Expatriates and corporate-level international strategy: governing with the knowledge contract

Purpose - This paper proposes a methodology for governing expatriate assignments in the context of corporate-level objectives. Design/methodology/approach - The approach taken is to envisage expatriate managerial assignments within the theoretical framework of agency theory and the knowledge-based view of the firm. The paper begins with the view that knowledge acquisition and integration is a primary goal for most expatriate assignments. The relationship between expatriate managers and multinational corporation (MNC) headquarters from an agency perspective are considered and the notion of a "knowledge contract" as a means of governing that relationship is discussed. Four corporate-level international strategies available to MNCs (global, international, transnational, and multidomestic) are then examined and the extent of agency problems under each strategy is discussed. Findings - The paper makes specific predictions about the type of knowledge contract that is most likely to address agency problems for each corporate strategy. Originality/value - This research extends agency theory by introducing the knowledge contract as a means of managing agency concerns. This offers a broader range of contract alternatives, moving researchers beyond traditional agency theoretic prescriptions. The research also contributes to the literature on expatriate management by integrating assignment success with research on corporate-level international strategy. Few authors have recognized organizational strategy as an important unit of study in international human resource management. Doing so, however, has yielded a unique set of contingency relationships that would otherwise be obscured.