ABSTRACT
Recent years have shown a marked increase in the internationalization of business in areas such as international strategic alliances, foreign subsidiaries and overseas representative offices (Katz and Seifer 1996-7; Harvey 1996; Hiltrop and Janssens 1990). Arguably, according to Hippler (1996), the question nowadays from many companies is no longer whether or not to internationalize, but how to do so. For those already abroad, the critical issue is how to sustain their foreign operations. This is particularly true in Europe. The dismantling of trade barriers between the EU countries and the development of a free market system in Central and Eastern Europe have resulted in increased intraregional trade and investment between EU countries and from non-EU countries (Hippler 1996; Brewster and Scullion 1997). The collapse of communism has attracted massive international investment to the area. Russia alone had attracted $4.5 billion in foreign capital by the middle of 1995, while up to 22,940 joint ventures operations had been registered in Poland by the end of 1995 (EIU 1995; Knight and Webb 1997; Montezemolo 1996). Investors are attracted by a huge, skilled and relatively inexpensive labour pool and geographic proximity to most countries in Western Europe (Dillon and Higgins 1994). Investment is likely to increase as the infrastructure of a market economy is put in place and the political and economic situation continue to improve. This growth in overseas business in Central and Eastern Europe has put increasing pressure on MNEs to develop a pool of dynamic, well-trained individuals who have the necessary technical and functional skills as well as the ability to manage effectively and succeed in a postcommunist scenario. In this context, research demonstrates that there is a lower rate of expatriation among establishing companies, with most aiming to have as high a host country national presence as possible (Borg and Harzing 1995; Hippler 1996). According to Edkins (1995) the rationale for this may well be that ‘an assignment to Central or Eastern Europe is likely to be more challenging than most…even one who has travelled to Central or Eastern European countries many times is likely to find living in the region a culture shock’. However, it is also worth noting that Irish and UK MNEs ‘tend to rely more heavily on expatriates to run their foreign operations’ (Scullion 1994).
