Arp, F 2014 Emerging Giants, Aspiring Multinationals Foreign Executives

EMERGING GIANTS, ASPIRING
MULTINATIONALS, AND FOREIGN

EXECUTIVES: LEAPFROGGING,
CAPABILITY BUILDING, AND
COMPETING WITH DEVELOPED
COUNTRY MULTINATIONALS
FRITHJOF ARP
The phenomenon of emerging-market organizations appointing foreign ex-

ecutives from distant cultural contexts to headquarters positions has stirred
public and academic interest. Emerging giants, aspiring multinationals, and
even local organizations that focus entirely on domestic markets have joined
the global hunt for management talent. This article reports why foreign exec-
utives from significant cultural distance are appointed to local headquarters
positions, what they contribute, and why these positions are not filled with
local executives. Data are sourced from in-depth interviews with two sample
groups in organizations founded and headquartered in Malaysia (46 foreign
executives from 13 countries and 25 host-country peers from three local
ethnocultural groups). Triangulation of dyadic data from these two sample
groups reveals a dichotomy between the initial reasons for which foreign
executives are appointed and the continued reasons why some of these
executives remain in their positions. © 2014 Wiley Periodicals, Inc.
Keywords: foreign executive, local organization, internationalization,

emerging markets, Asia
Introduction positions in the headquarters operations of

emerging giants, aspiring multinationals,
E
merging market organizations have and even organizations that focus exclu-
recently been reported in the media sively on domestic markets (“India’s Visa
to appoint foreign executives from Rules,” 2010; Korn/Ferry Institute, 2009;
distant cultural contexts to head- “SOEs in Bid to Hire Overseas Managers,”
quarters positions. A number of for- 2010; “10% of Listed Firms Hire Foreign
eign executives have been appointed to Executives in 2011,” 2012). The decision
Correspondence to: Frithjof Arp, Department of International Business & Management, Nottingham University
Business School, 199 Taikang East Road, Ningbo 315100, China, E-mail: frithjof.arp@nottingham.edu.cn.
Human Resource Management, November–December 2014, Vol. 53, No. 6. Pp. 851–876
© 2014 Wiley Periodicals, Inc.
Published online in Wiley Online Library (wileyonlinelibrary.com).
DOI:10.1002/hrm.21610
852 HUMAN RESOURCE MANAGEMENT, NOVEMBER–DECEMBER 2014
of Chinese car manufacturer Qoros, for ex- but in the country where these organizations
ample, to appoint a top management team have their headquarters.
comprising almost exclusively foreign ex- As noted in the literature on the liability
ecutives from significant cultural distance (and, lately, the potential advantage) of for-
suggests that replicating products, services, eignness (e.g., Hymer, 1960; Nachum, 2006;
and management methods of organizations Zaheer, 2002), organizations are frequently
elsewhere in the world is rapidly becoming a perceived to have a “local” national iden-
strategy for leapfrogging or at least compet- tity and to be “one of ours” in their home
ing with established multinational competi- country. Zaheer (2002, p. 352) also notes that
tors (Arp, 2013a). These appointments differ “local does not necessarily mean domestic”
significantly from ex-, in-, trans-, and repa- as a local organization could itself have inter-
triation within the existing structures of al- national operations. However, the degree of
ready globalized multinational organizations internationalization (DOI; see Sullivan, 1994)
(MNOs). Figure 1 illustrates the distinction of local organizations is typically lower than
between those established conceptualiza- the DOI of developed country multinationals.
tions of international workplaces and the The appointment of foreign executives to
phenomenon of foreign executives in local headquarters management teams is a rare phe-
organizations (FELOs) of culturally distant nomenon—even in globalized MNOs with
countries (also see Arp, Hutchings, & Smith, high DOI (Caligiuri, Lazarova, & Zehetbauer,
2011). The term local is utilized to distin- 2004; Palmer & Varner, 2007; Staples, 2007,
guish organizations founded and headquar- 2008). Nevertheless, executive search firms
tered in emerging economies from foreign involved in hiring foreign executives for local
multinationals. This terminology also con- organizations in Korea and China report that
notes that FELO workplaces are not in the “the demand for these executives will likely
foreign subsidiaries of these organizations, continue,” although these “highly visible”
Global MNO domestic

market
high degree of internationalization (DOI; Sullivan 1994)
Expatriates Inpatriates
Transpatriates
A B C D E F G H I J
Established international subsidiary structure
competition
local organization domestic

low DOI (if any)
market
Foreign
Executives in
Local
Organizations =
FELOs Few expatriates (if any) Few inpatriates (if any)
A B
Few foreign subsidiaries (if any) and low FSTS, FATA, FETE ratios
FIGURE 1. Conceptual Distinction of FELOs from Ex-/In-/Transpatriates
Human Resource Management DOI: 10.1002/hrm

EMERGING GIANTS, ASPIRING MULTINATIONALS: FOREIGN EXECUTIVES IN LOCAL ORGANIZATIONS 853
appointments “can be controversial” (Korn/ After discussing the findings, their con-
Ferry Institute, 2009). Accordingly, research tribution to theory and implications for
findings show that FELOs are exposed to practice, the article addresses limitations
heightened local scrutiny, that assumptions and concludes with suggestions for further
about their income can be a source of friction, research.
and that only FELOs with very significant
levels of host-country involvement remain Literature Review
in their positions beyond temporary appoint-
Broadly, two bodies of literature are relevant
ments (Arp, 2012, 2013b).
to the FELO phenomenon. One of these sug-
gests reasons why organizations may appoint
Theoretical Framework and Research foreign executives to their man-
Questions agement teams; the other reports
Research findings
that they typically do not.
Conceptually, FELOs can be placed in the
show that FELOs
larger context of new types of international Theories on Why Foreign
cross-cultural workplaces (Bonache, Brewster, Executives May Be are exposed to
& Suutari, 2001; Stahl, Miller, & Tung, 2002; Appointed
Thomas, Lazarova, & Inkson, 2005). Thomas heightened local
et al. (2005), for example, reason that research The first body of literature implies
on such workplaces is at an early stage of that national and cultural diver- scrutiny, that
development, in which construct definitions sity of executive teams may
assumptions about
are just emerging. Many “boundary-less enhance organizational perfor-
careers” (Arthur & Rousseau, 1996; Bird, mance in developed (Caligiuri their income can
1994; Stahl et al., 2002) involve some form of et al., 2004) as well as emerging-
self-initiated expatriation (SIE) as opposed to market organizations (Ramas- be a source of
expatriate assignments (see comparisons in wamy, 2001). There is support, for
friction, and that
Inkson, Arthur, Pringle, & Barry, 1997; Suutari example, for the theory that for-
& Brewster, 2000). As will be discussed at the eign executives on the board may only FELOs with very
end of this article, FELOs can also be viewed be an effective monitor to reduce
from a career-capital (Jokinen, Brewster, & unrelated diversification or other significant levels
Suutari, 2008; Suutari & Mäkelä, 2007) and value-destroying moves from self-
of host-country
knowledge transfer perspective (Hocking, ish managerial self-interests
Brown, & Harzing, 2004, 2007). (Ramaswamy, 2001). It is further involvement remain
The present article begins with a review suggested that ethnic minorities
of literature that helps explain why organi- (Carter, Simkins, & Simpson, in their positions
zations might appoint foreign executives 2003) and outside directors on
boards (Fields & Keys, 2003), split- beyond temporary
and why they typically do not. This review
is followed by a description of the methods ting ownership and control appointments.
utilized in the research. The empirical part (Nowland, 2008), the hiring of
of this article then presents findings from executives with international
46 FELO affiliations to address the following experience (Daily, Certo, & Dalton, 2000;
research questions: Tihanyi, Ellstrand, Daily, & Dalton, 2000)
and a global mind-set (Nummela, Saarenketo,
1. Why do local organizations appoint for- & Puumalainen, 2004), as well as general cul-
eign executives from significant cultural tural diversity in organizations (Cox, 1993;
distance? Cox & Blake, 1991), assist in gaining new
2. Why are these positions not filled with market segments and customers. Competition
host-country nationals or executives from today does not only mean competing with
neighboring countries? products and services developed, produced,
3. What are FELOs perceived to contribute and marketed worldwide; it often includes
to local organizations? what the New York Times (“In Hiring,

Europeans Go Global,” 2008) refers to as “the that middle managers in Penang prefer MNO
hunt for cross-cultural managers.” However, expatriates over local executives. The foreign
no empirical evidence has been presented superiors are reported to use persuasion and
that FELOs are appointed for their cross-cul- argument more effectively; allow subordi-
tural competence and to enhance national nates greater scope for initiative, decision
and cultural diversity in executive teams. This making, and action; be “more visible” in the
raises the question whether more mundane exercise of their leadership roles; and place
and pragmatic reasons may help to explain higher importance on the well-being of sub-
the FELO phenomenon. ordinates. However, studies on the leadership
Organizations in smaller and develop- preferences of subordinate managers may be
ing economies, with smaller labor markets of limited utility to the research questions of
and a narrower range of skill sets, find them- the present study. These preferences for “for-
selves having to compete for talent in the eign” management styles may not be shared
global employment marketplace. Dawar and by senior executives and not represent the
Frost (1999) report that many local organiza- reasons for FELO appointments. At best, such
tions in emerging markets face much larger, preferences may help explain the effective-
well-resourced MNO rivals with ness of FELOs after their appointment.
It is conceivable multiple sources of competitive The theory that there may be advantage
advantage (financial and techno- as well as liability of foreignness (LOF) at the
that advantage logical resources, seasoned man- organizational level (Nachum, 2006; Zaheer,
agement, and powerful brands). 2002) could be applied to the individual
of foreignness Hence, foreign executives from level, and thus be relevant to the appoint-
significant cultural distance may ment of FELOs. Similar to the cultural dis-
at the individual
be appointed because they are tance construct, which has reliably frustrated
level may occur in deemed to have expertise not attempts by academia to define and measure
available in the developing coun- it (Kirkman, Lowe, & Gibson, 2006; Shenkar,
countries where a try. A lack of suitable and cultur- 2001, 2012), there remain questions on appro-
ally close candidates, caused by priate measures and levels (national, cultural,
sense of inferiority
increasingly globalized talent flow organizational) for the LOF construct (see
to, or xenophilic and “brain drain” (Carr, Inkson, & Mezias et al., 2002). Nevertheless, it is con-
Thorn, 2005) may also contribute ceivable that advantage of foreignness at the
preference for, to FELO appointments. Should individual level may occur in countries where
this be the case, it would sug- a sense of inferiority to, or xenophilic prefer-
foreigners exists.
gest that FELOs are appointed in ence for, foreigners exists. However, it is hard
spite of rather than because of sig- to conceive of any such advantage as a causal
nificant cultural distance. Theoretical factors influence for the appointment of FELOs.
other than a desire for cultural or national Hence, there are a number of theories on
diversity—that is, a pragmatic need for spe- why foreign executives from significant cul-
cific hard skills—may thus help explain the tural distance might be appointed by, and
FELO phenomenon. what they might contribute to, local organi-
However, certain culturally different zations. Empirical data elucidating why FELOs
management styles may be favored over local are appointed has not been presented—a gap
practices. Selmer (1996), for example, finds filled by the present study.
that middle managers in Hong Kong who
had experience with both local Chinese as Theories on Why Foreign Executives
well as foreign bosses assess the leadership
May Not Be Appointed
behavior of their foreign bosses to be signifi-
cantly closer to that of their perceived ideal The second body of literature indicates that
boss. Some Malaysians are apparently inclined organizations worldwide typically do not
toward a “foreign” management style, too. appoint foreign executives from culturally
Wafa, Arumugam, and Sulaiman (1999) report distant countries. That literature includes

studies of national and cultural diversity in as the GLOBE series—(see, e.g., Chhokar,
MNO boardrooms, reasons for expatriate Brodbeck, & House, 2007; House, 2004) views
assignments, and culturally endorsed leader- national and cultural distance as a problem-
ship styles. Studies of national and cultural atic barrier to be bridged. Specifically, there
diversity in boardrooms (e.g., Caligiuri et al., is often an assumption that effective lead-
2004; Palmer & Varner, 2007; Staples, 2007, ership must be congruent with culturally
2008) focus on large MNOs of developed endorsed leadership styles and expectations
economies, infer diversity from nationality as (culturally endorsed leadership theory dimen-
a proxy, and do not operationalize “cultural sions [CLTs] in the GLOBE series).
distance” due to conceptual difficulties of Incongruence with CLTs is implied
Why local
establishing agreed definitions and construct- to be less effective. Based on that
ing measures (Kirkman et al., 2006; Shenkar, assumption, the “diversity equals organizations
2001, 2012). It must be questioned, however, advantage” literature cited earlier
how much cultural diversity is added by, for would be wrong and successful appoint foreign
instance, Canadians on the boards of US cases of the FELO phenomenon
executives from
Fortune 500 companies or Austrians in could not exist, as local executives
German MNOs. Qualitative questions of what would always be more congruent culturally distant
foreign executives contribute are not investi- with culturally endorsed leader-
gated in these studies; this gap is filled by the ship styles and expectations than countries to their
present research. Findings from these studies FELOs could ever be. Hence, FELO
headquarters
document that foreigners are rare in the affiliations that involve signifi-
boardrooms of the overwhelming majority of cant cultural distance are all the management
organizations, and that their presence is often more remarkable, as they suggest
attributable to regional economic integration that incongruence with culturally teams, why these
and cross-border merger and acquisition endorsed leadership styles may
(M&A) activity, rather than an organizational be effective, and cultural distance positions are not
desire for increased cultural diversity. may not always be a problem that filled with host-
A similar picture emerges from the expa- needs to be bridged.
triation literature. Expatriate assignments, Overall, geographic and cul- country nationals
specifically, parent-country nationals (PCNs) tural distance appears to be limited
in executive positions of MNO subsidiaries in in studies of national and cultural or executives
geographically or culturally distant countries, diversity in MNO boardrooms
from neighboring
reflect that retaining control of foreign subsid- (Caligiuri et al., 2004; Palmer &
iaries (Harzing, 2001a, 2001b) is paramount. Varner, 2007; Staples, 2007, 2008) countries, and
Despite an increase of HCNs in such positions and self-initiated expatriates (SIEs).
over recent decades (Collings, Scullion, & The SIEs researched to date pri- what these FELOs
Morley, 2007), issues of trust, allegiance, and marily work in the foreign subsid-
are perceived to
control feature prominently. Banai and Reisel iaries of globalized MNOs, not in
(1999), for example, find that executives in the headquarters of local organiza- contribute remain
nationally homogeneous organizations have tions (e.g., Richardson & Mallon,
significantly higher levels of trust for their 2005; Vance, 2005). Most SIEs do unexplained in the
peers and superiors than executives in nation- not work in host countries of sig-
literature.
ally heterogeneous organizations. Even in nificant cultural distance (Inkson
nationally heterogeneous organizations, exec- et al., 1997; Inkson & Myers, 2003;
utives trust other executives with the same Lee, 2005; Myers & Pringle, 2005; Suutari &
nationality more than those with a different Brewster, 2000), and the few who work for
nationality—even when all members of a work local organizations do not hold executive
group use a common workplace language. positions (see analysis of SIE studies in Arp,
Much of the extant cross-cultural man- Hutchings, & Smith, 2013). Why local orga-
agement literature—in particular, the expa- nizations appoint foreign executives from cul-
triation literature and leadership studies such turally distant countries to their headquarters

management teams, why these positions Sample Groups

are not filled with host-country nationals or
executives from neighboring countries, and The two sample groups comprise FELOs and
what these FELOs are perceived to contribute their local peers in some of the largest compa-
remain unexplained in the literature. nies listed on the Kuala Lumpur Stock
Exchange (KLSE), government-linked and
Methods nongovernment organizations, and privately
held small and medium-sized enterprises
While the FELO phenomenon has been (SMEs). The FELO workplaces represent a
observed in various Asian countries, three rea- cross-section of organizations founded and
sons made Malaysia an ideal research setting headquartered in Malaysia in a wide range of
for an in-depth investigation. First, common manufacturing and service industries. Table I
use of English in Malaysia facilitated gaining provides an overview of nationalities and
the perspectives of foreign and local partici- gender in the FELO sample group.
pants in a single language. Second, the reason- The label LOCAL in capital letters is used
ably large population of FELOs in Malaysia here to distinguish host-country interview-
permitted gathering foreign perspectives from ees from other locals referred to. This pur-
a wide spectrum of cultural backgrounds. posive group comprised 14 participants who
Third, an objective of this research was to gain were in dyadic affiliations with FELOs, and
local perspectives that could ideally be general- was made up of colleagues, board members,
ized to other settings. Malaysia’s population chairpersons, and family members work-
comprises large heterogeneous groups (typi- ing with FELOs, as well as business analysts
cally categorized as Chinese, Indian, and Malay and executive search consultants who were
“ethnicities”) that are relatively distinct. familiar with local organizations’ appoint-
Influences on the FELO phenomenon that are ment considerations. The LOCAL sample
specific to one of those groups (e.g., religion group comprised participants with honorific
for the predominantly Muslim Malays) could nonhereditary titles, such as Tan Sri, Dató,
be distinguished from influences specific to and Datuk, that denote awards bestowed on
the other groups. Influences that were higher echelon identities in the corporate
described in the same way by members of the sector for their contribution to Malaysia’s
three main groups were aggregated and are economy. Overall, the LOCAL sample group
likely to be specific and unique to the FELO consisted of well-educated, sometimes highly
phenomenon. Thus, Malaysia was used as a influential Malaysians. Table II provides
research setting from which theory may be information about the LOCAL interviewees
generated about the FELO phenomenon in according to Malaysia’s ubiquitous triethnic
other settings. schema of categorization.
The selection of potential FELO participants
Approach started with a database of 13,318 corporate
Following recommendations in the literature directors in Malaysia (MINT online database,
(e.g., Minichiello, Aroni, & Hays, 2008), in- Bureau Van Dijk Online Publishing, 2008),
depth interviews were selected to obtain rich and searches in annual reports, corporate doc-
and substantive insights on the FELO phe- uments, and regulatory stock market filings
nomenon from the perceptions of both for-
eign and local participants. While interviews TABLE I Foreign Sample Group
can assist in the analysis of quantitative data, Nationality Gender
their main purpose is theory construction German 17 Male 41
(Bryman, 2008). In-depth interviews are con-
British 8 Female 5
sidered a means of accessing unquantifiable
facts, allowing the researcher to “share in the Australian 6
understandings and perceptions of others” Ten other nationalities 15
(Berg, 2007). (n < 5 each)

TABLE II Host-Country Sample Group TABLE III Interviewee Age, Position, and
Ethnic group Gender Type of Organization
Chinese 14 Male 14 FELOs LOCALs
Malay 7 Female 11 Age of interviewees
Indian 4 Range 28–68 29–74
Median 52 48
from public records and the Kuala Lumpur Average 51 50
Stock Exchange (KLSE, Bursa Malaysia, www. Interquartile range (IQR) 44–60 44–57
klse.com.my). Only organizations founded Executive position
and headquartered in Malaysia were con- Board director 13 8
sidered, and the Major Shareholder Analysis
CEO, COO, or MD 21 8
section in the annual reports of Malaysian
Employed executive 12 9
companies was used for this purpose. For
institutional shareholders acting as trustees Type of organization
or nominees, their classification as either Private enterprise 26 14
local (tempatan) or foreign (asing) was taken Public-listed company 16 9
into account. In addition, snowball sampling Government or state con- 4 2
was employed during the data collection. trolled, nongovernmental
This involved asking study participants to organization, nonprofit
inform the researcher about other potential
candidates who fit the sample criteria of the
research project. to elaborate on various aspects that they
The final sample size reflects the rare believed to be significant: “Please feel free to
occurrence of the FELO phenomenon. An elaborate and describe your career,
indication of this was that the snowball sam- how you came to this country,
pling yielded the same suggestions for poten- how you came to the position you The final sample
tial foreign participants after some time. The now work in, and what you do in size reflects the rare
sample size was nevertheless thought to be this position.” Equivalent ques-
more than appropriate since “the validity, tions about the FELOs were asked occurrence of the
meaningfulness, and insights generated from of LOCALs, and probing questions
qualitative inquiry have more to do with the were asked whenever appropriate FELO phenomenon.
information richness of the cases selected and to clarify details, resolve contra-
An indication of
the observational/analytical capabilities of dictions, or extract further expla-
the researcher than with sample size” (Patton, nations. Probing questions were this was that the
2002, p. 245). Table III provides comparative aimed at elucidating the research
information about both sample groups and questions of this study (why the snowball sampling
the organizations for which they work. FELOs had been appointed, why
yielded the same
their positions had not been filled
with host-country nationals or suggestions for
Data Collection
executives from neighboring
Interviews were conducted in and around countries, and what the interview- potential foreign
Kuala Lumpur from April 27 to September 23, ees thought is the appointees’
participants after
2009, and commenced with a series of ques- contribution to local organiza-
tions concerning sociobiographical data, tions). There was flexibility in some time.
comprising age, education, and number of terms of the wording and ordering
years in the organization and the host coun- of interview questions as well as in
try. Following this, the interviews moved to the mode of asking questions, as advocated
broad, open-ended questions such as “How by Minichiello et al. (2008). The present study
would you describe your position and role in required this flexibility, as the absence of spe-
this organization?” Interviewees were invited cific information on the FELO phenomenon

in the literature did not permit a rigidly struc- Bunce, & Johnson, 2006). The data are pre-
tured interview instrument (see Crabtree & sented here in the form of verbatim quotes
Miller, 1999). (nodes in bold) as well as frequency tables
detailing (1) the number of comments about
Data Analysis themes that were of sufficient note to inter-
Recordings were transcribed, analyzed, and viewees to be articulated in detail, (2) the
coded into themes in NVIVO (version 8) number of interviewees articulating these
software. Crabtree and Miller (1999) discuss themes, and (3) the source of comments
three different approaches to the analysis of (i.e., FELOs or LOCALs). This form of pre-
qualitative data: template, editing, and sentation elucidates the pervasiveness of
immersion/crystallization. The data-ana- views within the two sample groups as well
lytic approach in this study moved primar- as the proportion of participants expressing
ily from the immersion/crystallization to those views (see Tables IV and V). It also
the editing approach. As no specific litera- helps to indicate differences between the
ture existed for the FELO topic, no code two sample groups (see Discussion section
manual from a priori knowledge was devel- later), although only themes that were con-
oped for a template approach (Crabtree & sistent within groups and triangulated from
Miller, 1999). The coding and data analysis comments made by both groups are reported
process in NVIVO initially started with a for objectivity.
large number of “free nodes” that was grad-
Findings
ually reduced and sorted into a more hierar-
chical “tree node” structure, with subnodes This empirical section addresses the two key
reflecting more nuanced subthemes research questions “Why do local organiza-
(Richards, 2005). Themes emerging from tions appoint FELOs?” and “What are FELOs
the interviews showed a high level of perceived to contribute to local organiza-
consistency after about 25 interviews, in tions?” Answers to the second, and an implicit
line with figures frequently cited in the lit- third question (“Why are these positions
erature (Denzin & Lincoln, 2008; Guest, not filled with host-country nationals or
TABLE IV Why Are FELOs Appointed?

Subthemes Comments FELOs Comments LOCALs
Hard skills, expertise, and making up for brain drain 130 40 93 25
Opening of foreign markets and external cross-
cultural bridging 78 33 39 19
Portrayal of internationalization and enhancement of
reputation 70 29 36 16
“Fix-it” roles may include “hatchet jobs” and becom-
ing a “scapegoat” 25 19 14 8
TABLE V What Do FELOs Contribute?

Theme and Subthemes Comments FELOs Comments LOCALs
1 Soft skills—the neglected factors 173 37 36 20
1.1 Willingness to act, manage change, address 92 23 33 19
issues
1.2 Mentor roles 92 37 35 13
1.3 Communication style 64 22 58 18
2 People management style 246 45 63 15
3 Social attitudes, personality 167 44 91 25

executives from neighboring countries?”) Why Foreign Executives Are

emerged from the analysis of data collected. Appointed by Local Organizations:
Specifically, a dichotomy became apparent Leapfrogging
between the initial reasons why FELOs are
appointed, and the continued reasons why Hard Skills, Expertise, and Making Up for
their positions remain unfilled by local Brain Drain
executives. Local organizations primarily appoint foreign
Most frequently named as reasons for executives for specialist knowledge and tech-
FELO appointments were specific expertise nical or procedural expertise. Most local orga-
in administrative procedures, technical fields, nizations aim for knowledge transfer to occur
corporate governance, marketing, and financ- within a relatively short period.
ing strategies. Such hard skills are typically
reflected in individuals’ paper qualifications They will bring in people who are
or documented career track records. Other specialists in finance, in the pro-
pragmatic benefits cited, but not described as duction techniques in certain
sole causal reasons for FELO appointments, fields. (FELO #28)
include the image or reputation gain in both
His experience of construc- Most frequently
domestic and foreign markets that foreign
tion management, of what he
executives can bring to local organizations. named as
has learnt in [his country-of-
FELOs—ostensibly better equipped with for-
origin], that construction reasons for FELO
mal qualifications and with more interna-
management skill that
tional experience than their local peers—are
he’s brought here … The appointments were
seen as aiding local organizations in their
system that they use, the
portrayal of being “internationalized.” FELOs specific expertise
methodology of doing
are also appointed to open up new markets,
things, is very, very differ-
to interact with foreign organizations, and in administrative
ent from our local here. … So
as troubleshooters in times of organizational
when I see people like him procedures,
difficulties. Some hard skills are attributed
coming here, in a way you
to FELOs along the lines of “because they are technical fields,
could argue that it’s a bit
foreigners, they can do this.” What “this” is,
of “transfer of expertise”
LOCALs often find hard to articulate precisely: corporate
(LOCAL #4)
The only reason we go for a for- They are way ahead of us governance,
eigner is that we believe the nec- in terms of technology,
essary skills are not resident, marketing, and
in terms of expertise, in terms
okay? The second reason you go for of many things. … So the financing strategies.
a foreigner is this “impact” that best way is to really engage
you hope to happen. … So, it’s this and employ them to come
whole learning and nurturing here and help us. (LOCAL #6)
experience: “I bring the foreigner
here for you to learn versus sending A large number of comments were made
you all outside; that’s more expen- about the country’s education system and
sive; there are too many” (LOCAL #1) brain drain. But all of us know: local graduates,
a lot of them, are not able to deliver the value
The possibility of “this impact” requir-
(LOCAL #2).
ing long-term capability building rather
Local organizations have to compete with
than short-term leapfrogging is often dis-
MNOs for executive talent:
regarded; it is the marketability of FELOs
and their formal hard-skill qualifications As far as I know they looked for
that explain their initial appointment. Table twelve months for a local to
IV provides comment frequencies for the approach, to fill in this position, but
subthemes. they couldn’t find anyone—an

expert—so they started to look for but we somehow can’t. Because

a foreigner. (FELO #35) there are no Malaysians who
stay long enough to … justify
It’s a really simple problem: they can- that ambition. … Because our own
not find the ones who are quali- people also do not want to take
fied. If they find them, they are on that challenge; and it’s a … it’s
normally with multinationals. And a huge challenge; it’s very difficult.
guess what? They are well paid! (LOCAL #7)
So, you come to a similar problem
[as appointing a FELO]. (FELO #35) Further analysis reveals that there are
needs beyond knowledge, expertise, and pure
And the [local] people who go hard skills. Most comments from FELOs imply
abroad, they don’t like to come a shortage of relevant experience rather than
back. Because they are then used expertise:
to a different way of dealing and
being dealt with. (FELO #28) I saw my position as being that some-
body who could contribute, with
The desperation about brain drain was some degree of knowledge, back-
especially poignant in one local CEO’s ground, expertise and experi-
comments, who hoped for the misfortune of ence on the [deleted] side. … I became
compatriots to turn into advantage for the acutely conscious that I was the only
local organization: member of the … board who had any
real hands-on experience in the
Well, one thing that might work
[deleted] industry. (FELO #7)
in our favor is if Britain really does
revoke our Commonwealth privi- Few LOCALs are aware of or can articulate
leges. I gather that the judgment is needs beyond hard skills. Some resort to listing
due in April, and … they’ll find that a plethora of technical, marketing, sales, and
their work visas get terminated and management functions, indicating that FELOs
they can’t get jobs. So, we’re hop- are needed for long-term capability building
ing that that sends some of them rather than short-term transfers of knowledge.
back here. … It’s real sad, isn’t it? … And he’s got really valuable infor-
Well, I’m hoping it works in my mation about the science—well,
favor; it’s not good. (LOCAL #10) because the scientific industry is
Related comments concern “job-hop- what this company is all about—so
ping” among local executive talent and an he has all this experience doing,
apparent unwillingness to grow into senior … international trade. That’s
positions, take on responsibilities, and accept important: the sales side; as well
difficult challenges. as he’s got in-depth knowledge
in all the products. So he knows
But a lot of locals can do his job—it’s what works, what doesn’t work,
a matter of whether they want what should be improved, how
to or not. You know what I mean? to sell, what to sell. (LOCAL #12)
… I think it’s really good that they are
… foreign expertise coming, those
Opening of Foreign Markets and External
with a lot of experience are coming
Cross-Cultural Bridging
into our workforce, but I think it’s
no use if Malaysians are not Interviewees report that FELOs have an impor-
going to learn it. (LOCAL #12) tant role in the aspirations of local organiza-
tions to become MNOs in their own right:
We wish we could train our own
Malaysians to take on the respon- They recognized that there are
sibilities of heading the company, certain risks if you appoint a

foreigner for a purely Malaysian Sometimes, if there are discus-

business, but their ambitions sions with European companies
are international. How was and the people from the European
“international” going to happen? It companies are not so experienced
could only come with being strong with Malaysian people, then the
in your own market. And they rec- cultural barriers and misun-
ognized that even if it’s a foreigner, derstandings could be a prob-
that foreigner first of all has to clearly lem. They could lead to, you know,
demonstrate how to be successful in that the parties don’t get together.
this market. Otherwise, you don’t … There’s a very large barrier.
have the credentials to take it Then you [as a FELO] can help. So
to another market. So, to answer you are bridging this. You are the
your question: they have clearly cultural link between the two,
international aspirations, but because you understand those and
they were clearly hiring for a you understand those. (FELO #10)
local business. (LOCAL #1)
Portrayal of Internationalization
One of the criteria is that he will and Enhancement of Reputation
remain as an overall CEO oversee-
ing the operation, but not only Many FELOs relate anecdotes about their
focusing on Malaysia and Singapore; presence being desirable at meetings, public
they want him for the Europe events, and photo opportunities:
and US region. [That’s] one of the Many times I was called into a meet-
conditions. (LOCAL #2) ing, not because I was going to add
any value to what was ongoing,
This role can take simple forms of practi-
except that I was a “white face.”
cal help with the world’s business language:
And it was sort of like: “We’re bona-
“Often I felt that the reason I was there was
fide. We have us a white man.” I was
because the situation called for English, and
the token white man. (FELO #13)
my English perhaps was seen as more advanced
or more sophisticated than the local people’s” This is one of my ultimate motives:
(FELO #9); other languages of foreign busi- to show a multinational … to por-
ness partners: “With the additional business tray an image of a real MNC.
that we are doing with [that European MNO], From a Malaysian conglomerate
they appreciate very much that the foreigner, moving towards the multinational
at the other end of the phone, is talking to company. This is my ultimate objec-
them in their language” (FELO #19); or mak- tive. So certainly this [FELO] will
ing use of foreign contacts: “I started bring- help, but I take it one step at a time.
ing other expats from Australia and England (LOCAL #2)
together, to actually build the facility in the Interviewees suggested that it is specifi-
first place” (FELO #14). On a more sophisti- cally a Caucasian appearance that is desirable:
cated level, the role of FELOs involves cross-
cultural bridging: They felt that [they wanted] … effec-
tively a Westerner, or a Caucasian,
This is where I think it does help or, if you don’t mind me being bru-
being a foreigner, so, actually tal: a “white man.” As opposed
I am able to understand how the to a Japanese or … I mean they
locals are doing it and how the for- could also, of course, had—if they
eigners are presenting it. And I can wanted an expatriate—a Japanese
bridge the gap. I’m a foreigner or a mainland-Chinese, or what-
who is being seen as largely ever … a Singaporean. It was
local. (FELO #8) really a Caucasian that they

were looking for. If they have a Portrayal of internationalization may also

Caucasian face, that would typically be used to impress local investors, “local as
give—in the clients’ minds—some well as international” (LOCAL #19), to gain
better confidence in terms of reputation with, and compete successfully in
investor relations. (LOCAL #19) the domestic market:
In many cases, this desirability of a If you have a foreign CEO, people
“Western” face is reportedly based on a feel- tend to think: “Ah, okay!” They
ing that local organizations would otherwise take your company a bit more
not be taken seriously: seriously, especially if you’re a
smaller company. … And it’s gen-
The ethnic Chinese-controlled
erally more: “Okay, this is a serious
businesses here, they frequently
company! It’s more established; it’s
would like a “Kwai Lo” [Cantonese:
doing very well if it can employ
“white man”] at the top or right
a foreign manager” (LOCAL #12)
next to the top, because it’s good
for the international business. In other words, they wanted to
… It makes the foreigners com- be able to sort of “wheel in”
ing to speak with the organization, their expat [FELO] if, you know,
and to do business with the orga- other companies were “wheeling in”
nization, more comfortable. their expats. So when you’re going
(FELO #17) for, say, a “pitch”—to do a market-
ing campaign or an advertising
And also, don’t forget, when you
campaign—you know, the multi-
go outside of Southeast Asia,
nationals … would obviously
let’s say Australia: it’s harder for
have several foreigners on their
them to get the recognition in
panel, er, team. So his company
Australia, for example, than here.
being a local company, I suppose,
Here they are seen as a well-situated
felt slightly inferior and wanted
business family. In Australia, they
to present themselves or project
won’t care. … So, they probably
themselves as also having the
thought if a “white face” comes,
level of sophistication of a mul-
they are able to do that. It just gives
tinational. (LOCAL #8)
a level of confidence; again, right
or wrong, that’s my observation. Interviewees emphasize that all forms of
(FELO #35) reputation enhancement are only for exter-
nal consumption and do not give FELOs an
In the case of listed companies, it can be
advantage within local organizations.
aimed at mitigating perceptions by foreign
investors of poor corporate governance: Once you’re in, you have to perform
like everyone else. You just have
I think it’s probably to try and
to perform. … There is definitely
impress essential foreign inves-
an added value. Because the
tors. (FELO #7)
local company also plays out
So you had, you know, “Standard & this cliché, for example, if there’s a
Poors [rating organization] is coming meeting set up. … It is something
to visit, roll out the Westerner!” that they use. … But it’s cer-
and having a Westerner here on the tainly a reason for a company
board would make them realize that to have, maybe, a “white face.”
we had good corporate governance But again, it’s only to the outside.
coming through, so … there was a Internally, it doesn’t matter. Once
fair element of that and it helped you’re in, you have to perform.
them. (FELO #25) (FELO #10)

“Fix It” Roles May Include “Hatchet Jobs” Other interviewees attribute it to local
and Becoming a “Scapegoat” relationships:
Some FELOs are appointed to implement dif- You go to functions in KL [Kuala
ficult or controversial change management Lumpur]—it’s the same business
interventions. group at all of them. It’s a very
[This FELO] sort of [said]: “Okay, small town in terms of business.
I give you an opportunity to They all got relationships with
save yourself. But as far as I can somebody. And then they just
see, we have to stop the bleeding excuse themselves, because you’ve
first. Maybe one day we can grow; got to make some hard decisions.
maybe we can come back.” So he (FELO #4)
had to make difficult decisions, and The ones that have come in have
he had to go to the shareholders and just got caught in flak—crossfire
the board, and to quickly demon- that’s nothing to do with them.
strate results. … But they still had They get caught between agencies
to swallow the difficult message that … and then they are used
“… I’ve come to shut you down” as a very good scapegoat.
(LOCAL #1) While often
(LOCAL #10)
FELOs think that they would likely be Several anecdotal cases of the intertwined,
made scapegoats if such interventions meet hatchet job and scapegoat sce-
narios were reported by LOCALs, comments can be
insurmountable resistance, as in “Pay him
well for a year, have him do the dirty work, but none of the FELOs in question sorted into three
and then he goes off and does it somewhere participated in this study. Thus,
else. You know, kind of a ‘mercenary’ or details of this subphenomenon broad categories:
‘hatchet’ type of thing … if they need a fall remain to be explored.
guy” (FELO #15). None of the FELOs inter- (1) the soft skills
viewed believe themselves to have been What Foreign Executives
of FELOs, (2) their
appointed specifically to do a “hatchet job” Contribute to Local
(i.e., to close down operations and retrench Organizations: Capability people management
staff), but they do think that local executives Building
may prefer to leave controversial interven- style, and (3) their
This section reports the large
tions to outsiders:
number of interview comments social attitude and
The Malay attitude and outlook on what FELOs contribute to local
personality.
is not one of going in and doing organizations beyond hard skills
hatchet jobs. It’s a series of com- and marketability. Frequent
promises. And I don’t think that descriptive statements and emphatic com-
in a situation where you and I ments about the attitude and behavior of
might consider that a hatchet FELOs were made by interviewees, inter-
job was absolutely essential, spersed with lengthy anecdotes. While often
but I don’t think that the Malay intertwined, comments can be sorted into
mentality would actually seri- three broad categories: (1) the soft skills of
ously consider that way of going FELOs, (2) their people management style,
about it. There’d be various sorts and (3) their social attitude and personality. It
of behind-the-scenes discussions, cannot be deduced from the data that FELOs
deliberations, and eventually a are generally better managers than other
solution—perhaps a half-baked executives, whether foreign or local. It does
solution might emerge. It emerge from the data, though, that FELOs
wouldn’t necessarily be very contribute to capability building within local
effective. (FELO #7) organizations, that this contribution is not

due only to FELOs’ hard skills, and that the for my employers. My employers
need for this contribution is not fully recog- were, respectively, a Chinese in one
nized by some employers. Table V provides case—a rather Westernized Chinese,
comment frequencies of this theme and its not a particularly Chinese-Chinese
subthemes. one—and in the other case it was a
very Westernized Indian-Sikh. But I
Soft Skills: The Neglected Factors think in both cases, the relation-
Most interview comments on the soft skills of ship eventually deteriorated
FELOs do not strike the casual observer as quite badly because their manage-
particularly noteworthy, as they describe ment styles were much more Asian
what one would expect of any good manager. than my own. In other words, they
It is only the frequency of comments, the were more autocratic, more dic-
context of other comments in which they are tatorial, more what I would see as
made, and the contrast to comments about harder and more demanding—more
local executives that highlight soft skills as a exploitative. (FELO #9)
major theme. The soft skills of FELOs—also referred to
My management style, I must as emotional intelligence or people manage-
say, is not much of a management, as they are in the literature—are typi-
ment style, it’s more of a … no, I cally hard for LOCALs to describe.
wouldn’t say it’s Asian … because I mean, to be frank, it will not be
Chinese management style tends to the same [when this FELO leaves]. …
be very dictatorial. My manage- He trained people, but there are
ment style is to be as accommodat- certain things that you can’t
ing to local feelings and values train a person, especially when
and standards as possible—without it comes to people management
abdicating the responsibility. To where technical work doesn’t matter.
try and fit in as comfortably and (LOCAL #23)
seamlessly as possible. The people
are not working for me; they are the Although often generic in terminology,
people I am working with. So my interviewees’ use of emotive language and
style is to try and be as culturally emphases indicate that soft skills are much
sensitive, as accommodating as pos- more crucial to the success of FELOs than
sible, rather than impose my for- the initial hard-skill reasons cited for their
eign values or standards. (FELO #9) appointment. Failed FELO affiliations are
exclusively mentioned in the context of the
He knows the method of bringing
soft skills:
the best out of the [people in this
industry]. … He can work with Every time I ask, “Hey, what makes
anybody, however young or old. him such a good, great CEO in your
… Which is . . . like he can make mind?” [they respond]: “Ey, the guy
the security boy see what he is is great, man! ‘Cause, you know, he
all about; he can make the tech- makes every effort to know us, to be
nician see what he’s all about. like us, to be with us, you know.”
(LOCAL #7) That is important: cultural soft
skills. … In particular the expatri-
People management style may find the
ate CEOs … in local organizations …
approval of colleagues and staff, but may on
where they are not successful
occasion be different from the expectations
is not because they can’t do the job.
of FELO employers:
It is because they can’t fit into
I think it worked for my col- the company. … They can be the
leagues. It probably didn’t work best CEO or the greatest … industry

expert—everything, you know: fan- Example: product development

tastic—but they fail! (LOCAL #19) and R&D requires a very long range
development model in mind. It also
Willingness to Act, Manage Change, and requires resources to be com-
Address Neglected Issues mitted: money, people etc. “If
FELOs are reported to be more willing than it’s not something I can measure and
their local peers to make decisions and address turn into a profit in one year, I won’t
neglected issues of workplace safety, lack of do it”—that’s the model! (FELO #11)
research and development, efficiency of work FELOs are seen as contributing an outsid-
processes, or product quality. This is er’s perspective and to be willing to question
frequently attributed by interviewees to orga- the status quo, embrace different ideas, and
nizational or societal culture: manage change:
As an example, I’ve been trying Well, they [FELOs] can see things.
to improve our safety perfor- Because they’re looking from the
mance within the operations. … perspective of an outsider; they
Culturally, if they die, then: can see things, which … might be so
“Insha’ Allah!” Allah, faith—that’s obvious that they [locals] don’t see
the mood. … What was more it. (LOCAL #16)
important was to explain to
them that if they were injured, Because the locals are still having
and they couldn’t provide for their that [attitude]: “Oh, this is not mine,
family, then that was a real problem. this is not my job—somebody else
Because, as a Muslim male if … you do it!” … The foreigners that we have
can’t go back to work for six months engaged, they come with a very dif-
because you damaged yourself, and ferent attitude. “If there’s a job to
you can’t provide for your family, be done, fix it. The buck stops here.”
that’s a real cultural problem And they always have the ability
for him. That actually then got to think outside of the box.
across to them. (FELO #12) (LOCAL #6)
And I’ve been particularly con- Overall, this theme of comments supports
cerned with, and interested in, the notion that organizations often require
the issues of health and safety. external change agents to overcome cultural
… There was practically no resistance to change.
awareness of health and safety.
Mentor Roles
And last calendar year we had a
pretty disastrous record of fatalities LOCALs frequently use the words mentoring/
in … and I think it may have had teaching/guiding/training/educating in describ-
some modest degree of success in ing FELO roles, and expressions such as
instilling a sense of awareness learning from/being guided by when describing
of, really, all levels of the organiza- their relationships with FELOs. Importantly,
tion. Because they know, “When these descriptions are not related to the
[this FELO] visits, the first thing acquisition of hard skills, but made in the
he’s going to be asking is: when context of the life histories of FELOs, learn-
was your last fatal accident?— ing from social experience, attitudes, and
and, indeed, the details of all the personality traits.
other accidents.” (FELO #7)
He’s got a lot of positive traits
Some issues may be neglected because that people can learn. To me
they are not or not yet so important locally as … he earns my respect. It doesn’t
they are internationally: matter we are different, you

know. … We’ve gone beyond that “I agree with you, but in reality
supplier and customer relationship. I don’t,” you know. So, again, that’s
We go … it’s become a personal one of the major frustrations for
relationship, you know. It’s quite foreigners. (LOCAL #19)
enjoyable to talk with him.
(LOCAL #2) FELOs report that agreement is frequently
superficial in Malaysia, that “face” is impor-
It’s an advantage. You can learn tant, and that information is frequently used
from them, why not, not only as a power tool instead of being shared. FELOs
technical. … It’s not about foreign- are also aware that self-reflection may be dif-
ers, it’s the personality. (LOCAL ficult for their local peers, and that communi-
#17) cation across the constituent ethnic groups of
FELOs also mention their impact in guid- their host country is often lacking. LOCALs
ing others, and often relate it to their foreign- concur:
ness and “being different.” We are not necessarily the most
I did touch some people’s lives rational people when it comes to
and some communities’ lives with- introspection. We’re not. We need
out realizing it. Just by being dif- somebody else to be rational and
ferent. It’s kind of, like, a little bit of tell us some things. We’re not
access. And in that sense, you have introspective; it is bad, and in a bad
the capacity to change things interaction we tend quickly to
a little, you know. Their way of associate, and to agree only with
thinking about foreigners or broad- our own kind, and to expect
ening local perspectives in a way. only “acceptable” answers.
… (FELO #5) (LOCAL #1)
In sum, the capacity of FELOs to have an Many FELOs describe it as an aim of their
impact on host-country nationals appears to leadership to change their local colleagues’
extend well beyond the work environment to behavior away from superficial agreeable-
the building of personal capabilities. ness in the form of “yes-saying” to a more
reflective and critical communication style.
Communication Style
Constructive dissent is crucial for organiza-
FELOs are seen by their local colleagues as tions because:
better communicators and more willing to
Actually, it’s more effective when
openly discuss issues than local executives:
the foreigner disagrees because
That is [this FELO’s] style. He will … then you know and can discuss it.
he will voice out what he thinks A local one—for all intents and pur-
should be the right thing to do; if poses—agrees, but then doesn’t carry
you think he’s not right, you can it out, or gripes behind your back.
tell him; and then, everyone (LOCAL #10)
will come to a decision. But once
it’s been decided, he would like FELOs state that fostering discourse is
to see that followed through. part of their role. “You’re expected—as the
(LOCAL #23) ‘mat salleh’ [Caucasian]—to push the limits.
You’re expected to do that! You’re expected
Many LOCALs think that Malaysians “are to say things that sometimes Malaysians can’t
very opaque; no one will tell you what they’re say” (FELO #4) because Malaysians know that
thinking” (LOCAL #10) or pretend to agree “a lot of our people haven’t been pushed to
while disagreeing: learn how to question, and maybe that’s the
I think we will tend to, you know, strength of a foreigner—he’s got no baggage”
speak less and pretend that: (LOCAL #10).

Through expressing dissenting views and FELOs must combine this open commu-
allowing dissenting views of others to be artic- nication style with correctly “reading” con-
ulated, FELOs set an example for those who textual information and interpreting signals
would not normally do so without encourage- from local colleagues. As one local colleague
ment. While several local participants express illustrates:
that “generally, Malaysian culture is a follow-
We tend to try and accommodate
ing culture; they are followers” (LOCAL #9),
people, and we … we would not
and that they “would really wish the Malaysian
necessarily speak out, you know.
labor force here can be a lot more critical rather
And as a very frank and honest
than just compliant” (LOCAL #9), FELOs help
American, he expected us to say
foster a more discursive organizational culture:
what we thought there and then.
It’s all very stiff [in local Malaysian He didn’t know how to read
organizations], it’s listening to between the lines enough. …
just one voice, dare not speak Also, it’s to know when people
up and tell the boss that what he are taking offense and you don’t
is talking about “is not so correct, realize it, because they’ll not tell you.
Mr. Boss.” … They do not dare, An American might tell you, but not
or they do not think it’s appropri- a Malaysian. (LOCAL #10)
ate, because Tan Sri [honorific of
senior Malaysian corporate figure] is In aggregate, successful FELOs are
boss. Whereas [this FELO] and me, reported by both groups of participants to
when we go in there, and have have an outsider’s willingness to disagree
our discussion about [the organiza- and accept disagreement, combined with
tion], then we have got to fight an insider’s understanding of context—a
our fights. We just do it. … So that unique in-/out-group status. Their ability to
we can then go away and focus on make local colleagues feel sufficiently com-
what we are there to do, rather fortable to share information and opinions
than figuring out what Tan Sri is is attributed to their “insider” status, their
expecting us to do. (LOCAL #7) open communication style and fostering
of discursive communication to their “out-
FELOs’ avoidance of dictatorial decision sider” status.
making and their fostering of a discursive cul-
ture thus appear to be appreciated by many of People Management Style
their local colleagues. Indeed, the number of
Comments from several LOCALs indicate
LOCALs referring to this theme is proportion-
that the prevalent local management and
ally higher than the respective subcategory of
leadership style is not without room for
FELOs (18 of 25 LOCALs vs. 22 of 46 FELOs):
improvement:
He listens to people, he’s willing to …
My perception, certainly about local
take in ideas and to … you know, he’s
organizations, is that they do
not the type who will “impose”
tend to be very hierarchical. …
his way of doing things at all. I
And I don’t know whether it’s the
mean, in fact he would be more than
organizational culture or whether it
happy for someone to come up with
goes back to the educational envi-
the idea and work it out, and so,
ronment where, you know, there’s
then: “This is the way that it’s going
a very authoritarian kind of
to be done.” (LOCAL #16)
environment. But definitely there
I interact with [this FELO] in a very is a very pyramid kind of structure
different way because [this FELO] as, I suppose, a more flat struc-
is very open to my opinion. ture that you find in Western
(LOCAL #23) organizations. (LOCAL #13)

As one very senior, widely admired, and Both sample groups are aware of the coun-
highly decorated LOCAL says: try’s inequalities:
I’m really the … the farthest, the fur- We’re more class-conscious in
thest away from being able to com- Malaysia. You classify people accord-
ment on what my lovely brothers ing to the work they do and you
and these people are doing up there treat them accordingly, whereas,
… in their … lofty offices. And this where he’s coming from, there is no
is the thing about us also: the man- rigid class structure, in fact hardly
agement style that we, I mean … any. So, he does not … he would
give for ourselves. Big offices, and treat, you know, a gardener the
thick carpets, and huge cars same way he would treat an old
and … agghhh … you know, I just friend. (LOCAL #8)
wonder. … (LOCAL #7) FELOs feel that ethnocentrism and nepo-
tism deny local organizations the ability to
FELOs are described to pursue a more
become truly multicultural, and, by exten-
inclusive, egalitarian, and meritocratic lead-
sion, true multinationals. They report to act
ership within their sphere of influence:
accordingly:
When you hire a foreigner, you tend There is no such thing as: “I
to expect a more consultative only want Chinese.” If you have
management style rather the brain, and you can do it, you
FELOs feel that
than a “top down,” which is a come in. … I think you are aware
more Asian style. (LOCAL #8) that there is a sort of unofficial com-
ethnocentrism and plaint that Chinese companies only
You know, we took away
nepotism deny local that everyone got a month
employ Chinese, Malay companies
of salary as a bonus. We took only employ Malays, and Indian com-
organizations the that away. Oops! Gone! We panies only employ Indians. … Even
rejigged it and made it per- though they talk about multi-
ability to become cultural society and so on, when it
formance based. It needed
to be done. … People want comes to these things, they always
truly multicultural,
to be recognized for look at “brotherhood.” In fact,
and, by extension, effort. People want a “pat there’s one company I know where
on the back.” That can be the owner only wants one specific
true multinationals. ethnicity, which is Indian, but he only
monetary, that can be a pat
on the back. That’s the wants Muslims. So it is very much
same everywhere in the world. prevalent—it prevails. (FELO #2)
(FELO #4) There are these few things that are
important to me. So if I have the
The people management style of FELOs
feeling that someone is, like, you
is described as “hands-on,” with a “fold your
know, more inclined to one race
sleeves up” attitude, participative, and based
and making condescending com-
on universal principles: “Because at the end
ments about others, then, to me,
of the day you’re all one big brotherhood in
that is pretty much the end—the
the office and you have to work together”
end of that. … That puts me off.
(FELO #2).
It really, really does. (FELO #10)
Social Attitude, Personality Appointment decisions made by FELOs
The words attitude and personality were fre- are seen as less biased than those made by
quently used by LOCALs to describe why the local peers:
FELOs under discussion are able to do what Because he’s a foreigner, so he … he
they do, and why local peers cannot do it. obviously—at the end of the day—

picks the person who he thinks the day it’s … I want to use a simple
can do the job. He’s not looking word: attitude. (LOCAL #2)
at color … He’s just saying: “I’m Various comments concern FELOs’ appre-
choosing this person because I think ciation of cultural differences and universals.
this person can do the job.” … And As one FELO says:
I think that’s a good thing because
… that’s again a good thing with Dump a dozen people on a desert
a foreigner in a local organiza- island and you’ll find that, amongst
tion. To make certain decisions … that lot, you get people that you’ve
(LOCAL #23) got things in common. You have
never met them before, but you’ve got
But I’m sure when compared to a things in common although you
local executive, if you talk about come from completely different
certain things, then he’ll be more cultural backgrounds. And that’s
[neutral in his stance] than a Malay the joy of this because there will be
or a Chinese. (LOCAL #4) similarities and there will be differ-
He’s the Head of Department, and yet ences. And you’ll appreciate the
you can see all the workers around differences as well as the simi-
him working together very well. … larities! And if it works right, you
As an outsider, he is seen as bipar- both learn something from the
tisan and neutral, and therefore differences. Doesn’t mean you’ll
there isn’t any of that kind of adopt the differences—you learn
… racial stigma that’s attached. from it, which is also great. (FELO #8)
(LOCAL #13)
Many FELOs feel that this appreciation of
In combination, the relative “outsider” multiculturalism (as opposed to pluralism) is
status of FELOs, their perceived or actual not shared by all host-country nationals.
lack of bias, combined with their “insider”
I like all of that. For me person-
knowledge about their host country’s eth-
ally, if you want to live multicul-
nocentric undercurrents—the unique in-/
turally, this is a very good place.
out-group status of FELOs—appears to be
I’m so happy that my kids grow up
a valuable advantage over local executives.
with neighbors who are Malay and
Further comments on FELO personality
Chinese and Indian, and they just
and attitude typically overlap with other
don’t know anything else. I’m happy.
first- and second-order themes such as life
But you need to embrace that,
experience.
and you need to enjoy that.
I think it’s a function of two things: There are also—people here don’t
number one is personality. The want to talk about it, but there are
personality you have, the character many locals, especially Malays,
you have, and your general outlook in who don’t like that. (FELO #10)
life. And then that added to the expo-
And LOCALs concur that FELOs are prob-
sure and experience that you
ably better in this regard:
have in the country. (LOCAL #16)
It’s his good traits that he has. I
It is you yourself. It is your atti-
think he can see and understand
tude. It is “information seeking,”
the commonalities as well as
the “knowledge-finding,” isn’t it? So,
respect the differences, you
this friend of mine, this [FELO] guy
know, and is able to distinguish
… he doesn’t know [this industry]
between both. (LOCAL #19)
but he took his own initiative to talk
to people, and to relate that … to In contrast, comments from LOCALs
the business model. … At the end of suggest that they are focused more on

differences than on similarities. Only few that’s why we don’t do that, we

LOCALs, with high education levels and don’t do it that way,” if you try to
years of their own overseas experience, artic- introduce something. … The resis-
ulate thoughts such as: tance—the excuse they always
give to resist—is always: “We’re
That’s the challenge, isn’t it? It’s
different, you know, it won’t work
being able to reconcile … that
here.” (LOCAL #8)
there are differences, and that there
are cultural practices … or religious
practices that may be differ- Discussion
ent, but that … you know, finding
Findings reported here comprise only themes
in amongst all of this universal
that were consistent and triangulated from
truths that bind us and unite
comments made by both heterogeneous sam-
us, rather than divide us. … So, I
ple groups. Differences within the two groups
think, [this FELO] is very strong on
(pervasiveness of views and proportions of
that. … I would like to say that the
participants expressing those views) were lim-
Malaysians around him were
ited. Hence, findings are likely to be general-
at the same level as him, but
FELOs appear to izable to other settings. There were, for
unfortunately that is not
example, no obvious differences in perspec-
be relatively more the case. … It kind of sur-
tives between members of the local ethnocul-
prises them when there are,
tural subgroups. Neither did the nationality/
aware than their you know, similarities. I think
country of origin of FELOs appear to matter,
they assume that foreign-
local counterparts whereas consistently frequent comments
ers are foreign and that,
were made about their relative “outsider” sta-
of the importance of you know—the emphasis is tus and the valuable advantage over local
on the foreign and on the
executives that this can at times afford. This
people management difference. Similarly, within
suggests a generic positive association with
Malaysia the emphasis is
style (or, at least, foreignness rather than with particular coun-
on what … the difference
tries—an “advantage of foreignness” (cf.
is rather than on the similari-
FELOs articulate Nachum, 2006; Zaheer, 2002) at the individ-
ties. (LOCAL #16)
ual level.
this theme more Some FELOs indicate that they There are, however, differences in the rel-
specifically). are somewhat tired of “cultural dif- ative frequency of comments. For example,
ferences” being used as an excuse FELOs appear to be relatively more aware
for a variety of behaviors running than their local counterparts of the impor-
counter to universals; and some LOCALs can tance of people management style (or, at
apparently empathize: least, FELOs articulate this theme more spe-
cifically). LOCALs, on the other hand, appear
The disadvantage is that you’re
to attach greater importance to FELOs’ social
always being blocked by: “Oh,
attitudes and personality as a theme separate
this is a cultural difference.”
from management style (or, at least, mention
And you are being told: “We do this
these relatively more often; see items 2 and 3
differently; the Chinese do it like
in Table V). This could mean that FELOs view
this.” And I’ve just come to the point
soft skills and capability building as intrinsic
where I say: “I don’t care.” You usu-
parts of their managerial contribution, while
ally do something right or you do
many LOCALs appear to view social attitudes
something wrong, and it has noth-
and personality as divorced from the contri-
ing to do with culture! (FELO #6)
bution they want FELOs to make. That latter
You’ll find Malaysians saying things perspective illustrates an overall local focus
like: “Oh, but … this … we’re dif- on hard skills and marketability and the
ferent; our culture is different, short-term aim to leapfrog and successfully

compete with developed-country MNOs. styles (see GLOBE studies, e.g., Chhokar et al.,
Hence, there continues to be no empirical 2007; House, 2004) may at times be effec-
evidence to support notions expressed in tive, and cultural distance may not always
the media (e.g., “In Hiring, Europeans Go be a problem that needs to be bridged. The
Global,” 2008) that foreign executives are different people management style of FELOs
appointed for their cross-cultural competence appears to be appreciated in the longer term
or to enhance national and cultural diversity. and helps explain why their positions are not
Overall, the findings indicate that FELOs are filled with host-country nationals or execu-
appointed for pragmatic reasons and in spite tives from neighboring countries.
of rather than because of cultural distance. Fourth, the study builds theory on a sig-
nificant dichotomy that appears to exist
between the initial reasons for which FELOs
Contributions to Theory
are appointed (hard skills and marketability;
Three specific contributions to theory of this Table IV) and the continued reasons why some
research can be identified. First, this study FELOs remain in their positions (soft skills,
contributes to a developing research agenda people management style, social attitudes,
(Bonache et al., 2001; Thomas et al., 2005) by and personality; Table V). Such dichotomies
addressing a gap in the extant literature on a are not uncommon. Hocking, Brown, and
specific type of international workplace that Harzing (2004, 2007), for example, explore
has not been the subject of academic inquiry. differences between initial expatriate assign-
In explaining why FELOs are appointed and ment purposes in MNOs (defined as business
what they contribute to local organizations, and organizational applications) and contin-
the findings extend knowledge on the career ued capability building over time (defined as
capital derived from boundaryless careers individual experiential learning of the expa-
(see, e.g., Jokinen et al., 2008; Stahl et al., triates). Hard skills appear most important in
2002; Suutari & Mäkelä, 2007), and new the initial phases, but the capability build-
forms of international workplace affiliations ing through experiential learning in subse-
including self-initiated expatriation (e.g., quent phases may be the more important
Inkson et al., 1997; Peltokorpi & Froese, 2009; resource—as in FELO workplaces. The differ-
Suutari & Brewster, 2000). ence between expatriate assignments and the
Second, the study extends the LOF concep- FELO phenomenon is the level and predomi-
tualization from organizations (see Nachum, nant direction of this valuable experiential
2006; Zaheer, 2002) to individuals. The find- learning and knowledge transfer. In expa-
ings suggest that there can be advantage as triate assignments, frequent access to host-
well as liability of foreignness at the indi- country “insider” knowledge contributes to
vidual level. FELOs’ advantage of foreignness the capability building of an individual. In
is illustrated not only by their usefulness to FELO workplaces, frequent access to “out-
local organizations in the portrayal of inter- sider” knowledge of an individual contributes
nationalization. The relative outsider status to the capability building of organizations.
of FELOs apparently gives them the ability to
address neglected issues, manage change, and
Implications for Practice
take on “fix-it” roles that local executives find
too controversial for themselves. In addition, The present study holds important implica-
this status allows FELOs to contribute outsider tions for practitioners and researchers of
perspectives, question the status quo, and international business. First, the initial
help their colleagues embrace different ideas. appointment of FELO occurs as local organi-
FELOs’ liability of foreignness is reflected in zations aim to leapfrog, compete with, or
their risk of being made scapegoats due to defend their domestic market share against
their relative outsider status. developed country MNOs. As Dawar and
Third, the findings suggest that incon- Frost (1999) have highlighted, many local
gruence with culturally endorsed leadership organizations in emerging markets face larger,

well-resourced MNO rivals with multiple multinationals, and even local organizations
sources of competitive advantage including that exclusively focus on domestic markets.
seasoned management. The FELO phenome- Developed-country MNOs face a brain drain
non is often linked to defensive strategies, of their own if seasoned executives take
driven by a need for hard skills rather than an with them significant sources of competitive
appreciation of the value of diversity within advantage (cf. Stahl, Chua, Caligiuri, Cerdin,
management teams, and includes the por- & Taniguchi, 2009).
trayal of internationalization and enhance- Fourth, expatriate managers of devel-
ment of local organizations’ reputation. oped-country MNO subsidiaries may increas-
Second, the existence of successful long- ingly face competition in their host countries
term FELO affiliations illustrates the continued from local organizations with executives of
need of local organizations to build capabili- similar expertise in technical fields, adminis-
ties beyond hard skills, as leapfrogging the trative procedures, international experience,
competition is rarely possible. However, the corporate governance and financing strate-
soft skills emphasized by both LOCALs and gies, and access to developed-country con-
FELOs in this study are typically disregarded tacts. However, developed-country MNOs
at the initial appointment stage. may be able to win back talent from the
The frequent critical comments global executive marketplace by hiring FELOs
The frequent critical
made by both groups in the sam- who have gained valuable insight from their
comments made ple about a dearth of good people cross-cultural experience in local organiza-
management within local organi- tions. Having been exposed to the experience
by both groups zations suggest that there is room of working as an executive in local organi-
for improvement. In this context, zations may prove to be a valuable asset (cf.
in the sample
it must again be noted that this Jokinen et al., 2008; Suutari & Mäkelä, 2007).
about a dearth study has a “survivorship bias” in
that participants predominantly
Limitations and Further Research
of good people represent ongoing FELO affili-
ations. Other FELO affiliations, This study is, of course, limited by its explor-
management within especially those involving the atory theory-building nature. The contribu-
local organizations “hatchet” and “scapegoat” sce- tion of foreign executives to the local
narios mentioned, may be hard to organizations for which they work is reported
suggest that observe through research meth- from interview data. Further limitations of
ods other than longitudinal case this study include a potential “survivorship
there is room for studies. Appointing FELOs for bias” resulting from the cross-sectional nature
short-term change management of the research, potential sample selection
improvement.
interventions (and making them biases (e.g., gender, nationality distribution
“scapegoats”) may be effective in the FELO sample group, ethnicity distribu-
in a few exceptional cases, while long-term tion in the LOCAL sample group), and poten-
capability building and changes in organiza- tial limitations arising from the single broad
tional culture take time. The second impli- perspective of this research (“Western” execu-
cation, therefore, is that local organizations tives in “Eastern/Asian” organizations). The
may need to accept that the soft skills and terms Western and Eastern, not unlike the
management style of some foreign executives terms developed and developing country, create
can contribute more to organizational perfor- a superficial dichotomy that does not reflect
mance than the hard skills for which they are the complexity and heterogeneity within
predominantly initially hired. either construct. Globally, the FELO phenom-
Third, as local organizations join “the enon could also be represented by Eastern
global hunt for talent,” developed-country executives holding headquarters positions in
MNOs need to be aware that an increas- Western organizations (or the reverse) as well
ing number of executives are willing and as by African or Latin American executives in
able to work for emerging giants, aspiring the headquarters of European organizations

(or the reverse). Indeed, the FELO phenome- of the FELO phenomenon that require analy-
non could also be represented by, for instance, sis concern what types of local organizations
Korean or Japanese executives in local appoint foreign executives. Are there differ-
Malaysian organizations. ences, for example, between the family-dom-
The question of whether some mechanisms inated and government-linked organizations
of the FELO phenomenon might be different in that are common in Asia (see, e.g., Claessens,
developed countries highlights a further limi- Djankov, & Lang, 1999, 2000)? What influ-
tation of this study. Until systematic research ence does the mind-set of the top management
has been conducted on more cases and in more team (Levy, Beechler, Taylor, & Boyacigiller,
settings, conclusions on this point may be pre- 2007; Nummela et al., 2004; Taylor, Levy,
mature. However, preliminary data collected Boyacigiller, & Beechler, 2008) have on the
in developed countries, comparison with decision to appoint foreign executives and to
cases in developing countries, and compari- the long-term success of FELO cases?
son with the findings from the present study Similarly, a typology of foreign individu-
does suggest multiple similarities. These com- als involved in the FELO phenomenon should
parisons include cases of European executives be developed. What are the differences, for
in neighboring European countries; American, example, between FELOs with previous host-
European, Indian, and Mexican American country experience and those without? What
executives in Australia, Germany, Japan, and influence does previous experiential learning
Korea; and European and American execu- of FELOs have on knowledge transfer to, and
tives in China, India, Indonesia, Singapore, capacity building in, local organizations? Such
and Vietnam. The similarities among all these typologies can assist in identifying which FELO
cases include the initial reasons for appoint- affiliations produce successful outcomes and
ments, perceptions about the foreignness and those that are likely to fail. Further analyses can
unique in-/out-group status of FELOs, and the address the question of how cultural distance
increased ability of FELOs to manage change is bridged in successful long-term FELO work-
and address neglected issues, as well as their places. In addition, longitudinal case studies
perceived or actual lack of bias as relative out- will be required to elucidate subthemes of the
siders. To what extent these characteristics can FELO phenomenon (in particular, those relat-
be a valuable advantage over local executives ing to successful long-tenure FELOs).
in all of these countries will require further To date, FELOs have not been the subject
investigation. The most limiting factor may of much academic inquiry. Contributing to
be sample sizes that are sufficiently large for the emerging body of literature on HRM in
methodically rigorous studies of the rare and emerging markets, this article is an important
specific FELO phenomenon. step in understanding this remarkable cross-
The purpose of the present study was cultural management phenomenon.
an initial exploration of an as yet underre-
searched phenomenon that is to date proba-
Acknowledgments
bly most visible in emerging markets. Because
of its investigation of multiple cross-cultural I am thankful to three anonymous reviewers
interfaces (comprising FELOs from 13 coun- who, in addition to other constructive criti-
tries and their local peers from various cul- cism, encouraged me to more clearly express
tural backgrounds), the present study is not that FELOs are initially appointed in spite of
narrowly monodimensional. Nevertheless, rather than because of significant cultural dis-
limitations in the generalizability of the tance. While the soft skills, different manage-
findings to other settings may only become ment styles, and contribution of FELOs to
clearer once comparative studies in other cultural or national diversity in the manage-
countries have been conducted. ment teams of local organizations becomes
As is the case with all constructs from appreciated over time, it is the initial pragmatic
exploratory research, some differences between need for specific hard skills that helps explain
FELOs are likely to emerge. Therefore, aspects the existence of the FELO phenomenon.

FRITHJOF ARP, PhD, researches and teaches at Nottingham University Business School,
Ningbo, China. He has previously worked at Monash University and La Trobe University,
both in Melbourne, Australia. Dr. Arp’s career spans three continents and includes posi-
tions as managing director in Singapore and Malaysia (1995–2004; two companies con-
currently), Australia (2004–2008), and Regional Manager Europe for a large Singapore
conglomerate (1991–1995). His research and advisory interests include market-, prod-
uct- and people-strategies, where his work spans the spectrum from the theoretical and
empirical to the methodological, educational and practical.
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EMERGING GIANTS, ASPIRING

MULTINATIONALS, AND FOREIGN

The phenomenon of emerging-market organizations appointing foreign ex-

Keywords: foreign executive, local organization, internationalization,

Introduction positions in the headquarters operations of

Global MNO domestic

local organization domestic

FELOs Few expatriates (if any) Few inpatriates (if any)

FIGURE 1. Conceptual Distinction of FELOs from Ex-/In-/Transpatriates

Human Resource Management DOI: 10.1002/hrm

Human Resource Management DOI: 10.1002/hrm

Human Resource Management DOI: 10.1002/hrm

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management teams, why these positions Sample Groups

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Human Resource Management DOI: 10.1002/hrm

TABLE IV Why Are FELOs Appointed?

TABLE V What Do FELOs Contribute?

Human Resource Management DOI: 10.1002/hrm

executives from neighboring countries?”) Why Foreign Executives Are

Human Resource Management DOI: 10.1002/hrm

expert—so they started to look for but we somehow can’t. Because

Human Resource Management DOI: 10.1002/hrm

foreigner for a purely Malaysian Sometimes, if there are discus-

Human Resource Management DOI: 10.1002/hrm

were looking for. If they have a Portrayal of internationalization may also

Human Resource Management DOI: 10.1002/hrm

Human Resource Management DOI: 10.1002/hrm

Human Resource Management DOI: 10.1002/hrm

expert—everything, you know: fan- Example: product development

Human Resource Management DOI: 10.1002/hrm

Human Resource Management DOI: 10.1002/hrm

Human Resource Management DOI: 10.1002/hrm

Human Resource Management DOI: 10.1002/hrm

Human Resource Management DOI: 10.1002/hrm

differences than on similarities. Only few that’s why we don’t do that, we

Human Resource Management DOI: 10.1002/hrm

Human Resource Management DOI: 10.1002/hrm

Human Resource Management DOI: 10.1002/hrm

Human Resource Management DOI: 10.1002/hrm

References Bird, A. (1994). Careers as repositories of knowledge:

Human Resource Management DOI: 10.1002/hrm

Human Resource Management DOI: 10.1002/hrm

Human Resource Management DOI: 10.1002/hrm

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