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Host Country National Supervisor’s Relationships with Subordinates of Different Backgrounds

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Host Country National Supervisor’s Relationships with Subordinates of Different Backgrounds: An Empirical Investigation in the United Arab Emirates

 

Abstract

Given the importance of global mobility for multinational corporations, this field study was designed to test the predictors of the quality of interpersonal relationships between host country nationals (HCNs) and exchange partners from different backgrounds, in the context of expatriate interactions with HCNs.  We drew upon the twin theories of self-categorization and interpersonal affect to test our hypotheses.  Data were collected from 62 supervisors and 221 subordinates in a large corporation in the United Arab Emirates (specifically, Dubai). Our analyses indicate that differences in nationality and even perceptions of values similarity, may not be as important to relationship quality and support received from HCNs as a more basic feature of exchange quality – interpersonal affect.  Implications for expatriate assignment and supervisor training are discussed.

Keywords: expatriates; host country nationals; nationality differences; interpersonal affect; leader-member exchange; LMX; role information support

Introduction

In their recent review of developments related to global mobility, Caligiuri and Bonache (2016) highlighted several key issues faced by multinational corporations (MNCs) in connection with their international assignment needs and practices.   These include significant changes in the types of jobs for which expatriates are sent abroad, the length of time for which they are sent, and the demographic profile(s) of who is being sent on international assignments.  In this connection, Mayrhofer and Reiche (2014) noted that, due to the very nature of their set-up, MNCs must draw upon their global organizations resources to address the unique issues faced by them.   Indeed, since MNCs operate in numerous countries around the world, they have the benefit of being able to draw their resources from various countries.  However, since the requisite resources, especially talent, may not always be immediately available in all locations, they must increasingly rely on employee global mobility in order to meet their strategic objectives (Stahl et al., 2012).

In this regard, Collings (2014) has suggested that MNCs need to approach the management of expatriate assignments using the lens of global talent management (GTM), by calling upon human resources function(s) to design and implement relevant human capital integrations (Morris, Snell, & Bjorkman, 2016).  This is critical as very often MNCs struggle with finding the requisite talent in the various locations in which they operate.  Indeed, as Mellahi and Collings (2010) had argued, talent management failure is a real issue in global corporations.  At the same time, it is critical that MNCs ensure that they have the requisite talent available at the right time in the various locations, as superior human resources are crucial to their competitiveness (Makela, Bjorkman, & Ehrnrooth, 2010).  This is where GTM can prove extremely useful as these systems can scan talent throughout the organization, without the restriction of geographical boundaries, and identify potential high performers who would fit the organization’s requirements worldwide (Morris et al., 2016).

Of course, this requires the active participation of talent who are open to global mobility and who would enjoy and thrive in their global experiences (Shaffer, Kraimer, Chen, & Bolino, 2012), and it also requires that the subsidiary managers put forward the subsidiary talent.  Indeed, as Tung and Varma (2008) had predicted, the need for expatriates to fill critical global assignments has continued to increase, and the process has become increasingly more complex in terms of the types of assignments and the demographic profiles of the expatriates.  In other words, as globalization continues to strengthen and impact nations and businesses worldwide, employees are often called upon to take part in global work experiences (Stahl, Miller, & Tung, 2002), that transcend national boundaries.  In order for expatriates to succeed on global assignments, global leaders must also be willing to mentor and develop them (Mendenhall, Reiche, Bird, & Osland, 2012).  However, as several authors (see, e.g., Mahajan & Toh, 2014; Varma, Budhwar, & Pichler, 2011) have noted, expatriates face many obstacles in their attempts to adjust to the new location, and the longer it takes them to adjust to the new location, the longer it will take them to start performing successfully on their assignments.  As noted by Toh and DeNisi (2007), one of the primary reasons that expatriates are often unsuccessful on assignments is their inability to adjust to the new location.  Further, several authors (e.g., Caligiuri & Bonache, 2016) have emphasized the critical role played by host country nationals (HCNs) in the successful adjustment of expatriates as they attempt to navigate the terrain at their new location.

The present study is designed to fill a critical gap in the literature – understanding the issues faced by expatriates as they attempt to navigate the uneven terrain of the new location, through the lens of their social exchange with HCNs.  Previous studies of the expatriate–HCN interaction have examined the role played by nationality differences and perceived values similarity in determining whether HCNs offer requisite role information to expatriates (e.g. Pichler, Varma, & Budhwar, 2012; Sonesh & DeNisi, 2016).  However, the present study goes one step further by examining these relationships through the affect theory of social exchange (Lawler, 2001).  Further, we conduct our study with a rather unique sample of expatriates and HCNs who have been working in a location long enough that they start to think of themselves as HCNs, which we discuss below – our study was conducted in the United Arab Emirates (UAE, hereon) which presents such a unique sample of expatriates and HCNs.

The UAE/Dubai

The term “Middle East” was first introduced in 1901 by U.S admiral Alfred Mahan before it was adopted in official correspondence by the United Kingdom (Ali, 1999).   It should be noted that the term Middle East is loosely defined and refers primarily to a cultural area rather than defining precise geographical borders.  Indeed, there is no consensus on precisely what areas make up the Middle East though, in the broadest sense, it is the geographic region where Europe, Africa, and Asia meet (see, e.g., Budhwar & Mellahi, 2004). While the Middle East is often in the news for all the so-called wrong reasons, one of the countries that keep garnering positive press and attracting investors, tourists, and expatriates, is UAE.  Established in 1971, UAE comprises the emirates of Abu Dhabi, Dubai, Sharjah, Ajman, Fujairah, Umm al-Qaiwain and Ras al-Khaimah.  Arabic is the official language but English is widely spoken along with several other languages such as Hindi, Malayalam and Tagalog.

In terms of trying to understand the people of the UAE and its culture, it is important to bear in mind that UAE is a Muslim state, where social life is highly influenced by the values and culture of Islam.  So, for example, the family is the cornerstone of social life in Emirates.  According to Ali (1996: 6), “the family and other social institutions still command the respect of almost all individuals [in Arabia] regardless of their social backgrounds”.  Traditionally, the UAE household used to consist of a married couple, their married and un-married children, and un-married sisters and brothers.  However, more recently this form of household has started to diminish in urban areas, such as Abu-Dhabi and Dubai because of factors such as the limited size of modernized houses and apartments and the tendency of young generations to have their own homes and independent lives. Nevertheless, individual social identity and loyalty continue to be oriented to the largely extended family and individuals always make attempts to ensure that the needs of the larger family take precedence over their individual plans.

Overall, the UAE has an open economy, with high per capita income and considerable annual trade surplus.  Its economy is mainly dependent on oil and gas production, trade, and light industries.  The discovery of oil in the UAE more than 30 years ago helped transform the UAE from a rather poor country to a modern country with a very high standard of living.   However, the global financial crisis of 2008-09, along with falling oil prices and tight international credit had a significant impact on the UAE, and especially Dubai, since the Dubai economy was largely dependent on real estate prices and oil.

In terms of the workforce, the UAE presents a rather unique picture, whereby a significant majority of the workforce is made up of foreign nationals. The UNDP reports that foreigners and/or expatriate workers make up roughly 80 percent of the population of the UAE.  They mostly hail from other Arabic countries, and Asian nations such as India, Pakistan, Bangladesh, Sri Lanka, the Philippines and Iran.  While this unique mix contributes to the significant diversity of the UAE population, it has caused some concern among the UAE authorities, who have expressed worry about the erosion of culture and religious values.  At the same time, however, it is clear that the UAE needs these expatriate workers in order to function.

In general, the expatriates in the UAE can be classified into two major groups – the skilled/ educated group, and the casual or unskilled labor.  The skilled employees are recruited to occupy administrative and management positions in industrial, financial, educational, health, agricultural and numerous similar sectors, while the unskilled and casual laborers are recruited for manual jobs across the nation.  It should be noted here that citizens of the UAE are rarely found in traditional, private-sector, jobs – instead, the vast majority seek employment in government departments where they work as executives or sometimes, even clerks.  As such, UAE nationals dominate public sector jobs, though their number remains negligible in the private sector, where expatriates are the mainstay.  Indeed, in the private sector, it is very common to see whole departments made up of expatriates at all levels.  Indeed, most often only the very top position(s) might be held by the local Emiratis – the rest are all filled by expatriates.  Such situations create interesting workplace dynamics, where a majority of the workforce work closely with other expatriates, and have little or no contact (at least in the workplace) with local Emirati.  So, for example, you could see a Chinese worker who reports to an Indian manager who reports to a Filipino boss who reports to a German head of the department who reports to the CEO, a UAE national.

As regards the overall working climate, studies (see, e.g. Srimannarayana, 2007) have reported that there is rather unique HR climate prevalent in the UAE, more specifically in Dubai based companies.  On the one hand, employees are helpful to each other, are keen on learning, and supervisors delegate authority to subordinates and treat them with understanding and help them when they make mistakes.  On the other hand, there are several issues that need to be addressed, including lack of proper reward mechanisms and career opportunities, and the apparent management belief that employee behavior cannot be changed.

In this connection, several authors have noted that cultural values play a critical role in the socialization of newcomers (see, e.g. Lee, Reiche, & Song, 2010).  These authors emphasized the importance of two of those values (Hofstede, 2001) – individualism/collectivism and power distance, both of which can be expected to play a rather critical role in the context of the Middle East.  Indeed, if we explore the UAE culture through the lens of Hofstede’s model of cultural consequences, we can get a better understanding of the deep drivers of its culture relative to other world cultures.  Given the high numbers of expatriates from India and the Philippines, we compare the scores for these three countries on a couple of key dimensions from Hofstede’s four original scales.  Power distance is defined as “the extent to which the less powerful members of institutions and organizations within a country expect and accept that power is distributed unequally” (Hofstede, 1988: 10).  On power distance, the UAE scores 90, the Philippines 94, and India 77.  As can be seen, the UAE and Philippines are quite similar on this dimension, and India is slightly lower, though still quite high.   However, on the Uncertainty Avoidance scale, the cultures of these 3 countries are quite different – while India scores 40 and Philippines 44, the UAE scores a healthy 80.  In other words, while people in India and the Philippines are quite comfortable with ambiguity and can deal easily with a lack of structure and guidance, the same is not true for the UAE, where individuals have a high preference for structure and clear rules and guidelines.

Clearly, the UAE (and more specifically, Dubai) workplaces are characterized by these cultural similarities and differences, and we are faced with an interesting situation whereby unique dyads are formed between supervisors and their subordinates, given that neither the supervisor nor the subordinate are originally from the UAE.  Indeed, as we note above, the majority of the workforce, especially in the private sector, is made up of expatriates from various countries around the world.  Thus, what makes this a unique situation as compared to expatriate–HCN interactions in other countries (see, e.g. Varma, Pichler, & Budhwar, 2011; Mahajan & Toh, 2014) is that the supervisor-subordinate dyad here is made up of two expatriates who may be from the same country or two different countries, but neither is from the host country.

The Present Study

Predictors of Relationship Quality with and Support from Host Country Nationals – Field Data

The purpose of our study was to examine and test the model of relationship quality between expatriates and HCNs in a field setting.  In this study, we wanted to see if our results as to differences in nationality between supervisors and subordinates would be related to the relationship quality between them.  We also wanted to develop our theoretical model in terms of the likely interpersonal exchange variables that might be predictive of relationship quality, and to test whether or not relationship quality predicts the role information that subordinates receive.

Thus, we examined these principles in the context of a diverse multinational organization located in the UAE (Dubai), which presented us with the opportunity to study HCN–expatriate interactions in a very unique setting.  In Dubai, almost all the workforce is comprised of expatriates, while the native Emirati restrict themselves to ownership roles.  In the context of HCN–expatriate interactions, this presents scholars with a very interesting and unique context, since both supervisor and subordinates in the dyads are expatriates.  However, those expatriates who have been working in Dubai for a much longer than the newcomers, often seem to start thinking of themselves as HCNs, even though the law does not allow them to acquire local citizenship.  In the following section, we present a brief history of the UAE and Dubai and a description of the culture, to help explain the context.

The Role of the Host Country National

As numerous scholars have noted, HCNs can be of immense help to expatriates as they can provide critical information, both about the workplace, as well as living in the country (see a recent review by Van Bakel, 2018).  In the workplace, HCNs can help expatriates by providing them information about the do’s and dont’s, as well as share the unwritten rules of the workplace, thereby saving the expatriates’ time and effort, and helping them adjust faster.  In a similar vein, HCNs can help expatriates with important information about living in the country.  Moving to a new country can be quite stressful for the expatriates – from wondering about the right neighborhoods to live in, to identifying schools for their children, there is a long, unending list of activities that any person moving to a new city/country must perform.  As Farh, Bartol, Shapiro, and Shin (2010) have noted, expatriates are often forced to form “network ties” to gain critical information and receive emotional support.  Once again, this is where HCNs come in – they can help the expatriates’ adjustment and socialization by sharing information and providing support.

Not surprisingly, over the years, several scholars (see, e.g. Toh & DeNisi, 2007; Wang & Varma, 2017) have called for multi-faceted investigations of the role played by HCNs in the expatriate adjustment, as this support can be invaluable to expatriates and can have a significant impact on the expatriate’s performance and overall experience (see, e.g. Mahajan & Toh, 2014; Takeuchi 2010).  In this regard, several studies have been conducted to try and understand the factors that help guide HCN willingness to offer role information and social support to expatriates (see Van Bakel, 2018).  Role information guides individual on appropriate and acceptable behaviors in the workplace.  As Louis (1980) has argued, by virtue of their experience and background, HCNs have access to role information that vital for expatriates’ success.  Clearly, expatriates would have a higher probability of success if this information was made available to them by the HCNs (Mahajan & Toh, 2014).   Given that moving to a new country can often be a traumatic experience, any help the expatriate can receive is likely to go a long way in helping the adjustment process.  Indeed, as Kraimer and Wayne (2004) have argued, it is critical that the appropriate conditions are created to facilitate expatriate adjustment and commitment to the new location.  This is where HCNs can play a critical role.

HCN Categorization and Support

As we note above, HCNs can offer two types of assistance to the expatriates – providing them role information, and social support, both of which are critical to an expatriate’s success. While several studies (e.g. Varma et al., 2011; Pichler et al., 2012) have explored this relationship in terms of peer support, we examine this relationship in connection with HCN supervisors and expatriate subordinates.

Of course, HCNs may not automatically be motivated to offer support to expatriates, given the salience of their differences.  In the following sections, we discuss the antecedents of expatriate categorization, and how these might affect HCN willingness to help expatriates.

In the following sections, we discuss the relevant literature and develop our hypotheses.  This is followed by a description of the data collections procedures, followed by analyses and results.  As can be seen in Figure 1, we propose that subordinate nationality and interpersonal affect will significantly impact HCNs’ proclivity to categorize expatriates into in-group or out-group.  In the current study, we were particularly interested in studying the role that liking (interpersonal affect) could potentially play in the HCN–expatriate interaction, since it is known that interpersonal affect is a complex emotion (Tsui & Barry, 1986; Varma, Budhwar, Katou & Mathew, 2016), often expressed in a spontaneous and instinctive manner (Zajonc, 1980).  Further, given that interpersonal affect forms the core of interpersonal relationships (Zajonc, 1980), it is clear that expatriates who are liked by HCNs are more likely to receive assistance from HCNs, than those who are not liked, or liked less.

In general, we propose that nationality differences, as well as perceived values similarity and interpersonal affect will have a significant impact on the quality of relationship that develops between the HCNs and the expatriates, which will determine the degree to which the HCN would be willing to offer role information to the expatriate.  In the following section, we discuss the theories that inform our study of expatriate exchange with HCNs.

The Theories of Self-Categorization and Interpersonal Affect

One theoretical framework that has been successfully used to investigate in-group and out-group categorizations of individuals is self-categorization theory (SCT: Pratt, 1998; Turner, 1981; 1985).  According to SCT, individual and contextual factors can cause individuals to label others as in-group or out-group members.  For example, nationality is often a salient attribute (see, e.g. Varma, Toh, & Budhwar, 2006), which can cause HCNs to derive their own identity as “Indians” or “Americans”, thus leading them to cast others who are not from their own nation into the out-group.

Indeed, Varma and his colleagues (e.g., Varma, Pichler, & Budhwar, 2011; Varma, Pichler, Budhwar, & Kupferer, 2012) have found that HCNs use self-categorization to categorize expatriates into in-groups and/or out-groups, and this categorization is what determines whether HCNs offer required information and support to expatriates.  In their studies, conducted across several different countries (e.g., China, India, Turkey, United Kingdom, USA), these authors reported a common thread running through – expatriates are broadly categorized as ‘in-group’ or ‘out-group’ and this categorization determines the degree to which HCNs are likely to help them.  Further, this categorization depends on a number of key variables, such as the degree to which HCNs perceive expatriates as having similar values, and whether or not HCNs like the expatriate (in other words, do they feel interpersonal affect toward the subordinate).

Nationality Difference

The issue of national origin often evokes perceptions of differences in terms of values, with individuals conjuring up images of someone who may not understand them as well as other HCNs, due to differences in background, and a lack of shared experiences, or common understanding.  This issue is further complicated by demographic differences between HCNs and expatriates, and thus the nationality of the individuals is likely to become a major factor in their interactions.  Clearly, in the case of HCN-expatriate interactions, nationality is likely to be very salient, as the identity of the expatriate is closely linked to the fact that he/she has been sent on assignment from another country.  Thus, nationality is likely to be used as salient category by the HCNs as they search for similarities and/or differences between themselves and the expatriate, in order to establish their social identity (Haslam, Powell, & Turner, 2000), relative to the expatriates.

Clearly, one might argue that expatriates are likely to be deemed as different, and hence categorized as out-group members, while other HCNs are likely to be categorized as in-group members.  However, in the process of determining their identities, individuals often rely on a number of different factors and processes (Ashforth & Humphrey, 1995; Leonardelli & Toh, 2011), and thus may not automatically categorize all foreigners in the same manner, or automatically as out-group.  Thus, nationality is likely to be the first level of examination, given its salience in such interactions.  However, HCNs are likely to compare other individuals hailing from different nationalities on numerous other attributes, thus creating a tiered level of categorization.  Clearly, this multi-level categorization is likely to have a differential impact on HCN willingness to help expatriates, depending on the expatriate’s nationality.

Perceived Values Similarity

One reason that individuals often avoid associating with those that are dissimilar is that interactions with such individuals might cause them to question their own belief systems and attitudes.  These attitudes and beliefs are a function of the individuals’ value systems, that are unique to their culture (Hofstede, 2001), and are likely to lead to different goals and priorities for individuals hailing from different cultures.  In the context of HCN-expatriate interaction, the difference in national origin is likely to become very salient, leading the HCN to perceive that the expatriate most likely holds a set of very different values (Olsen & Martins, 2009).  The perceived values dissimilarity can lead to out-group categorization, as this helps reinforce the HCNs’ belief that individuals from other nationalities are different.  This categorization would once again result in the HCN refusing to offer support to the expatriate, both in and outside the workplace.  On the other hand, individuals who are perceived to have similar values, are likely to be offered both role information as well as social support, and would be categorized as in-group.

Interpersonal Affect

Interpersonal affect has been conceptualized as a like-dislike reaction (Zajonc, 1980) that operates on a continuum.  According to Zajonc (1980), affect is an involuntary reaction that constitutes the core of interpersonal relationships. In this connection Lefkowitz (2000) has argued that perceived value similarities influence the extent of interpersonal affective interactions among individuals. In other words, individuals are more likely to be attracted to, and develop a liking for, those they perceive as holding similar values (see, e.g. Varma et al., 2011).

Indeed, as Varma, DeNisi, and Peters (1996) observed, that cognitive process of individuals are, to a large extent, dependent on the interpersonal affect shared by them.  Previous research (see Lefkowitz, 2000, for a detailed review) has confirmed that indeed, interpersonal affect often guides individuals’ behaviors towards other individuals.  In other words, when people “like” someone, they are more likely to engage with them, and befriend them.  In previous studies, it has been found that when individuals like someone, they are more likely to want to work with them (see Tsui & Gatek, 1984: Robbins & DeNisi, 1994; Varma, et al., 2016), and offer assistance to them.  Clearly, in the case of expatriates, if the HCNs “like” them, they are more likely to be offered required assistance, as opposed to if the HCNs dislike them.

 

Leader-Member Exchange

Leader-member exchange (LMX) theory describes the role making process between a supervisor (leader) and an individual subordinate (member). In addition, the theory describes how leaders develop different exchange relationships over time with various subordinates (Martin, Guillaume, Thomas, Lee, & Epitropaki, 2016), typically dividing subordinates into either the in-group or out-group, based on certain characteristics. Graen and Uhl-Bien (1995) specifically focused on the theoretical basis of LMX, noting that, over a given period of time, a series of interactions between a supervisor and subordinate will develop each person’s role in the relationship and his/her work role. Moreover, the organizational participants define workplace roles, with little influence from external factors. However, external and internal culture of an organization does have a significant influence on leader-member exchange (Varma, Srinivas, & Stroh, 2005).

An employee’s assignment to a supervisor’s in-group or out-group has bearing on the quality of the relationship that has been cultivated between the leader and the member, also influenced and influencing employee performance (Martin et al., 2016). In-group members are distinguished by high-quality relationships with their supervisors.  These relationships are characterized by high trust, frequent interactions, interpersonal and professional support, and formal as well as informal rewards (Graen & Cashman, 1975; Liden & Graen, 1980).  Leaders tend to pay more attention to these members, investing more time and energy into developing in-group members as well as expend more resources for these individuals.  High-quality relationship with a supervisor is reflected in the member’s attitude toward the work and results in fewer employment problems.

In contrast, out-group members have low-quality relationships with their immediate supervisors. Interpersonal and professional distance, low trust, lack of interaction, minimal support, and few rewards characterized these low-quality relationships (Graen & Cashman, 1975; Liden & Graen, 1980).  Employees in the out-group are perceived to be hired hands (Vecchio & Gobdel, 1984) and are also viewed as a relatively homogeneous group.  Many times, out-group members will be classified as “those people” and, as a group, receive similar evaluations, typically lower than those of in-group members, with little useful feedback.

The disparity between the feedback, rating, and treatment of in-group members versus out-group members can be attributed to the self-fulfilling prophecy of the supervisor (Toh & DeNisi, 2007).  As out-group members realize that they are receiving less attention and fewer rewards from their leaders, they may begin to change their performance level to reflect the development of their position by the superior.  In conjunction, the superior may see, after placing a subordinate into the out-group, the performance level of the member slackens and have their initial assumptions confirmed. Conversely, the in-group members may see a more positive reaction as their superiors watch them thrive under careful guidance and attention.  Also, the initial perceived competence of in-group members may be an effect rather than a cause of their assignment to the in-group.  With subordinates categorized by their membership to the in- or out-group, performance appraisals will tend to be more subjective and reflective of the perceptions of the supervisor (Vecchio & Gobdel, 1984). Based on the above discussion, we propose the following hypotheses.

Hypothesis 1: Nationality difference will be related to leader-member exchange, whereby the relationship quality will be higher when subordinates share the same nationality with supervisors.

Hypothesis 2: Perceived values similarity will be positively related to leader-member exchange.

Hypothesis 3: Interpersonal affect will be positively related to leader-member exchange.

Hypothesis 4: Leader-member exchange will be positively related to role information.

Hypothesis 5: Leader-member exchange will mediate relationships between a) nationality difference, b) values similarity and c) interpersonal affect and role information.

Method

Procedures

 

We collected matched data from supervisors and subordinates working in a large multinational organization in Dubai. In this setting, many workers are expatriates – both supervisors and subordinates. There are often differences in nationality between supervisors and subordinates; the participants in this study were from a variety of countries across the globe including Western countries (e.g. the United States and the United Kingdom), Asian countries (e.g. India) as well as Arabic speaking countries, such as the United Arab Emirates.

Sample. We collected matched data from both supervisors (N = 62) and subordinates (N = 221).  On average, supervisors were forty years old and mostly (98%) male. Subordinates were, on average, thirty-five (35) years old, and mostly male (93%).

Measures

 

Nationality is an objective measure, which represents whether or not supervisors and subordinates are from the same country of origin. The interpersonal similarity and relationship quality variables were measured from the perspective of the supervisor. The support measure, role information, was measured from the perspective of the subordinate. All of our variables are validated measures with established psychometric properties.

Target nationality was measured using a dichotomous variable, 0 = different country of origin, 1 = same country of origin.

Perceived values similarity (α = .81) was measured with a 4-item measure adapted from Varma et al. (2011).  Respondents indicated, on a scale from “1 = strongly disagree to 7 = strongly agree”, the extent to which they perceived themselves to be similar to the expatriate in terms of their personal, and work, values. A sample item from this scale would be “I believe we would have similar cultural values.”

Interpersonal affect (α = .70) was measured using a 4-item scale from Tsui and Barry (1986), which has been used extensively in related research.  A sample item includes “I would like to spend time with this person.”

Leader-member exchange (α = .75) was measured using a 5-item scale adapted from Graen & Cashman (1975), and included items such as “I recognize my subordinate’s potential very well.”

Role information (α = .86) was measured through a 5-item measure rated on a 7-point scale, regarding the extent to which HCNs provide the five different types of role information identified by Morrison (1993).  Items were measured on a scale of 1 to 7 (1 = strongly disagree to 7 = strongly agree).  The questions were designed to measure the extent to which HCNs were willing to provide various types of information such as information on the behaviors and attitudes valued and expected by the organization.  A sample question from this scale includes “I would provide the expatriate with information on the behaviors and attitudes that the organization values and expects.”

Results

 

 

Before testing our hypotheses, we conducted a confirmatory factor analysis to assess the factor structure of the items indicating interpersonal affect and social categorization. Results of a two-factor model represented good fit (χ2 = 243.12, p = 0.00, RMSEA = .06, SRMR = .06), and significantly better fit than a one-factor model (χ2 = 925.47, p = 0.00, RMSEA = .16, SRMR = .16), Δ χ= 682.35, Δ df = 6.

We used the Preacher and Hayes (2008) bootstrapping procedure and SPSS macro to estimate direct and indirect effects (see also Preacher, Zhang, & Zyphur, 2016). This procedure allows for testing of multiple mediators simultaneously, does not rely on the assumption of a normal sampling distribution, and has the advantage of greater statistical power while reducing the likelihood of Type 1 error (MacKinnon, Lockwood, & Williams, 2004; Preacher & Hayes, 2008).  Bootstrapping involves resampling with replacement and estimating the direct and indirect effects with each re-sampling, from which a sampling distribution of the indirect effects is built and can be used to construct confidence intervals around the indirect effects.  Confidence intervals (CI) that exclude zero provide evidence of significant indirect effects (Shrout & Bolger, 2002).

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Tables 1 and 2, and Figure 1 go about here

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Table 1 provides the descriptive statistics while table 2 provides results for bootstrapping indirect effects (see also Figure 1).  Figure 1 indicate that interpersonal affect (β = .34, p < .05) predicted leader-member exchange but values similarity (β = .00, n.s.) and target nationality (β = .06, n.s.) did not.  Results also indicated that leader-member exchange had a significant direct effect on role information (β = .21, p < .05), and that there was a significant indirect effect of interpersonal affect on role information through leader-member exchange (Table 2: CI = .02, .15).  Thus, hypotheses 1 and 2 were not supported; hypotheses 3 and 4 were supported; hypotheses 5a and 5b were not supported; and hypothesis 5c was supported.

Discussion

This study revealed some interesting findings – for example, differences between exchange partners in nationality were not related to exchange quality, contrary to our predictions.  On the other hand, interpersonal affect was positively related to leader-member exchange, and it mediated the relationship between leader-member exchange and role information.  These results indicate that interpersonal affect is a key predictor of relationship quality between exchange partners in a setting with significant diversity in terms of country of origin and ultimately of role information as well.  Interpersonal affect appears to be important regardless of surface-level differences between exchange partners and even perceptions of values similarity.  Although this seems counterintuitive at first blush, for instance, with the similarity attraction paradigm, our results consistent with the literature on interpersonal affect, which has shown that affect develops quickly and predominates in interpersonal relations.

Traditionally, expatriate assignments required transferring or posting an executive from an MNC to manage operations in other parts of the world and such MNCs have been headquartered in countries such as the USA, Japan and Germany, etc.  However, the last two decades have seen the emergence of China and India as leading world economies, with the result that expatriates now move in numerous directions (e.g. Shah, Russell, & Wilkinson, 2017; Wang, Fan, Freeman, & Zhu, 2017).  Indeed, expatriates are now found in almost every industrialized nation, and the expatriates in any nation are likely to be from a large number of different countries.

Clearly, when individuals from different nations/cultures come together to work, the possibilities of misunderstandings and conflicts increase significantly.  This would especially get exacerbated in cases where the individual is reporting to another individual from a different culture.  In this regard, several scholars (see, e.g. Toh & DeNisi, 2007, Varma et al., 2011) have argued that host country nationals play a significant role in determining whether the expatriate is successful on his/her assignment. As scholars (e.g. Farh et al., 2010) have argued, expatriates need two types of information in order to successfully adjust in the new culture – role information and social support. Role information helps the expatriates learn about the behaviors and attitudes valued and expected by the organization as well as information on how to perform specific aspects of the job.  Similarly, social support helps the expatriate settle into the new culture through learning key information, such as the location of the local grocery store, safe neighborhoods to live in, and good schools for the expatriate’s children.  However, as previously noted, it cannot be assumed that HCNs will provide such information to expatriates automatically.  Indeed, numerous studies (e.g. Pichler et al., 2012) have shown that HCNs use a process of categorization to classify the expatriate as being either in-group member or an out-group member (Fisher, 1985).

According to the social categorization theory, an individual’s perception of others as in-group or out-group members may produce differential treatment in the form of positive or negative discrimination (Tajfel, 1981; Tajfel & Turner, 1979).  Since expatriates operate in unique contexts (i.e. in international locations), it is critical that their relationships with co-workers and superiors/subordinates are examined taking into account their unique circumstances, given the potential for misunderstandings is high since the expatriates and their superiors/subordinates may come from different backgrounds.

Overall, our results indicate that differences in nationality and even perceptions of values similarity, which we think of as aspects of surface- and deep-level diversity, respectively, may not be as important to relationship quality and support received from HCNs as a more basic feature of exchange quality – interpersonal affect.

In terms of contribution to theory development, across studies, interpersonal affect predominates.  This is consistent with extant theory, which argues that interpersonal affect develops quickly between exchange partners and becomes a key determinant of the nature of their relationship long-term. Thus, we believe that so long as there is relatively strong interpersonal affect, that should be more important to social exchanges than surface-level differences, and it should help explain why any form of support would be related to exchange quality.  We believe this is a novel contribution of our study, and has not been proposed before.  Further, our results clearly establish support the argument that interpersonal affect contributes tosocial categorization (and LMX).

It is, of course, counterintuitive that values similarity (or deep-level similarity in the diversity nomenclature) did not predict LMX, nor did nationality similarity (or surface-level similarity in the diversity nomenclature).  We believe that this is because previous research has not investigated these relationships while also including interpersonal affect.  If previous studies had included interpersonal affect when studying values similarity of nationality differences, they may have found that interpersonal affect really the key ingredient, so to speak, in social exchanges – even in an international context where nationality should be more important than in traditional Western studies published in management and organization journals.

These results have important implications for theory and research related to diversity management, similarity attraction and social exchange.  For instance, our results suggest that surface-level differences may not be as important to perceptions of deep-level similarity – and to similarity attraction – as they are thought to be in the literature. Although interpersonal affect has received significant attention in the social and applied psychological literatures, we believe that future research should focus directly on how interpersonal affect is developed between expatriates and host country nationals and how this is related to relationship quality between partners –  as well as their performance.  Our results also have important implications for management and organizations.  For instance, organizations may want to train expatriates to develop positive impressions and positive affect among their host country counterparts as a way to maximize their assignment success.

Conclusion

As organizations continue to globalize, international assignments are increasingly becoming a strategic instrument for MNCs to successfully compete globally, and the need for expatriates to take on important assignments will continue to grow.  The literature on expatriate adjustment and HCN interaction also needs to evolve to keep pace with the unique situations that expatriates often face.  As a case in point, our sample presents a rather unique set of dyads, where both the supervisor and the subordinate are expatriates, and yet due to their longer tenure, the supervisors are often seen as HCNs.  Given the requirements of global organizations, whereby both global leaders and global talent play a critical role in supporting business strategy, the supervisors (HCNs) will have to come up with ways to help the subordinates (expatriates) adjust to the new location, so they may be effective.  As Allen (2006: 253) notes, “providing newcomers clear information about the stages of the socialization process should increase on-the-job embeddedness,” and thus performance and loyalty.  However, as long as HCNs treat expatriates as out-group members, it will prove difficult to bring them into the organization’s in-group.

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Table 1

Descriptive statistics, correlations and internal consistency reliability estimates

Variables M SD 1 2 3 4 5
     1. Nationality difference (1=local) .39 .49  
     2. Values similarity 3.62 .70 -.25***  
     3. Interpersonal affect 3.47 .58 -.02 .41***
     4. Leader-member exchange 3.87 .52 .05 .14* .38***
     5. Role Information 3.93 .63 -.06 .08 .20** .22**

Note. * p < .05; ** p < .01; *** p < .001.

Table 2

Bootstrap results for indirect effects.

BCa 95% CI
Estimate SE Lower Upper
Nationality difference .01 .02 -.01 .05
Values similarity .00 .02 -.03 .03
Interpersonal affect .07 .03 .02 .15

 

 

Figure 1.

Theoretical model with results of bootstrap result

Nationality Difference

Role

Information

Values

Similarity

Interpersonal

Affect

.06

Leader-Member

Exchange

.00

.21*

 

.34*

 

 

 

 

 

Note. * p < .05; ** p < .01; *** p < .001.



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