Why do organizations continue

The world economy is moving away from the traditional economic system, where national markets were considered as distinct entities, towards a modern economic system where the national markets are merging into one huge global market. Therefore, as the development in the international business environment are forcing companies to think of the world as one vast market, the companies are being forced to set up their manufacturing and marketing facilities in different foreign countries in order to be internationally competitive. Large multinational enterprises and global organizations typically employ individuals from throughout the world.
In this regard, there are in today’s world a still increasing number of managers, namely expatriates, who are sent by international firms on foreign assignments to work in an overseas subsidiaryfor a period of time in order ;to broaden their horizons and to enhance their inter-cultural competence; (K. Barham, 1991, pp.158 ).
Nevertheless, as mentioned by J.F Hennart (1982, pp.82), ;operating overseas usually costs more than operating at home because a foreigner does not have the same contacts and knowledge of local customs and business practices as indigenous competitors”. The potential losses associated with this latter point can be extremely costly for the ongoing success of the company. B.J. Punnett pointed out that " the incremental cost (i.e., that over and above the amount incurred if the position were staffed locally) of sending an expatriate manager to a foreign location is in the vicinity of $200,000 " (B.J. Punnett, 1997, pp.388). Hence the need to ensure the right people are going overseas for the right reasons at the right time is also central to the company's success.
As the use of expatriates or parent-country nationals in multinational companies can seem confusing because of the cost involved in training and sending managers overseas, we therefore need…


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