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Recently, a Fortune 500 company in the food and apparel industry began expansion into the European market for the first time. In anticipation of relocating many of its American employees to the European site, it sought advice on possible cross-cultural training programs or procedures for preparing these prospective expatriates for their new assignment. Similar to many multinational corporations, top management had very limited awareness of how beneficial CCT could be, what it should entail, how it should be applied, or who should be included. As a result of that inquiry, the following background information and program framework was developed in order to provide a better understanding of the key aspects of CCT.
Why Should CCT Programs Be Provided?
As the magnitude of international business operations escalates in the 1990s, one of the greatest challenges facing MNCs is developing expatriate managers who can function successfully within other cultures. An estimated 20 to 40 percent of all expatriates sent on foreign assignments return prematurely (Mendenhall, Dunbar, & Oddou, 1985; Black & Mendenhall, 1989) because of the manager's and/or the spouse's inability to adapt to the new culture (Tung, 1988). As a result, the need for cross-cultural training (CCT) to facilitate effective adjustment and performance is imperative for financial and strategic reasons.
The financial cost of premature returns is high, with some studies estimating the costs of a failed expatriate assignment to be $50,000 to $150,000 (Black & Mendenhall, 1990). The true cost, however, of ill-suited or unprepared expatriates is the missed business opportunities in developing markets abroad (Dunbar & Katcher, 1990).
When expatriate managers are unable to maximize opportunities because of their limited cross-cultural skills, they prevent the MNC from successfully fulfilling its strategic goals. As a firm progresses through different phases of cross-border corporate strategies (international, multinational, global, and transnational), the skills needed of expatriates undergo a parallel shift (Adler & Bartholomew, 1992). Because the degree of cross-cultural interaction increases with each phase, the focus of CCT must be aligned to address the needs of trainees operating within a given strategy.
Furthermore, as MNCs tend to progress over time from a primarily ethnocentric staffing strategy to a polycentric strategy (Dowling & Schuler, 1990), the involvement of host country nationals and third country nationals in managerial responsibilities...