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Transnational Communities Programme

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Transnational Communities: Japanese and Korean Expatriate Managers in the UK

Short Summary / Long description

Principal Researchers
Professor Richard Whitley
Manchester Business School
Booth Street West
Manchester
M15 6PB
 
Dr Glenn Morgan
Warwick Business School
University of Warwick
Coventry
CV4 7AL
Contact
Professor Richard Whitley
Tel: 0161 275 6333
Fax: 0161 275 6489
Email:  r.whitley@fs2.mbs.ac.uk
Internet: http://www.mbs.ac.uk
Duration of Research
1 October 1998 to 14 March 2001

Short summary

The main aim of the project is to explain the factors which influence the creation and development of transnational communities amongst Japanese and Korean expatriate managers and their families in the UK. The research will examine how Japanese and Korean expatriate managers and their families adapt to the experience of living and working in the UK as well as how they reintegrate into their home organisations when they return. It will focus on the ways that Japanese and Korean multinational firms vary and affect the patterns of work and non-work behaviour of expatriate managers and their families in the UK. The strategies and structures of multinational corporations shape how expatriate managers interact with other members of their own ethnic community and with members of the host society thus creating particular sorts of boundaries within and between communities and constraining/encouraging particular forms of interchange and exchange across these boundaries. These patterns lead to particular kinds of transnational communities amongst expatriate managers. The research will examine these processes through a series of questionnaires and interviews with Japanese and Korean expatriate managers in both manufacturing and service sector.


Transnational Communities: Japanese and Korean Expatriate Managers in the UK

Long description

The intensification of global competition and the increasing cross-national coordination of economic activities by multinational enterprise have greatly expanded the scope and density of cross border linkages amongst nations and amongst organizations. The development and management of the ' global employee' has received some research attention recently in response to the recognition of the demands placed on personnel working in TNC's, e.g. Ghoshal and Westney, 1993.Such studies tend to have a limited view of the firm, the process of internationalization and the social dynamics of emerging transnational communities based on networks of expatriate managers. The nature of firms differs considerably across societies in terms of their forms of management and ownership, the extent of their diversification, the control mechanisms which are utilised to integrate complex organizational structures, and the ways in which work systems are organized (Whitley, 1996; 1997). This affects both the patterns of internationalization processes through which firms evolve and the social relationships upon which transnational organizational forms and communities are constructed. The nature and meaning of concepts such as the ‘global employee’ can therefore be expected to vary depending on the home origins of the transnational corporation.

It follows therefore that firms and their employees operating in similar sectors but from different national business systems can be expected to behave in contrasting ways when entering the same overseas market. From the point of view of the firm itself, we anticipate that national business system differences will reveal themselves in the experience of expatriate managers in the following ways:

  • the position of expatriate managers within the overall structure of employment in the foreign subsidiary (e.g. the numbers of expatriate managers employed, their seniority and expertise)
  • where overseas transfer fits into the career structure and promotion opportunities of individual managers and the significance of overseas transfer for the development of the skills and knowledge of individuals
  • the manner in which expatriate managers are selected and trained for their assignments (both at home and in the host environment)
  • the management of overseas assignments as part of the learning and development process for the firm as a whole
  • the interaction between the overseas subsidiary and other firms in the same location (both from the same home base, from the host society and from other countries)

From the point of view of the company, these areas constitute aspects of the world of the expatriate manager which can be subject to control and decision-making. However, the firms themselves recognise that for overseas assignments to work successfully, there are a range of more intangible issues that are to a significant degree beyond their control. These relate to the social context of the expatriate’s life overseas and the ability of the expatriate to settle in the new environment. It is this process of ‘settling’, no matter how short it may be for the individual expatriate manager (most overseas assignments from Korean and Japanese companies into the UK are for between 2-5 years), which over time (and given sufficient numbers) may create the characteristics of a transnational community, i.e. patterns of relationships and interactions (reflected in the creation of specific shops, restaurants, clubs, schools and the celebration of particular cultural and religious events) which are based around a particular ethnic identity and reproduce themselves over time even when there is constant turnover of the individual members of the community. These patterns also create characteristic forms of relationships and interactions with the host community, reflected in the degree and nature of contact across community boundaries.

The interaction between the male-dominated world of work and its associated social activities (such as golf and drinking) and the family-centred world outside work becomes the crucial nexus whereby the process of settling is accomplished and the transnational community emerges. This will be influenced partly by the deliberate policies of the firms towards their managers, partly by the complex effects of the national business system (e.g. in terms of expectations about hierarchy and authority and the degree to which this encourages or discourages contact across levels within the firm or into other firms both in the work environment and outside) and partly by the nationally based institutions which influence expectations about family and gender. In all these respects, we expect to see marked differences between the transnational communities formed from the expatriate managers and their families from different societies.

The Research Agenda

The proposed research builds on previous work in the comparative business systems field which has been carried out by the applicants and others (Whitley 1992: Whitley and Kristensen eds. 1996; Whitley and Kristensen eds. 1997). This work is based within the emerging field of economic sociology and its application to business organizations (see e.g. Smelser and Swedberg eds. 1993; Hollingsworth and Boyer eds. 1997; Crouch and Streeck eds. 1997). This perspective focuses on the centrality of nationally based social institutions in the constitution of management processes and organizations. One of the key theoretical and empirical issues concerns the interaction between the internationalization of economic activity and national business systems (see e.g. Boyer and Drache eds. 1996; Dore and Berger eds. 1996; Quack, Morgan and Whitley forthcoming). By focusing on ‘globalization from below’, developing through the activities of transnational corporations (Cohen 1997, ch. 7), this research will make a major contribution to understanding how internationalization occurs and how this reproduces and interacts with national business systems.

Our study will focus on expatriate managers and their families in Japanese and Korean firms in the UK. We have selected these two countries for the obvious reason that over the last ten years, they have become major overseas investors in the UK. In the case of Japan, this has led to an expatriate community in the UK of around 50,000 (according to official figures from the Japanese embassy) though Cohen states that ‘the total is likely to be about 90,000’ (Cohen 1997: 159). Nearly half of the official number (i.e. around 25,000) are located in London according to the Japanese Embassy. Amongst the category of ‘private company employees’, 91% are male. The ratio of employees to family members within this category is 2:3. In the case of Korea, no official figures are available though anecdotal evidence puts the figure at around 8,000 with around 1,000 located in London.

Clearly the two countries differ substantially in the scale of their financial and human resource investment in the UK. The Japanese began their entry to the UK in the 1960s and the experience of the early expatriate managers was very different to that which a Japanese expatriate could expect now on posting to the UK. Korean firms began to enter the UK in the late 1980s and within a few years had developed major manufacturing plants and also established a presence in the City of London. In this period, the experience of the Korean expatriate managers and their families were probably more similar to the Japanese in the 1960s than to the Japanese experience in the 1990s. However, Korean expectations that their entry to the UK would continue to develop in the same steady trajectory as the Japanese has been severely hit by the recent financial crisis in Korea which has led some companies to delay indefinitely proposed investments in the UK as well as causing some of the Korean financial institutions in the City of London to restructure their organizations and repatriate some of their managers.

Our main research objective is to compare and contrast the nature of the transnational communities which are being constructed as a result of the establishment of these firms in the British context. Our initial expectation is that the Japanese and Korean experiences would vary greatly due to the nature of the home business systems and the different structures of Japanese and Korean firms.

Korean chaebols are family dominated diversified conglomerates.The owning family within the chaebol defines itself and its firm in relation to political and economic rivalries with chaebols from different regions. Each chaebol is a self-contained unit which has gradually diversified across many sectors often in direct rivalry with other chaebols. The Korean economy and society is significantly segmented along regional lines, embedded in the chaebol structure. Internally to the manufacturing firm, structures of authority, discipline and control are strongly hierarchical, based often on the application of Taylorist techniques (Biggart 1997: Whitley, 1992a: Janelli 1993; Kim 1992). From this, we hypothesize that foreign subsidiaries of Korean chaebol would tend to reproduce the self-contained structure of their home base. Any formal and informal linkages across Korean firms in the UK would not be expected to carry general business information or to be particularly significant as a means of strengthening long-term relationships between firms. We would also expect that the strongly hierarchical nature of organizational relationships would work against the creation of strong ties between Korean and non-Korean employees within the firm. Cooperation across organizational boundaries would be expected to be minimal and learning and skills transferred to or from the local population of firms and employees low. These expectations would be reflected in the training and preparation of the expatriate manager in the home base. The Korean expatriate manager would be likely to remain highly dependent on instructions from head office in Korea.

These features in turn would be expected to affect the informal associational activities of Korean employees and their families in the UK. Given relatively small numbers of Koreans in the UK, it would be expected that they would tend to locate together in particular geographical areas where economies of scale would enable Korean shops, restaurants and educational facilities to operate successfully, e.g. most Koreans working in London live with their families in the Kingston-upon-Thames area. This is likely to create a social network for male managers, their wives and children which goes beyond chaebol and business group boundaries. This localised social network will play an important role in sustaining the enthusiasm and interest of the manager in his assignment both directly, in providing opportunities for social and leisure activities and also indirectly, in providing social, leisure and educational opportunities for wives and children. Regional, religious and organizational rivalries may be over-ridden in most circumstances by the need to cooperate away from the home society.

The Korean structure and the expectations which flow from it about the nature of the Korean expatriate community in the UK stand in marked contrast to our expectations of Japanese expatriates. In the Japanese business system, firms tend to be focused on particular core technological and organizational competences and there are low levels of unrelated diversification (Fruin, 1992). Japanese firms are embedded within network structures of cooperation that link firms within production chains and across sectors together through a variety of mechanisms, including ownership, supply relations, lending facilities, management interchanges and ‘President Club’ meetings for the formal and informal exchange of information between key firms within these intermarket groups (Gerlach, 1992: Westney 1996). Firm boundaries inside these business groups and vertically organised groups are relatively permeable and there is constant exchange of information, resources and personnel across firms, business groups and the business community more generally, a process which Sabel terms ‘learning by monitoring’ (Sabel 1994). We would therefore anticipate the establishment of many different types of formal and informal linkages amongst Japanese firms located in the UK. These would go beyond the requirements of direct business dealing and would contribute to the diffusion of general economic and business intelligence amongst the Japanese business community as well as enabling the face-to-face contacts which become means of establishing and cementing direct business relationships. We would therefore expect to see a much higher degree of interaction across the Japanese business community than in the Korean one.

These features would also potentially lead to greater interaction between Japanese and British employees within the same firm. The Japanese firm is less strongly hierarchical than the Korean and is built on the expectation of cooperation amongst all ‘core’ employees. Whilst Japanese expatriate managers in the UK may bring a strong sense of technical superiority, it is unlikely that this would lead to a rigid divide within the firm along ethnic lines. Instead, there would be varying levels of cooperation and consultation between the British and the Japanese in the workplace. These processes would also be likely to lead to a greater degree of autonomy and responsibility (particularly in the area of human resource policies) for the Japanese manager in the UK setting than his Korean counterpart. We would expect this to be reflected in both the selection criteria applied in Japan and the sorts of training and monitoring which the expatriate manager receives as well as the degree and nature of contact with head office in Japan (see Storey et al. 1997 for a broad discussion of management training in Japan). Similar considerations apply in relation to the linkages between Japanese and UK firms. Whereas Korean chaebols are usually highly vertically integrated, Japanese firms rely on purchasing from outside. Japanese firms in the UK are more likely to establish close relationships with UK suppliers (as well as their Japanese supply partners who may be encouraged to follow the lead company into the overseas venture)(Elger and Smith 1995).

In terms of the structure and boundaries of the Japanese expatriate community as a whole, we have already noted the growing size of this community and therefore it has the scale, as Cohen states, to develop its own social institutions such as ‘golf clubs, hotels, spas, Japanese schools, temples, cinemas, booksellers, restaurants, nightclubs, bars and markets ...patronized almost exclusively by overseas Japanese’ (Cohen 1997: 159). Anecdotal evidence indicates that the size of the community and the range of Japanese facilities now available in some locations may be such as to enable expatriates and their families to avoid almost entirely any contact with the host community.

These tentative hypotheses may, however, have to be modified when a sectoral comparison is made. FDI in manufacturing in the UK from Japan and Korea has occurred as a means of entry to the European market in order to reinforce the mass market presence of Japanese and Korean firms in this sector. The process of internationalization has involved the transfer and adaptation of existing systems and personnel to the British context. The internationalization of Japanese and Korean banks, however, derives from different forces. As manufacturing firms extend overseas, their home bankers face the challenge of internationalizing themselves in order to support their home base customers or potentially losing business to foreign banks. Additionally, banks look for new and profitable sources of business which can arise in foreign markets. These differences imply that the sorts of expatriates employed, their criteria for selection, their role as managers and the procedures for monitoring their activities will probably differ between the two sectors. One of the key purposes of internationalizing for the banking sector is to integrate into the densely networked activities which constitute the City of London (Thrift 1996, ch. 6, also Morgan, 1997; Sassen, 1991). Within this network, personal ties, face-to-face contact and reputations remain significant even though the market is now increasingly internationalized and based upon electronic interchange of information. Personal relationships and networks (facilitated by the close geographical proximity) underpin formalised business activities to varying degrees depending on the nature of the specific financial markets and products being considered, as well as the nature of the customers. In the manufacturing sector, connections between firms for business purposes can be coordinated primarily through formal systems and processes. Personal interaction and networking between suppliers and main companies is not a traditional feature of such relationships in the UK and may indeed be hampered by short-term contracting and geographical distance. These differences at the level of business activity are reinforced by the differences outside of work between living in the London area (where cosmopolitan life styles can be sustained and developed partly because of larger numbers of expatriates being able to congregate together and partly because of the cultural values of ‘global cities’) and living in a provincial town in England or Wales.

The Research Process and Methodology

In order to investigate these issues, we propose to undertake a three stage approach to data collection. In the first stage, we will conduct a questionnaire survey of Japanese and Korean expatriate managers and their experiences. The second stage in the data collection will consist of the identification of a small number of companies - two within each sector (making a total of eight firms) - which will be studied in detail. At this stage, the head offices of each of the cooperating firms will be visited in order to gain first hand understanding of how the role of expatriate managers is perceived and monitored by management at the company headquarters. The third stage in the data collection will consist of detailed interviews within the chosen case study companies.

Potential Impacts

The research will have a number of potential long-term impacts:

  • It will contribute to a greater understanding of what is meant by the term ‘transnational community’ and the different types of such communities.
  • It will contribute to a deepened understanding of the social context of FDI into the UK and give a greater understanding of how this can be facilitated. This should affect long-term both policy discussions and the academic understanding of the forces for FDI and its relative effectiveness.
  • It will provide much needed empirical data on the nature of the ‘global employee’ and the transnational corporation. In this respect, it should contribute to both academic and policy discussions about the human resource implications of FDI and its management.
  • It will be highly relevant for academic discussions concerning the meaning of globalization and, in particular, the degree to which this leads to a convergence of firms and their structures or a continued divergence, based on the social factors which sustain home-based practices (in the workplace and outside) even in overseas settings.

Bibliography

Berger, S. and Dore, R. (eds.) (1996) National Diversity and Global Capitalism London: Cornell University Press

Boyer, R. and Drache, D. (eds.) States Against Markets: the limits of globalization London: Routledge

Biggart, N.W. (1997) ‘Institutionalised Patrimonialism in Korean Business’ in M. Orru, N.W. Biggart and G. G. Hamilton (eds.) The Economic Organization of East Asian Capitalism, London: Sage.

Boyer, R. and Hollingsworth, J.R. (eds.) (1997) Comparing Capitalist Economies: The Embeddedness of Institutions Cambridge: Cambridge University Press

Clark, R. (1979) The Japanese Company, Yale University Press.

Cohen, R. (1997) Global Diasporas, London: UCL Press.

Crouch, C. and Streeck, W. (eds.) (1997) Political Economy of Modern Capitalism London: Sage

Elger, T. and C.Smith , (eds.) (1995) Global Japanisation, London: Routledge

Fruin, M. (1992) The Japanese Enterprise System, Oxford University Press.

Gerlach, M. (1992) Alliance Capitalism, Berkeley, CA: University of California.

Ghoshal, S. and D.E. Westney (1993) Organization Theory and the Multinational Corporation, London: The Macmillan Press.

Janelli, R. (1993) Making Capitalism: The Social and Cultural Construction of a South Korean Conglomerate Stanford: Stanford University Press

Morgan, G. (1997) ‘The Global Context of Financial Services: National Systems and the International Political Economy’, in G. Morgan and D. Knights (eds.) Regulation and Deregulation in European Financial Services, London: Macmillan Press Ltd.

Quack, S., Morgan, G. and Whitley R. (eds.)(forthcoming 1998) National Capitalisms, Global Competition and Economic Performance Berlin: De Gruyter

Sabel, C.F. (1994) ‘Learning by Monitoring: the Institutions of Economic Development’ in Smelser N.J. and R. Swedberg (eds.) The Handbook of Economic Sociology, Princeton University Press.

Sassen, S. (1991) The Global City: New York, London, Tokyo, Princeton, NJ: Princeton University Press.

Smelser N.J. and R. Swedberg (eds.) (1994) The Handbook of Economic Sociology, London: Princeton University Press.

Storey, J., Edwards, P. and Sisson, K. (1997) Managers in the Making: Careers, Development and Control in Corporate Britain and Japan London: Sage

Thrift, N. (1996) Spatial Formations, London: Sage.

Whitley, R. (1992) Business Systems in East Asia: Firms, Markets and Societies, London: Sage.

Whitley, R. (1996) "There Is No Alternative: the necessity of state coordination of East European reindustrialisation", Competition and Change, 1.

Whitley R. (1997) "The Social Regulation of Work Systems; institutions, interest groups and varieties of work organisation in capitalist societies in Whitley and Kristensen (1997) op.cit. pp.227-260

Whitley R. and Kristensen, P.H.(eds) (1996) The Changing European Firm London: Routledge

Whitley R. and Kristensen, P.H.(eds) (1997) Governance at Work: The Social Regulation of Economic Relations Oxford: Oxford University Press.

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