Time to Rethink Expatriate Assignments in Emerging Markets

Expatriates sent to open factories and transfer knowledge into emerging markets need to rethink their roles if their organizations expect to stay relevant in the post-recession economy, said Thunderbird Professor Nathan Washburn, Ph.D.

“They have seen their job as coming in and transferring their expertise to the emerging economies where they are assigned,” Washburn said. “Their mentality has always been, ‘I need to transfer my skills from the corporate office.’”

Washburn said expatriates who cling to this mindset are missing the innovation that increasingly flows the other direction from emerging markets to the rest of the world.

“Emerging markets are the hotbeds for innovation,” he said. “The great innovations in the future are not going to happen in our mature, slow-growth and declining markets.”

Washburn said global companies need trusted managers on the ground in emerging markets who can gather intelligence and discern trends. Expatriates sent to open factories or implement strategy still need to transfer knowledge into emerging markets, but they also need to listen and gather information.

“For firms to really get in and understand these environments, they need to tack on an additional responsibility to these expats,” Washburn said. “They need to see their jobs not just as knowledge importers, but also as knowledge gatherers.”

Washburn said cell phone manufacturer Nokia learned this lesson the hard way in India.

The Finnish company has manufacturing sites in India, but expatriates from the company missed an important trend picked up by a local competitor.

Top-level executives from the competitor visited rural Indian communities and observed how people were using their cell phones. They saw villagers lining up behind a man on a motorcycle with a battery and cell phone charger.

People who did not have access to reliable electricity were paying the man to recharge their phones. The executives who gathered this intelligence went back to their teams and developed a new phone with a battery pack that lasts five days — or 30 days on standby. Sales have been brisk since the new product was introduced in 2009.

“Nokia had been the market leader in India, but they didn’t see this,” Washburn said. “They could have had their expats on the ground looking, but instead an Indian company saw the need and seized the opportunity.”

[This article has been reproduced with permission from Knowledge Network, the online thought leadership platform for Thunderbird School of Global Management https://thunderbird.asu.edu/knowledge-network/]