemational side (s^artfrom production and perhaps product modifications for foreign maiket requirements).According to a recent study of Finnish SMEs, 33.5 per cent started export operationsthrough a domestic intermediary or export organization (Luostarinen et al, 1994).

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406 Denice E. Welch and Lawrence S. Welch

However, for many companies, even a fortuitous export order will start a process thatleads to ever-growing demands on staff to cope with a variety of intemationally relatedactivities. This is refiected in the organizational arrangements companies ihake tohandle the move from domestic operations to sporadic, then regular, exporting. As tworecent US studies on export development show, few sporadic exporters utilize a formalexport department structure and, in most.cases, such exporters do not even have aperson with fonnal responsibility for the exporting activity. In contrast, as would beexpected, regular exporters are much more likely to formalize the activities througheiiher a designated position or a separate export department (Rao and Naidu, 1993;Samiee and Walters, 1996). Likewise, these studies highlight the greater commitmentmade by regular exporters to the development of staff in order to sustain exportdevelopment, for example, through export-related education or increased staff timebeing aUocated to export-related activities.

If the company has elected to handle its own exporting activities, rather than useintermediaries (foreign or domestic), some staff will be making frequent overseas visits:negotiating intemational contracts with potential customers, dealing with host govem-ment officials, etc. For example, the Firmish study referred to above revealed that 31.8per cent of SMEs in the sample used their own export operations at the outset(Luostarinen et al., 1994). Even if an intermediary in the foreign market is used (agentor distributor), there will still be an array of demands on those staff responsible formanaging the operations through these intermediaries. This will normally involveforeign visits of varying lengths, interaction with customers as well as the inter-mediaries, etc. As one of the co-owners of the Australian company, Ansell, commentedabout this stage in the company's intemationalization:

We have leamed two vital lessons. The first being the importance of specialized Agencyrepresentation in each country; the second, the necessity for a company representative tobe on the spot quickly in the event of problems arising.

(Welch, 1990)

There is a paucity of empirical evidence about the HR responses to such intemationalinvolvement Clearly, companies have to deal with these demands when they arise. Thequestion is how, and how effectively is this accomplished? Given the manner in whichintemational operations often begin, solutions (including HR issues) tend to be ad hocrather than deliberate (Bilkey and Tesar, 1977; Welch and Wiedersheim-Paul, 1980;McCosker and Walker, 1992). Small companies typicaUy have few choices when facedwith the decision of whom to appoint as the person to implement the foreign-marketentry steps, such as negotiating an arrangement with a foreign agent. The key decision-maker often handles these early entry activities, or someone else within the companywith relevant foreign-market background - such as an immigrant, or a person witfjlanguage skills, or simply a person who has been on holiday in the target market(Czinkota and Ronkainen, 1995). The reality of intemational involvement is that thecompany-appointed person will potentiaUy be thrust into a range of cross-culturalencounters, interacting with a wide variety of foreigners at different levels and indiverse situations. Where a foreign agent is used, there may be a range of continuingtypes of interaction required: perhaps training of agency staff; joint development ofmarketing campaigns and promotional literature; and dealing with other marketservicing issues. It may also be necessary to extend links beyond the agent to keyforeign customers, suppliers, banks, etc. - stretching the demands on the person's cross-cultural relational skills (Blankenburg and Johanson, 1992).

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Increasing demands from international growth

If intemational operations proceed successfully, and the intemational componentbecomes more important to the company, control tends to become of greater concem(Welch and Luostarinen, 1988). Even if a trading company has been used, there is atemptation for the firm to become more directly involved in order to protect its interests.Researeh on the intemationalization process has shown that control is a major factor inthe shift from exporting via an agent to the use of a sales subsidiary, often triggered byperceived problems with the agent (Seringhaus and Rosson, 1990). Even smallcompanies may find it necessary to establish sales subsidiaries in order to protectintemational markets. For example, a Hnnish study of SMEs found that 27 per centwere using foreign subsidiaries - overwhelmingly sales subsidiaries (Luostarinen et al.,1994). Such a move is likely to involve an escalation of intemational demands on thestaff involved in the establishment and operation of the sales subsidiary. There isevidence that many companies utilize parent-country nationals (PCNs) in initiallystaffing the subsidiary, and, for many, this will be the first expatriation experience. It isinteresting that a recent marketing joumal article on managing the expatriate industrialsales force concluded that, as the expatriate sales representative will be expected tooperate 'solo' in a strange culture, with all the inherent role confiict and ambiguity,anxiety about family, and little guidance about expropriate behaviour

the job becomes a logical venue for failure resulting firom culture shock effects. Thus,sales managers must recognize this situation and act to adjust the job structure, providetraining and support

(Guy and Patton, 1996: 389, emphasis added)

It is noteworthy that involvement of the HR department in dealing with this situation isnot offered as a solution.

While researeh on intemationalization has concentrated on manufacturing companies,service companies have, more recentiy, become the focus of widespread investigation(Erramilli, 1991; Buckley et al., 1992; LEK Partnership, 1994). These studies showconsiderable diversity in pattems and driving forees, depending in part on the type ofservice (tourism versus fast food versus consultancy services). Often, the nature ofservices necessitates establishment a of foreign subsidiary, or an intemational strategicalliance, much earlier in the intemationalization process than with manufacturingcompanies (Buckley et al., 1992) due to difficulties in supplying the service from adistance (for example, legal services). Because of this, there may be very littiepreparation for the intemational move particularly with regard to the people involved.Without prior intemational operations, there is likely to have been little chance for thedevelopment of relevant intemational experience and expertise.

As the foreign subsidiary matures, the number of PCNs may decrease (Dowiing et al.1994). Even when PCNs are withdrawn, however, the staffing demands of maintainingsubsidiary operations continue, albeit in altered form (for example, technology transfer,training, 'fiag waving' visits and other control activities).

In general, therefore, early intemationalization can be viewed as a phase for whichcompanies are often ill prepared. People are part of diis unpreparedness, yet play acrucial role in determining the success or otherwise of the intemational strategic moves.This fiuther begs the question: what is the role, if any, of the HR function, in thisprocess?

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408 Denice E. Welch and Lawrence S. Welch

Individuals and knowledge development

The preceding discussion on the intemationalization process has exposed the im-portance of the foreign-market knowledge accumulated through individuals. Selectionof the individual to handle intemational activity initially might have been fortuitous,but, over time, this person accumulates valuable foreign-market information, knowl-edge and skills. In cases where foreign agents have been used to handle foreign-marketentry, the company person designated to oversee the foreign-maiket activity initiallytends to be dependent on the agent's far superior foreign-market understanding. It canbe expected, though, that repeat visits to the foreign market will lead to increasedknowledge and confidence, thus decreasing the dependency relationship (Czinkota andRonkainen, 199S). However, the company's dependency upon its intemational operatorincreases as this person becomes a repository of valuable foreign-market intelligenceand skills.

While researeh on this issue is limited, it would appear that much of theexperientially based foreign-market know-how is not retained in readily accessibleform. A recent Norwegian study of exporters' information behaviour found companiesrelied pre-eminentiy on informal foreign-market information gathering techniques, withoral reporting as the preferred method of transferring this information within thecompany (Benito et al., 1993). Thus, infonnation gathering, dissemination andutilization tends to remain p)eople-bound. Unless the organization has a mechanism fortransferring and recording the knowledge gained by this key individual, it can be easilylost, for example, through staff tumoven 'When people leave . . . lessons of history arelost, knowledge disappears, the institution's memory is reduced' (Cariey, 1992: 20).The challenge is how to tap into the 'hidden reservoir' and convert the foreignknowledge and skills into routines and records, thereby lessening the company'sdependence on key individuals, as well as creating valuable strategic assets (Mueller,1996).

Formal procedure manuals are only part of the answer (Carley, 1992). Inevitably,some information leakage will occur, even if the company has taken steps to codifyexperiential knowledge. For instance, staff may not have recorded relevant foreignmarket details; or be unprepared to impart what they consider to be sensitiveinfonnation; or reveal the full extent of their networks. Some information may bediscarded as seemingly trivial (such as: don't drink the water in Country A; when inCountry B stay in such-and-such hotel) but important for staff performance. AsMacdonald (1995: S61) points out, 'Reverence for the firm's stock of knowledge makesno concession to the role in leaming of forgetting, of dispensing with unwantedinformation'. Of course, some of the knowledge gained is of such a tacit nature that itis difficult to extract (Nonaka et aL, 1994).

The role of the HR hmction

The review of relevant literature also reveals a paucity of information about when andhow the HRM function becomes involved in the personnel demands of earlyintemationalization. As much of the researeh on intemationalization has emerged frommarketing and economics, it is not surprising to find littie reference to the place and roleof HRM, and that this has tended to be confined to aspects such as structural responsesas the firm intemationalizes (Dowiing et al., 1994). In fact, it is often only when faced

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with a critical mass of expatriates that the company begins to consider, in a formalsense, the issues surrounding staff movements to support the intemational activities. Forexample, the Australian company, Mayne Nickless, increased its use of expatriatesduring a five-year period of rapid intemational growth in the 1980s. This placeddemands on the company's IHRM activities, forcing a more uniform and fonnalapproach to its policies, initiated by the director of personnel, and requiring theallocation of HR staff to expatriate management activities (Welch, 1990). It wouldappear that, as intemational activities expand with an accompanying increase in thenumber of expatriates, more formal policies emerge to handle the related activities ofselection, cultural awareness training and compensation - v^th the assistance of the HRdepartment (Dowiing et al., 1994; Welch, 1994; Hendry, 1996).

If this is indeed the case, with intemationalization likely to have been in process forsome time, the unit directiy handling intemational activities (often the marketing orexport department) will already have instigated the required personnel responses, anddeveloped relevant routines, with minima] (if any) contribution fix>m the HR department(if one exists). Whether formal or informal, it may be argued that these routines willhave become partiy institutionalized, leading to expectations regarding staff entitie-ments surrounding intemational activities (e.g. travel and entertainment allowances).Later attempts to introduce company-wide IHRM policies then have to take account ofexisting practices, part of the company's administrative heritage that the HRMdepartment may have to contend with (Bartiett and Ghoshal, 1988). The more isolatedthat the HR department has been from the preceding intemational activities, the moredifficult the task is likely to be.

An additional difficulty for the HRM department, when attempting to play a moreproactive role, is that it may well lack credibility as the competencies to handleintemational personnel demands may be seen as residing outside its current domain.This problem is noted in a recent US study of expatriates who were often handled byHR department staff with no experience of living abroad (Jackson, 1996). At this stage,it can only be speculated as to how the HR function is able to 'get into the game', andacquire the necessary expertise and credibility within the company to support its newrole. In such cireumstances, it is littie wonder that there have been calls for thedecentralisation of HR activities to those directiy involved in intemational operations(Welch and Welch, 1994).

Conclusions and implications

The above analysis of the early stages of intemationalization reveals a dearth ofreseareh consideration of human resource issues, and of the role performed by the HR-designated staff in this process. Consequentiy, people-related issues have tended toremain peripheral in the investigation of intemationalization effectiveness. This seemssomewhat incongruous given that much of the researeh into early intemationalizationhas identified the important part played by key individuals in a company's foreignmaricet decisions and activities. Rather, much of the focus of intemationalizationreseareh has been on various aspects of foreign-maiket operations, such as entry-modechoice, management of distributors and marketing-mix strategies. We argue that HRconsiderations are too critical to be ignored and need to be brought 'centre stage' - fromboth researeh and managerial perspectives in order to improve our understanding of therole of peopie in the intematiorudization process, and of related management issues.

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410 Denice E. Welch and Lawrence S. Welch

Therefore, a first step in further researeh would appear to be an investigation of thelinkages between the initial intemational steps and HR responses. For example, whatare the human resouree responses involved as the firm intemationalizes and who isresponsible for them? Further, at what stage does the company assign personnel aspectsof intemationalization to its HR department; and how do HR roles and activities changein response over time?

A somewhat obvious conclusion that could be drawn from early intemationalizationreseareh is that, in order to build foreign operations, a company needs staff with theappropriate skills, knowledge and experience. In fact, based on Finnish researeh, Svardand Luostarinen (1982) concluded that appropriate intemational personnel policiesshould precede, rather than follow, intemational operations. This is a challenge forcompanies though, as Hendry (1994: 39) has noted: 'The conundrum is how to developintemational managers in advance of having any suitable intemational business tomanage'.

A first step might be the development of an intemational orientation within the HRdepartment itself. This could be accomplished in a variety of ways, depending upon thecompany's existing approach to HRM. In smaller companies, it may be easier toinvolve the HR function in intemational activities as there are usually closer linkages-between functional areas, and shorter communication lines. If the company has a HRdepartment, but is deemed to lack an intemational orientation, then steps could be takento broaden the exposure of staff to intemational activities. This could include jobrotation, for example, between the export and HR departments. Another avenue couldbe to include the HR manager in the company's strategic formulation activities therebycreating an awareness of intemational HRM implications and consequences, not onlywithin the HR department, but throughout the company (Welch, 1994). It could beargued that the more the HR department is sensitized to the issues surroundingintemationalization, the better positioned it is likely to be to play a proactive role.

Another implication which emerges from the above review and discussion is that, forthe HR department's role to be effective, it needs also to be involved with themanagement of the information and knowledge outcomes of intemationalization. Asnoted earlier, valuable information and knowledge is bound to be generated by thepeople involved in the company's intemational operations and this can be easily lost ifnot extracted and harvested. The HR department might assist in establishingmechanisms and routines (such as staff debriefing sessions, communication links withforeign staff) that encourage information exchanges and knowledge transfer. In sodoing, the HR department obtains relevant feedback to ensure that its various policies,procedures and training programmes retain their appropriateness, and its humanresouree information system on present and potential intemational staff is relevant tothe company's intemational strategies.

Naturally, it is recognized that a lack of resourees will often constrain the ability ofsmall firms to prepare staff for intemational operations. As Gulbro and Herbig (1996)found, limited resourees restricted the ability of small firms to provide cross-culturalnegotiations training and consequently they did not perform as well in this area as thelarger firms in their study. Likewise, in a study of Anglo-German intemational HRpractices, Marx (1996) found that smaller companies were less likely to provide culturaltraining and on-going support than larger companies.

Clearly, it is difficult for HR staff/departments to become more proactive in the earlystages of the firm's intemational activities. However, without more serious attention to

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the pre-expatriation stage of intemationalization, intemational HR practitioners willcontinue to be regarded as littie more than the managers of expatriates.

Denice E. Welch and Lawrence S. WelchNorwegian School of Management

Note

1 Actor bonds 'connect actors and influence how the two actors perceive each other and formtheir identities in relation to each other. Bonds become established in interaction and reflect theinteraction pFOcess' (HSkansson and Snehota, 199S: 26).

References

Bacon, N., Ackers, P., Storey, L. and Coates, D. (1996) 'It's a Small World: Managing HumanResources in Small Businesses', International Journal of Human Resource Management, 7(1):82-100.

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