EXPATRIATE PERFORMANCE APPRAISAL IN U.S

EXPATRIATE PERFORMANCE APPRAISAL IN U.S. MULTINATIONAL FIRMS

Hal B. Gregersen* Brigham Young University

Julie M. Hite** University of Utah

J. Stewart Black*** Thunderbird Graduate School

Abstract. This exploratory study examines empirically expatriate performance appraisal (EPA) practices for U.S. multinational firms and assesses how such practices relate to the perceived accuracy of EPAs. From a sample of U.S. multinationals, the results suggest that a balanced set of raters from host and home countries and more frequent appraisals relate positively to perceived accuracy of EPAs. The data suggest, however, that most respondent firms did not follow these practices. In addition, the use of standardized and customized EPA evaluation forms relates negatively to perceived EPA accuracy. Implications of these exploratory findings for research and practice are also discussed.

Increasingly, expatriate managers have been viewed and used as strategic coordination and control mechanisms for multinational organization in their ever-expanding global operations [Adler 1991; Bartlett and Ghoshal 1987; Boyacigiller 1990; Edstrom and Galbraith 1977; Hedlund 1986; Kobrin 1988; Morrison and Roth 1992; Yip 1989]. Also, an increase in international assignments have become an important way to develop future global leaders

*Hal B. Gregersen is Associate Professor of International Management at the Marriott School of Management at Brigham Young University. His research interests include global leadership, international strategy, international human resource management, and corporate cartography.

**Julie M. Hite is a second year doctoral student in Strategic Management at the Eccles Graduate School of Management, University of Utah. Her research interests include entrepreneurial/small business strategy, entrepreneurial networks, workplace flexibility, and strategic human resource management.

***J. Stewart Black is Associate Professor of International Management at Thunderbird (The American Graduate School of International Management), Glendale, Arizona. His research interests include international human resource management and global leadership. An earlier version of this paper was presented at the 1993 Academy of International Business Meetings, Maui, Hawaii, October 24, 1993.

Received: June 1994; Revised: February & June 1996; Accepted: July 1996.

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who can navigate their firms effectively through the complex waters of international competition [Adler 1991; Black, Gregersen and Mendenhall 1992a]. While past research has examined issues from selection to effective cross- cultural adjustment, relatively little emphasis has been placed on one of the most important international human resource management topics, performance appraisal.

Whether a manager has been sent overseas to perform a certain function, develop skills and abilities, or both, expatriate performance appraisals provide critical information to the individual and the organization on the extent to which strategic objectives are being met [Black et al. 1992a; Butler, Ferris and Napier 1991; Dowling and Schuler 1990; Mendenhall and Oddou 1991]. The primary objective of this paper is to explore, both conceptually and empirically, the design and current practices of expatriate performance appraisals (EPAs) and their relation to the perceived accuracy of the overall EPA system.

CONCEPTUAL FRAMEWORK

While expatriates can play pivotal strategic roles during international assignments [Boyacigiller 1990], scholars have paid little theoretical (e.g., Gregersen, Black and Hite [1995]; Mendenhall and Oddou [1991]) and no empirical attention [Black et al. 1992a, 1992b] to expatriate performance appraisal systems. As a result, the primary theoretical basis for expatriate performance appraisal comes from the literature on domestic U.S. performance appraisals (e.g., Carroll and Schneir [1982]; Cascio [1986]). Our review of the extant domestic U.S. performance appraisal literature revealed several factors that relate to performance appraisal for international employees. Moreover, these factors become increasingly complex for expatriate appraisals because of the unique contexts of international assignments.

The Unique Context of Expatriate Performance and Appraisal

The international context can be a major determinant of expatriate performance [Cardy and Dobbins 1994; Ilgen, Barnes-Farrell and McKellin 1993; Mendenhall and Oddou 1991]. Overseas assignments involve a wide variety of situational contexts that differ from domestic assignments, particularly in their societal, legal, economic, technical, and physical demands [Murphy and Cleveland 1991]. Thus, expatriate performance may be difficult to understand and evaluate outside its global and organizational context [Landy and Farr 1980].

An important key to developing accurate expatriate performance appraisals (EPAs) is for the rater to understand clearly the foreign situation and the unique context within which the expatriate will perform [Murphy and Cleveland 1991; Peters, O'Connor and Eulberg 1985]. This understanding may be clouded by the raters' inexperience with foreign assignments, previous experiences with other overseas assignments, location in relation to the

EXPATRIATE PERFORMANCE APPRAISAL 713

expatriate, national origin (home country vs. local national), language barriers, cultural values concerning appraisal, as well as by other contextual factors stemming from the increased complexity of the foreign situation, culture and relationships [Murphy and Cleveland 1991; Mendenhall and Oddou 1991]. When examined out of context, behaviors that may seem to suggest poor performance are often adaptive responses to various contextual factors that surround expatriate performance [Landy and Farr 1980; Murphy and Cleveland 1991]. A critical tool to understanding the context of performance within specific foreign situations is the effective use of the knowledge and experience of previous expatriates [Black et al. 1992, 1992b; Mendenhall and Oddou 1991].

The global setting of the overseas assignment also presents a unique context for the EPA system, raters of expatriates, and the application of performance data [Cardy and Dobbins 1994; Ilgen et al. 1993; Peters et al. 1985]. The ideal EPA system should be developed and administered with expatriate performance specifically in mind. Although EPA systems for international assignments may include many issues similar to those of domestic performance appraisals, the unique context of expatriate assignments must be accounted for sys- tematically in the design of expatriate appraisals. As a result, EPA systems (appraisal criteria, forms, raters, frequency of appraisal, etc.) may need to differ from those used in domestic appraisals [Cleveland, Murphy and Williams 1989; Murphy and Cleveland 1991].

A Normative Approach to Expatriate Performance Appraisal

Building primarily on domestic performance appraisal literature, Black et al. [1992a, 1992b] outlined several variables intended to increase EPA accuracy. More important, Black et al.'s [1992a, 1992b] set of variables provides a target against which expatriate performance appraisals might be compared. Specific- ally, they proposed that to increase EPA accuracy in the context of overseas assignments, multinational firms should pay attention to multiple performance criteria, customized appraisal forms, multiple rater types, increased rater knowledge, and increased frequency of appraisal. This study represents the first analytical attempt to examine and describe current EPA practices and perceived accuracy.

Performance Criteria. Performance criteria are those aspects of employee performance that are measured or evaluated. Developing these criteria creates the foundation for other aspects of the appraisal system [Carroll and Schneir 1982]. Multinational firms need to gather and interpret a wide range of information on expatriate performance from a variety of sources [Black et al. 1992a; Ivancevich 1992; Ilgen et al. 1993]. Use of multiple criteria allows a more balanced and less biased appraisal that recognizes the multidimensionality of job performance [Carroll and Schneir 1982; Cascio 1986; Landy and Farr 1980; Schuler and Huber 1993]. This multiplicity is


critical to international settings, given the wide variety of constituencies that make demands on expatriate job performance [Peters et al. 1985]. Generally, performance behaviors fall on a continuum from objective to subjective criteria [Carroll and Schneir 1982; Cascio 1986] and may also include other contextual criteria from the specific global setting.

Hard Criteria. Criteria that are performance-based or outcome-based (i.e., profits, market share, etc.) are referred to as objective or hard criteria [Carroll and Schneir 1982]. Hard criteria are usually easy to collect, are considered easy to interpret, and usually provide a quick assessment of performance. Hard criteria are also easier to defend legally [Bernardin and Cascio 1984], and they reduce the chances for either subtle or intentional discrimination [Cox and Nkomo 1986]. Firms frequently rely on hard criteria to provide an accurate portrayal of employee performance [Black et al. 1992a] and to compare performance across employees, departments, or even firms [WAI 1978].

However, using hard criteria to compare the performance of global managers against domestic performance standards may be somewhat unfair and may not provide a fully valid comparison. Comparison assumes that two situations are nearly identical and that performance can then be evaluated by the results. Expatriate and domestic situations are not identical; a variety of external conditions can affect hard criteria for expatriates, while domestic managers may be insulated from these conditions. For example, transfer pricing practices to take advantage of lower tax rates in different countries can obscure the true profit (or loss) for operations in a given country.

In sum, the use of hard criteria has an important place in EPAs and are necessary for understanding many important elements of job performance. However, the assumption that hard criteria are necessary and sufficient to provide accurate appraisals may not be correct, particularly when dealing with the complexities of expatriate performance [Cardy and Krzystofiak 1991].

Soft Criteria. The U.S. domestic performance literature suggests that subjective or soft criteria are important for accurate and well-balanced performance appraisals [Carroll and Schneir 1982; Schuler and Huber 1993]. Most U.S. domestic performance appraisals incorporate soft criteria into their evaluations. Such criteria are often relationship- or trait-based [Bernardin and Villanova 1986; Carroll and Schneir 1982; Schuler and Huber 1993]. Carroll and Schneir [1982] argue that "organizations can be viewed as interaction systems in which those who succeed possess certain personal traits" (p. 37). These interpersonal factors can be even more critical in an international setting, since such soft criteria are often posited as central to expatriate success [Adler 1991; Tung 1988]. The value of using soft criteria is apparent in expatriate settings where objective, measurable results are not always available [Bernardin and Villanova 1986]. However, the potential difficulty of collecting


and interpreting soft criteria also increases in an international context [Mendenhall and Oddou 1991]. Because of the subjective nature of soft criteria, factors such as rater errors, biases and cultural differences (of ratees, raters, and users of EPA data) suggest that care be taken when incorporating soft criteria into EPAs.

When evaluating interaction between expatriate managers and subordinates, the use of some soft criteria may provide added accuracy to the evaluations as well as access to information unavailable through the examination of hard criteria alone. This dynamic becomes even more complex overseas, where several different cultures might be involved, e.g., a U.S. manager with a French subordinate in Japan. No simple formula can describe this interaction [WAI 1978]. Thus, interpersonal factors and other soft criteria seem important to achieving accurate EPAs in international settings.

Contextual Criteria. Contextual criteria deal with factors that result from the situation in which the employee is performing. These criteria are determined by the employee's specific assignment and represent a variety of external conditions that may affect both hard and soft criteria. Consideration of contextual criteria helps to avoid opportunity bias, which occurs when expatriates achieve differing levels of performance due to factors beyond their control [Peters et al. 1985].

Although every work situation involves a particular setting or context [Cardy and Dobbins 1994; Ilgen et al. 1993], overseas assignments further compound the effects of contextual criteria. Contextual criteria can affect an expatriate's perceived performance in ways that are not recognized either by raters or those who later use the biased appraisal information [Ilgen et al. 1993; Mendenhall and Oddou 1991; Smither and Reilly 1987]. For example, a favorable real change in exchange rates may mask underlying operational problems when results are translated back into home country currency. Contextual criteria may also include situational constraints that prevent an expatriate from performing well [Murphy and Cleveland 1991; Peters et al. 1985]. The culture of each foreign assignment influences what constitutes performance and its relative importance, i.e., efficiency vs. productivity, individual vs. group work, etc. As a result, an expatriate who is less proficient at making production quotas, but who can develop subordinates effectively may receive differing evaluations depending on the economic and cultural environment of the overseas assignment [Murphy and Cleveland 1991]. The home office, however, may not be aware of or know how to interpret contextual criteria.

In sum, a critical key to developing accurate EPAs appears to be identifying and considering the contextual criteria that may affect success in overseas assignments. Moreover, contextual performance criteria should be defined within the context of the expatriate's assignment and likely incorporated into the EPA system.


Multiple Criteria. Each type of performance criteria, i.e., hard, soft and contextual, has advantages and disadvantages, which may be magnified in a complex international job context. Moreover, each provides unique and important information for expatriate appraisal. Expatriate appraisal accuracy does not depend on the use of any single type of performance criteria alone, rather it depends on the appropriate use of each of these three types of criteria to collect data from multiple sources. Thus, to increase EPA accuracy, firms would likely benefit by incorporating a mixture of hard, soft and contextual criteria.

Hypothesis 1: The use of multiple criteria is positively related to the perceived accuracy of expatriate performance appraisals.

Customization of Performance Appraisal Forms. Researchers (e.g., Black et al. [1992a]; Mendenhall and Oddou [1991]) have argued that multinational firms should account for global issues and gather accurate performance data on expatriates; however, this may be difficult when using the same performance appraisal forms for all employees in both the home and host country [Cleveland et al. 1989]. Generally, because standardized forms cannot capture the complexity of expatriate assignments [Peters et al. 1985], multinational firms may increase accuracy by customizing EPA forms to specific country assignments [Ilgen et al. 1993; Mendenhall and Oddou 1991].

In principle, performance appraisal systems are designed carefully and often presumed to be static. Valid reasons exist for maintaining standard, traditionally used appraisals (e.g., when the system has been tested, has identified baselines, and reduces future development costs). These reasons are valid as long as the context of the performance does not change. In the expatriate setting, however, the performance context does change, and sometimes it changes dramatically. Given a global context, previous testing and established baselines grounded in domestic situations can become meaningless.

Hypothesis 2: Customization of appraisal forms is positively related to the perceived accuracy of expatriate performance appraisals.

Raters of Expatriates. Companies can vary widely both on how many and which types of raters are involved in expatriate performance appraisals [Black et al. 1992a, 1992b]. Raters themselves vary on specific characteristics that may affect their knowledge of the expatriate assignment (e.g., relationship to expatriate, geographic location, and nationality). For example, expatriates may be appraised by raters from the home office or from the host country, by raters whose relationship is an executive, direct supervisor, or peer, and who are either local or home-country nationals.

Recently, Black et al. [1992a] argued that a team of organization members


should participate in expatriate performance appraisal. Given the cross- cultural complexity of the global manager's assignment and possible rater bias due to cross-cultural issues, both use of multiple performance raters and selection of raters with greater knowledge of the expatriate assignment may be critical to accurate EPA systems [Kingstrom and Mainstone 1985].

Use of multiple raters contributes more than one perspective, provides insights into expatriate performance [Schaubroeck 1988], and may also help to reduce any halo, primacy or first-impression errors [Bernardin and Beatty 1984]. In either domestic or expatriate situations, relying on the appraisal of one rater will generally give a less accurate picture of performance [Black et al. 1992a, 1992b].

Using multiple raters, however, does raise the issue of potential rater disagreement. Raters will often have different perspectives when observing the behavior of an individual [Harris and Schaubroeck 1988]. For the most part, though, raters tend to agree on actual behaviors while disagreeing on their meaning or interpretation [Ilgen et al. 1993; Murphy and Cleveland 1991]. These disagreements do not necessarily have to be resolved, for they represent different perspectives [Harris and Schaubroeck 1988], and the information may be used for different purposes [Landy and Farr 1980; Murphy and Cleveland 1991]. Indeed, if all sources totally agreed, little benefit may accrue from the use of multiple raters [Campbell 1982; Murphy and Cleveland 1991]. Firms incorporating multiple rater types are employing a team approach to their EPAs. Given the cross-cultural complexity of expatriate assignments, use of a diverse team of raters seems central to accurate EPAs [Black et al. 1992b].

Hypothesis 3: Using multiple raters is positively related to the perceived accuracy of expatriate performance appraisals.

Rater Knowledge and Characteristics. The expatriate rating team often consists of raters with a variety of characteristics that can affect positively their knowledge of the expatriate assignment. Furthermore, selection of raters with greater contextual knowledge may enhance the accuracy of the EPA system [Kingstrom and Mainstone 1985; Landy and Farr 1980]. At least three categories of characteristics may impact rater knowledge: relationship, nationality and location.

Relationship. Scholars [Black et al. 1992a, 1992b] have proposed that raters should reflect differing constituencies of an expatriate employee. These may include managers, supervisors, human resource personnel, peers, and even clients. Each of these relationships can provide important information based on differing perspectives [Landy and Farr 1980]. For example, interpersonal behaviors at work (i.e., soft criteria) are often defined and interpreted differently by supervisors than by peers and subordinates [Harris and Schaubroeck 1988; Murphy and Cleveland 1991].


U.S. domestic human resource management research also shows that the most basic requisite for conducting a performance evaluation is the rater's opportunity to observe the ratee's job performance over a reasonable time period (e.g., six months) [Cascio 1986; Landy and Farr 1980; Mendenhall and Oddou 1991]. One critical factor to understanding job performance is task acquaintance, as defined by amount and type of work contact [Kingstrom and Mainstone 1985; Murphy and Cleveland 1991]. Task acquaintance varies, depending on the rater's level and position in the organization.

Immediate supervisors are usually considered well qualified to evaluate overall performance [Mendenhall and Oddou 1991], while peers are considered the single best-informed source, because they have many opportunities to observe the expatriate's performance [Cleveland et al. 1989; Harris and Schaubroeck 1988; Murphy and Cleveland 1991]. Feedback from peers can reflect how the expatriate works with others, as well as whether expatriates possess effective managerial, interpersonal, cross-cultural, and team-building skills. Sub- ordinates' feedback reduces potential "halo effect" ratings by expatriates' immediate superiors and provides insight into cross-cultural managerial skills, communication skills and leadership abilities [Cardy and Dobbins 1994]. Clients of the foreign operation may also provide useful feedback on expatriates' figurehead responsibilities, interpersonal skills, sales skills, expertise in negotiating, etc. [Cardy and Dobbins 1994]. Finally, expatriates themselves can provide important perspectives on their own job performance not available from other sources [Cardy and Dobbins 1994; Mendenhall and Oddou 1991]. In EPAs, using raters with a variety of relationships will provide different perspectives, greater understanding and a more accurate picture of expatriate performance.

Local Nationals. While a wide range of personnel within the host country can potentially evaluate expatriate performance, researchers [Black et al. 1992a; Mendenhall and Oddou 1991] have argued theoretically that performance data should also be collected from host-country nationals to increase appraisal validity. Domestic performance appraisal by definition uses local nationals as raters. Use of local nationals as raters, by including them on the EPA team, may provide additional perspectives not otherwise available. Local nationals may also be in a better position to interpret situations, barriers and opportunities. Their understanding of the local culture may help to determine an expatriate's fit in the environment and the results of an expatriate's actions.

The acceptability and legitimacy of an EPA system to a local national depends on the degree to which the system is consonant with the local national's societal values. Each country values different dimensions of performance, for example, deference vs. self assertiveness, formality vs. informality, group vs. individual work, impersonal vs. personal interactions, objective vs. interpersonal-oriented outcomes, efficiency vs. productivity [Hofstede 1980].


These values help determine what constitutes performance and its relative importance [Murphy and Cleveland 1991]. Moreover, cultural values affect the rater's interpretation of performance behavior. Such perceptual biases between people from different cultures can enhance (and perhaps threaten) both EPA accuracy and possibly expatriate careers [Black et al. 1992b; Mendenhall and Oddou 1991].

Hypothesis 4a: Use of raters with greater knowledge of the expatriate assignment (relationship and nationality) are positively related to the perceived accuracy of expatriate performance appraisal.

Location. Accurate EPAs depend on the raters having adequate knowledge of the expatriate's assignment [Landy and Farr 1980; Schuler and Huber 1993]. Particularly in the expatriate setting, the extent of this knowledge is often affected by the rater's location, i.e., home or host country. Using the criterion of location, host-country personnel in general would be the more appropriate EPA raters. These raters are usually perceived as being more accurate than home-country raters [Mendenhall and Oddou 1991]. Raters in the host country will be more familiar with soft and contextual criteria and other relevant information, and thus have greater knowledge concerning expatriate performance [Ilgen et al. 1993; Kingstrom and Mainstone 1985; Landy and Farr 1980]. However, they may not see the performance in its full organizational context [Cleveland et al. 1989; Murphy and Cleveland 1991].

Raters who are further removed from the employee, such as those in the home country, have often not had an adequate opportunity to observe the expatriate, may not have access to relevant information [Cleveland et al. 1989; Harris and Schaubroeck 1988; Murphy and Cleveland 1991], and may tend to use a different set of criteria than host-country raters, often showing an inherent bias toward hard criteria [Mendenhall and Oddou 1991]. The fact that these home-country raters may lack knowledge about the job may lead to both increased dependence on the expatriate and reduced frequency of appraisals, since distant upper management cannot appraise what they do not understand. Without direct on-site experience, awareness of appropriate criteria for overseas success will likely be limited, and may thus make accurate and valid appraisals quite difficult [Black et al. 1992a; Cascio 1986; Kingstrom and Mainstone 1985; Mendenhall and Oddou 1991]. However, since distal raters will more frequently know about results of behaviors rather than about behaviors themselves [Edwards 1990], they may provide important feedback on organizational outcomes of expatriate performance [Cleveland et al. 1989; Murphy and Cleveland 1991].

In sum, the ideal appraisal team would seek a balance of raters from both the host and home country [Black et al. 1992b]. Raters from either location alone would provide a less complete picture. Thus the arguments of proximal, locally


informed raters needs to be counterbalanced for EPAs, since firms often desire both local responsiveness and global integration. Global integration would require additional assessment from raters outside the host country. Rater location is, therefore, hypothesized to have a curvilinear relationship with perceived EPA accuracy: firms using a more balanced proportion of raters from both locations will perceive higher EPA accuracy than firms using raters primarily from one location.

Hypothesis 4b: Rater location has a curvilinear relationship with perceived accuracy of expatriate performance appraisals, with a more balanced proportion of raters from both locations providing highest perceived EPA accuracy.

Performance Appraisal Frequency. Although domestic performance appraisals have traditionally been completed annually [Bernardin and Villanova 1986; Murphy and Cleveland 1991], research suggests that conducting performance appraisals once or twice a year is insufficient [Cardy and Dobbins 1994; Carroll and Schneir 1982; Cascio 1986]. Recency bias effect can exert a significant impact on appraisal accuracy [Bernardin and Beatty 1984; Bernardin and Villanova 1986; Ilgen et al. 1993; Kingstrom and Mainstone 1985]. Recalling employee performance over the previous six to twelve months is difficult. In this time frame, raters often forget observed details and tend to evaluate by more recent recollections of performance. As a result, researchers (e.g., Black et al. [1992a; 1992b]; Mendenhall and Oddou [1991]) have proposed that multinational firms conduct formal EPAs more frequently.

Frequent evaluations serve monitoring functions [Cleveland et al. 1989], particularly in unfavorable settings, such as expatriate assignments, where poor economic, social and physical conditions make it difficult for the employee to achieve strategic goals. Frequent monitoring of these conditions makes it possible to catch problems while they are still manageable, provide encourage- ment and support, and recognize achievement. However, supervisors may conduct appraisals less often (or avoid them altogether) if they are not familiar with the job technology, since they cannot adequately appraise what they do not understand. Thus, because home-country raters may be unfamiliar with expatriates' assignments or settings, this lack of understanding may result in minimal effort for EPAs.

The U.S. domestic research shows that firms usually use annual appraisals for administrative decisions (i.e., salary, promotion, etc.) [Cleveland et al. 1989; Cummings and Schwab 1973]. In contrast, when performance appraisal is used for developmental purposes, firms conduct appraisals more frequently [Cummings and Schwab 1973; Murphy and Cleveland 1991]. Given the complexity of the expatriate context, frequent appraisals seem critical, for several reasons: 1) business and environmental conditions change frequently;


2) determining problems early makes them easier to resolve, especially when problems occur in a distant host country; 3) all raters can become more aware of the expatriate, the job and the performance; 4) effects of overemphasizing recent behaviors are minimized [Bernardin and Beatty 1984; Bernardin and Villanova 1986]; and most important, 5) frequent appraisals can lead to the increased development of expatriates, potentially benefiting the firm and furthering the firm's global strategic goals.

Hypothesis 5: Increased frequency of appraisal is positively related to the perceived accuracy of expatriate performance appraisals.

Summary of Propositions. On the basis of primarily U.S. domestic performance appraisal theory, and in response to the lack of empirical research on EPAs, we propose theoretically that several factors are key to the development of accurate expatriate performance appraisal systems. Specifically, we have argued that: 1) using multiple criteria, 2) customizing evaluation forms, 3) increasing the number of total raters, 4) seeking a more balanced proportion of raters from both the within and outside the host country, and increasing the use of host-country nationals, and 5) increasing the frequency of appraisals will influence positively the perceived accuracy of EPAs. In sum, this study is one of the first attempts to explore these propositions empirically by examining EPA practices in U.S. multinational firms.

METHODS

Sample

The sample for this exploratory study was drawn from the population of U.S. multinational client firms of a major international compensation consulting firm. These firms were multinational corporations with headquarters located in the United States. They employed expatriates in a variety of different countries. As such, this population of firms engaged actively with issues of expatriate performance appraisal, the use of host- and home-country raters, standardization versus customization of appraisal forms, etc. At the end of 1991, questionnaires were mailed directly to these 395 firms in the U.S. Of the total 395 questionnaires distributed, 58 were returned, for a response rate of 15%. Twenty-one percent of these respondents were female. While the number of firms responding is relatively small, the demographic information provided by respondent firms suggests that this sample is relatively representative of a larger population of firms operating in an international business environment. For example, the respondent firms represented twenty-four different industrial categories. These firms acquired an average of 27% of their sales from international operations. They also had an average of 17,960 employees worldwide, with 29% of their employees working outside the home country of the parent company. On average, respondent firms reported that twenty employees were currently on international assignments from the parent country. The


response rate, along with the exploratory nature of this study, indicate the need to approach the findings with caution.

Measures

Questionnaires were sent directly to each firm's human resource specialist who managed the EPA process from company headquarters. These HR professionals who managed EPAs likely had the best overall picture of EPAs in their firm, since they would generally have the opportunity to influence the design of EPAs, implement actual EPAs, use the EPA data in HR decisionmaking, review and use a variety of EPAs, and gather feedback from expatriates and others regarding the perceived accuracy of EPAs. In addition, HR professionals had the highest potential for involvement in all EPA processes, both within and across country locations. Thus, more than any other single data source in the firm, the HR professional managing EPAs likely provided the most informed, accessible information conduit on EPA practices and their perceived accuracy. All data reported in this study were collected directly from these individuals.

Performance Appraisal Criteria. Performance appraisal criteria were measured with three scales that inquired about the percentage of the evaluation made up of each of the three types of criteria, i.e., hard, soft and contextual. The first item asked, "What percentage of expatriate performance evaluation is determined by hard criteria (such as market share, ROI, and sales, etc.)?" The second item asked, "What percentage of expatriate performance evaluation is determined by soft criteria (such as employee development, local labor relations, local government relations, etc.)?" The final item asked, "What percentage of expatriate performance evaluation takes into account international issues (such as exchange rate fluctuations, transfer pricing, price controls, etc.)?"

Multiple Criteria. To determine whether firms were using more than one type of criterion in their EPAs, the number of types of performance criteria reported in the three previous questions regarding performance criteria were counted (i.e., hard, soft, contextual). For example, if a firm reported zero percent for a particular type of criteria (hard, soft, or contextual), then this criterion was considered as not being used and received a score of zero. Any criterion reported as being used (i.e. 1% or greater) was considered used for this measure and received a score of one. Thus the measure of multiple criteria provided a theoretical response range from zero to three, depending on the number of criteria types being used in the firm's EPAs.

Performance Appraisal Forms. To assess the degree to which firms used performance appraisal forms that were either standard or customized to some degree, we asked respondents to indicate the percentage of EPA forms that were standardized (same form as used by corporate headquarters) or customized (tailored to some degree to the specific country and assignment).


Performance Appraisal Raters. To identify EPA rater relationship and location, we asked respondents to indicate the percentage (0-100%) of expatriate performance evaluations within their firm that involved each of the following potential raters: 1) within the country of expatriate assignment: self (the expatriate), subordinates, peers, immediate supervisor, customers/clients, and HR professionals; and 2) outside the country of expatriate assignment: formally assigned sponsor, corporate HR professional, immediate supervisor, and regional executive.

To determine the total number of raters used in EPA, the number of rater types reported in the two performance appraisal rater questions (regarding percentage of time-specific raters within and outside the country were used) was computed as follows. If a firm reported zero percent usage for a particular rater, then this rater was considered as not being used and received a score of zero. Any rater reported as being used (i.e., 1% or greater), was considered used for this measure and received a score of 1. Thus the measure of multiple raters provided a response range from 1 to 10, depending on the number of rater types being used in the firm's EPAs.

To measure the relative emphasis of within-country versus outside-country raters, the location of raters measurement was recalculated using the two performance appraisal rater questions (regarding percentage of time-specific raters within and outside the country were used). If a firm reported zero percent usage for a particular rater, then this rater was considered as not being used, while any rater receiving 1% or greater was considered as being used. This provided a range from one to six for number of raters within the host country and one to four for the number of raters outside the country. The range, then, was from one to ten for total number of raters within and outside the country. Next, on the basis of these scores (1-6 for within-host-country raters, 1-4 for outside-country raters, and 1-10 for total raters), the relative location of raters was calculated by using a ratio of the number of raters used from within the host country (ranging from 1-6) divided by the total number of raters used (ranging from 1-10). The resulting proportion indicated the extent to which within-host-country vs. outside-country raters were used in EPAs.

Since we hypothesized a curvilinear relationship between this proportion and perceived EPA accuracy, indicating the need for a balance in rater location, the resulting proportions were then categorized into ordinal data consisting of two groups to examine the balance of raters used in the EPAs (1=Not Balanced: Within-host-country rater percentage below 20% and greater than 80%; 2=Balanced: Host-country rater percentage between 20% and 80%). In sum, rather than testing for perfect balance (50% from each of host and home country), balance was defined conservatively, as at least 20% host-country raters, but no more than 80%. In addition, an independent t-test indicated that


the means for perceived accuracy were significantly different for these two groups (p=.01). Thus this categorization for balanced location of raters was used to create a dummy variable for inclusion in the subsequent regression analysis.

Finally, to assess rater nationality, respondents were asked to indicate the percentage (0-100%) of expatriate performance evaluations that included local nationals from the host country (in any position) as raters in the appraisal process.

Performance Appraisal Frequency. To assess the frequency with which firms rated expatriate performance, we asked respondents, "What percentage of your expatriates are evaluated: quarterly, semiannually, annually?" Respondents indicated a percentage for each appraisal frequency option (0-100%).

Perceived Appraisal Accuracy. To determine the accuracy of performance appraisals, we asked respondents to indicate their perceived EPA accuracy by asking the following question:

Please rate your firm on appraising expatriates accurately during international assignments, using the scale below:

1 Very Poor (Our firm is far below what most companies are doing.) 2 Poor. (Our firm is below what most companies are doing.) 3 Average. (Our firm is equal to what most companies are doing.) 4 Above Average. (Our firm is above what most companies are doing.) 5 Excellent. (Our firm is far above what most companies are doing.)

Perceived EPA accuracy was used as a surrogate measure for actual rater evaluative and observational accuracy, for two primary reasons. First, the perception of accuracy is one measure that firms may use to evaluate EPAs, given that clear and objective standards are seldom available, and that "without such standards, the actual accuracy of performance judgments is virtually impossible to assess" [Cardy and Dobbins 1994, p. 48]. This is particularly the case when incorporating soft and contextual criteria that are critical to international business contexts. Another reason for using perceived accuracy is that practitioners responsible for managing expatriate policies and practices tend to engage in a number of similar professional associations to exchange data on best practices. Some of these organizations include the International Personnel Association, Institute for International Personnel, etc. Through these association meetings, they regularly exchange information on current industry practices regarding expatriate performance appraisal practices. In addition, information on EPA practices can be transferred across firms through intercompany transfer of employees, benchmarking reports, etc. Thus it seemed logical to assume that most firms in this sample would have managers or directors of expatriate policies who are generally aware of other firms' practices.


RESULTS

Descriptive statistics and zero-order correlations for variables included in this study are provided in Table 1.

Table 1 indicates that the following appraisal practices related positively to the perceived accuracy of EPAs: use of hard criteria, use of multiple criteria, use of multiple raters, lack of customization, annual appraisals, balance of rater locations, and use of within-country supervisor. To test the hypothesized relationships with perceived EPA, multiple regression analysis was performed on the hypothesized variables, controlling for the number of expatriates on assignment for the firm, the size of the firm (number of worldwide employees), and the number of employees outside the parent country. (The results are shown in Table 2.)

Multiple Types of Criteria

Hypothesis 1 suggested that the use of multiple criteria will relate positively to the perceived accuracy of EPAs. Zero-order correlation analysis indicates that use of hard criteria relate positively to perceived accuracy, while use of soft and contextual criteria are not related. From Table 1, we also see that the average number of types of criteria (out of a possible three) used in this study was 1.76. More specifically, firms reported using hard criteria 35%, soft criteria 44%, and contextual criteria 11% of the time in EPAs. Finally, regarding the use of multiple types of criteria, 20% of the firms used only one type of criteria, 50% of the firms reported using two types of criteria, and only 19% reported using three types of criteria. Table 1 also indicates that the use of multiple types of criteria relates positively to perceived EPA accuracy. However, the variable representing the use of multiple types of criteria was not significant in the regression model (see Table 2).

Customization of Appraisal Forms

Hypothesis 2 suggested that customization of appraisal forms will relate positively to the perceived accuracy of EPAs. Seventy-six percent (76%) of EPAs in this study used the same standardized appraisal forms as were used in the home country. In contrast, only 14% of the EPAs used customized forms to some degree for specific country assignments. Contrary to expectations, however, both customization (p=.01) and standardization (p=.05) related significantly and negatively to perceived EPA accuracy in the multiple regression model.

Multiple Raters

Hypothesis 3 suggested that using multiple raters will relate positively to the perceived accuracy of EPAs. In this study, most firms (81%) used more than one rater when appraising expatriate performance, while the average number of raters was 2.7, with a range extending from one to eight. The highest


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TABLE 2 Multiple Regression of Perceived Expatriate Performance Appraisal

Accuracy on EPA Process Variables

Variable Beta T

Control

Expatriates on Assignment .27 2.01 * Worldwide Employees .03 .24 Employees Outside Parent .14 1.18

EPA Process

Multiple Criterion .20 1.54 Customized Forms -.36 -3.10** Standardized Forms -.27 -2.07* Total Number Raters .07 .43 Local National raters .08 .68 Balanced Location .31 2.17* Quarterly Appraisal -.23 -1.61 Semi-Annual Appraisal .32 2.00* Annual Appraisal .37 2.65**

Adjusted R2=.35 F=3.56***

* p<05; ** p<.O1; *** p<.O01

proportion of firms used two raters (43%), while 21% used three raters. Finally, 21% of the respondent firms reported using four or more raters. Correlation analysis in Table 1 indicates that the number of raters related positively to the perceived accuracy of EPAs. However, multiple raters as an individual variable did not contribute significantly to the multiple regression model.

Rater Knowledge and Characteristics

Relationship. Hypothesis 4 suggested that use of raters with greater knowledge of the expatriate assignment (relationship/nationality, location) will relate positively to the perceived accuracy of EPAs. The results in Table 1 indicate a positive relationship between perceived EPA accuracy and host-country supervisors. An immediate supervisor is the most common expatriate rater (either from the host country (74%) or the home country (39%)); the expatriate as self-rater as the next most common rater. Firms also used human resource professionals, either in the home or host country (12% and 17%, respectively), while they rarely used peers, sponsors, subordinates, or customers.

Nationality. While nationality of rater was hypothesized to affect perceived EPA accuracy, it was not related to perceived EPA accuracy in either the zero- order correlation or regression analyses. In this study, firms used host-country nationals 33%S of the time in expatriate performance appraisals.


Location. In addition to relationship and nationality of raters, we hypothesized that location of raters would have a curvilinear relationship with perceived EPA accuracy; that is, firms using a balance of within-host and outside-host- country raters would exhibit higher perceived EPA accuracy. Balanced location of raters related positively to perceived EPA accuracy in the correlation analysis (r=.34, p=.01) and also contributed significantly to the regression analysis (p=.05).

Frequency of Appraisal

Hypothesis 5 suggested that more frequent appraisals will relate positively to perceived EPA accuracy. This study found that the majority of EPAs (82%) are conducted annually, while only 9% are conducted at three- or six-month intervals. Annual appraisals correlated significantly with perceived EPA accuracy (r=.34, p=.01). In addition, both semiannual (p=.05) and annual appraisals (p=.01) exhibited a significant and positive relationship to perceived EPA accuracy in the multiple regression model.

DISCUSSION

Building on domestic performance appraisal literature (e.g., Carroll and Schneir [1982]) and the emerging theory on international performance appraisal [Black et al. 1992a, 1992b; Dowling and Schuler 1990; Gregersen et al. 1992; Mendenhall and Oddou 1991], this exploratory study was the first to examine empirically the expatriate performance appraisal practices in U.S. multinational firms. Based on these exploratory findings, many research propositions can be generated for future study of this key international business topic, expatriate performance appraisal.

Multiple Criteria

In this study, the use of multiple criteria correlated positively with perceived EPA accuracy; however, the multiple regression results did not confirm this relationship when controlling for other variables included in the model. Interestingly, zero-order correlations indicate that firms using multiple criteria tended to also appraise more frequently, and use more raters. Table 1 also indicated that firms using hard criteria appraised expatriates more frequently. These collective preliminary results may suggest that use of hard criteria is less ambiguous and thus takes less effort, and this in turn relates to increased frequency of appraisal.

The positive correlation between perceived EPA accuracy and the use of multiple criteria, combined with the low frequency of using all three types of criteria (9%), suggests that although firms perceive use of multiple criteria as increasing EPA accuracy, they do not actually use all three types of criteria in their EPAs. Indeed, most firms in this study (50%) relied on two types of


criteria (generally soft and hard) in their EPAs. Incorporating additional contextual criteria into EPAs, however, often entails customizing appraisals (to some degree) for specific overseas assignments; the use of such appraisals requires significant firm-specific investments of time and financial resources.

In addition, while this study collected data on the percentage of time a particular criterion was used within a firm, the results do not lead to the conclusion that an ideal weighting criteria set should apply equally across countries and across companies. Each firm, however, will need to determine its own weighting of hard, soft and contextual criteria given their specific appraisal needs. Future research should examine more closely the role and influence of each type of criterion, as well as different combinations of criterion weights and their potential relationships with perceived EPA accuracy.

Customized Appraisal Forms

This study expected that customizing appraisal forms would lead to greater perceived accuracy of EPAs. However, contrary to expectations, a negative relationship was found in this study between appraisal form customization efforts and perceived EPA accuracy in both the correlation and regression analyses. The lack of a positive relationship may be due in part to the lack of clear baselines, or normative values, which can be used as targets [Dickinson 1987] for comparing cross-country performance. The issue of normative performance baselines for EPAs is critical. A baseline establishes the definition and level of acceptable standard of performance and provides for reliable comparability across populations [Cardy and Dobbins 1994]. Such baselines become less clear, however, when dealing with soft and contextual criteria. Clearly, the acceptable baselines may differ for domestic and expatriate performance, as well as across expatriate locations. In fact, completely generalizable cross-country baselines may be difficult, if not impossible, to establish for expatriate performance, given the complexity, uniqueness and contextual factors found in overseas assignment situations. However, the negative relationship of standardized forms and perceived EPA accuracy indicates that firms also do not perceive increased accuracy when using the standardized forms outside of the home country.

Thus the following paradox may arise in multinational firms. If firms do not customize EPAs to some extent, they may perceive that they cannot assess international performance accurately. EPA validity may be questionable when using only standardized, domestic appraisal forms in overseas contexts. It should be noted that noncustomized EPA forms also cannot provide reliable comparison across countries, given that performance requirements and opportunities differ across countries.

At the same time, however, if firms are responsive to international issues and attempt to customize EPAs, the lack of appropriate baselines for comparison


may also inhibit perceived accuracy. Firms may not know how to interpret or compare customized EPAs and therefore may question their accuracy. The lack of apparent cross-country comparability may decrease the perceived accuracy, particularly from the home office. Thus for this study, a potential effect of this paradox may have been that firms' attempts to customize EPAs actually resulted in a lower perceived accuracy.

To be effective, the EPA, as with any performance appraisal, should be pertinent to the actual performance requirements. To accomplish this, the firm's entire evaluation process, not just a few forms, may need to be adapted to assess expatriate performance appropriately for a particular country. The challenge of developing appropriate baselines should not be underestimated; and a lack of apparent baselines and cross-country comparability should not necessarily inhibit firms from examining how they might benefit from attempting to customize their EPA process for specific country contexts. Adapting the firm's overall PA processes may help to provide firms with the advantages of customized EPAs while lessening the disadvantages of customization. For example, firms might standardize the PA scoring system such that all PAs, domestic or expatriate, have consistent potential PA scores, i.e., the potential of 100%. Customized forms might then provide this comparable score using location-appropriate criteria. This score could then be used as the baseline within and across countries and may also be appropriate for administrative decisions throughout the firm. Another example might be determining new, appropriate performance standards for contextual criteria when customizing EPA forms. Then firms might evaluate expatriates by: 1) assessing the extent to which they meet customized performance standards, 2) comparing their performance against that of other expatriates in same country, when possible, and 3) assessing their overall contribution to the country operating unit's success. Clearly, the complexity of baseline development and EPA customization suggests that future research needs to explore further the costs and benefits of customization. Future research also needs to explicate a more comprehensive framework for developing appropriate baselines to compare expatriate performance across locations.

Multiple Raters

This study found that use of more raters correlated positively to the perceived accuracy of EPAs. While the theoretical principle of multiple raters is also common to domestic appraisals, accurate EPAs may require even more raters than domestic performance appraisals, due to the complexity of expatriate appraisal, distances between raters and expatriates, inexperience with foreign assignments, and possible language barriers. However, the use of multiple raters was not related significantly to perceived EPA accuracy in the multiple regression model. Future research could attempt to examine more carefully the r-ole and effects of multiple raters by pursuing such questions as: To what extent


do increased numbers of raters influence positively the perceived accuracy of EPA? Is there a point of diminishing returns when increasing the total number of raters involved in EPA? What are the relative costs and benefits to increasing the total number of raters in expatriate versus domestic appraisals?

Rater Knowledge and Characteristics

This study expected to find that rater knowledge, as a function of relationship and nationality, would relate positively to the perception of accurate EPAs. In addition, the location of raters, or their distance from the expatriate, was expected to be a critical factor in determining perceived EPA accuracy.

Relationship. Correlation analysis found that rater relationship was related positively to EPA accuracy for host-country supervisors. However, contrary to expectations, other raters with critical relationships to understanding the expatriate and the assignment were not related to the perceived accuracy of EPAs in the correlation analyses.

Nationality. Also contrary to expectations, rater nationality was not related to accurate EPAs, even though 33% of the EPAs in this study used local nationals as raters. This finding may be due to cultural limitations that may exist when using local national subordinates and peers as EPA raters. These raters may not understand the overall purposes of the EPA, needs of the firm, or even their own cultural biases. They may not have experience with the parent country and may bias their appraisals in favor of the local culture. While these added perspectives do have value, they can also confound the benefits of using local nationals. Thus the nonsignificant results for rater nationality may be explained by the confounding of the original theoretical argument that using local nationals would increase perceived EPA accuracy. Interestingly, firms that used local nationals as raters also tended to use more overall raters, including host-country subordinates and HR professionals, as well as home- country sponsors and HR professionals.

Location. The correlation and regression results indicate that EPAs are perceived as more accurate when using a more balanced combination of raters from both within and outside the host country. This balance was posited to provide the EPA with raters who are capable of both observing the expatriate's performance in context and those assessing how that performance may affect overall organizational results. This balance of raters is especially critical given the strategic need to balance local responsiveness and global integration. Finally, future research with alternative measures of rater location and a larger sample of multinational firms needs to further test this relationship more extensively.

Frequency of Appraisal

Frequency of appraisal was hypothesized to relate positively to perceived accuracy of EPAs. In this study, both semiannual and annual expatriate


performance appraisals related positively to perceived EPA accuracy. These relationships may suggest that more frequent appraisals in general are related to increased perceived accuracy of EPAs.

Moreover, the majority of firms in this study reported the use of annual appraisal practices. This finding is likely a spillover from domestic performance appraisal practices. Firms performing EPAs annually also tended to use standard appraisal forms and hard criteria. These domestic practices may require less effort to customize, collect and interpret the data. The pre- dominant use of annual EPAs (82%) may result from a reliance on domestic appraisal practices in international settings, reflecting a lack of effort or felt need to customize systems to the complexity of overseas locations. This lack of effort may be due, in part, to the overall lack of expatriate experience this study found among top executives (only 28% reported experience). Future research could extend this study's results by determining with more clarity the conditions under which EPAs are conducted more frequently than annually, and the relative efficacy on perceived EPA accuracy of evaluating expatriate performance more frequently than once per year.

Implications for Future Research

The discussion and findings in this research identify several basic issues regarding expatriate performance appraisal. Future research could further extend this exploratory, pilot study by examining in more detail and with larger sample sizes, additional factors contributing to the perceived accuracy of EPAs. Several areas of potential future research flow from the theory and results of this exploratory study.

Multiple Criteria. The use of different types of criteria and multiple criteria should be explored further. For example, can the performance appraisal system capture effectively the multiplicity of dimensions associated with expatriate performance in an international context? Under what conditions should firms attempt to set a standard for weighting EPAs toward more hard or soft criteria? Given the relatively low percentage of firms that used contextual criteria in this study for EPAs, how can firms capture and operationalize contextual issues into their conventional performance appraisal process?

Customization. To what extent should firms customize forms, given that neither highly customizing nor relying solely on standardized forms appears to contribute uniquely to perceived EPA accuracy? Under what conditions and based on what criteria would firms locate an appropriate balance of customization? How do firms that customize expatriate appraisal forms adequately and accurately compare performance across employees living in various countries? What data sources can be used to determine appropriate customization?


Multiple Raters. Does an ideal number of raters exist for examining expatriate performance? Is there a point of diminishing returns wherein too many raters may hinder EPA accuracy? To what extent is the combination of a rater's relationships and knowledge possibly more important than the total number of raters included in the appraisal process? For example, what is the relative influence of many raters with similar knowledge of the expatriate, job and context versus fewer raters holding more disparate knowledge?

Rater Relationships. What specific and/or unique information can be obtained from different raters exhibiting different relationships with an expatriate employee, particularly the expatriates themselves? Does this dynamic differ from domestic performance appraisal processes? What impact can information technology exert on EPAs and the ability of raters to gather and disseminate accurate performance information? Under what conditions and with what results do firms use more versus fewer local nationals as raters? How do multinational firms assess the performance of local nationals?

Frequency. This study's finding indicate that most firms perform annual expatriate performance appraisals, reflecting traditional domestic human resource practices. Given the geographic and temporal distances between expatriates and headquarters, how can EPAs be designed to provide more continuous feedback to expatriates and their managers? What role might information technology play in increasing the frequency of EPAs?

Perceived EPA Accuracy. Perceived EPA accuracy should be operationalized in future studies to include multiple data sources, including the expatriate's perspective of EPA fairness and accuracy. In addition, future research needs to attempt to assess actual EPA accuracy through the development of organizational and/or country baselines.

EPA Systems. To what extent do firms follow traditional, domestic performance appraisal practices when assessing expatriates? What EPA processes are necessary when domestic PA practices do not fit unique foreign country situations? To what degree are EPAs tied to a multinational firm's strategies? How can expatriates receive feedback regarding their individual impact on the firm's strategies?

Summary. Collectively, this study's results support the modification of some EPA systems (e.g., balancing rater location, increasing frequency of appraisal, and attempting some degree of customization and standardization) to increase the perceived accuracy of EPAs. However, in efforts to develop more accurate EPAs, each firm should consider carefully its unique situation, specific performance measurement needs, costs and benefits of potential modifications, and a likely point of diminishing returns. The result of this process is that no one EPA format that will likely apply to all firms and contexts, and yet some EPA principles may be still generalize across firms and countries (e.g., the use of


multiple criteria). Future research should confirm, expand and build upon these exploratory findings, particularly given the increasing globalization of firms.

General Limitations of the Study

First, EPA accuracy as operationalized in this study is a perceptual measure. Moreover, 79% of the responding firms reported average or above average EPA accuracy ratings. This may suggest satisfaction with current EPA practices rather than actual EPA accuracy. In the former case, assessing what firms perceive as appropriate methods for achieving EPA accuracy may still be helpful in extending our extremely limited understanding of expatriate appraisal practices. Furthermore, measurements of actual EPA accuracy may require a study of predictive validity. Clearly, however, future research needs to extend this study by collecting data on EPA accuracy with multiple measures from multiple sources to understand better the relationships between specific EPA practices and their accuracy.

Second, this study was performed with a U.S. sample of multinational firms. This suggests the need for future research to extend these results by examining EPA practices in other countries. For example, we may expect significant differences between our findings and EPA practices in Japanese firms. Many Japanese firms do not have formal appraisal programs for any employees like those found in U.S. firms. Further, given the Japanese emphasis on collective rather than individual behavior, the entire concept of individual employee appraisal is often unacceptable. Thus the Japanese appraisal system for expatriates is likely to be far less formal in design than that found in U.S. multinational firms included in this study. In addition, other cultural settings may not support the use of multiple raters (e.g., providing 360? feedback) for expatriate employees. For example, in many Latin American countries such as Guatemala, Venezuela, Ecuador, and Colombia, because of increased Power Distance [Hofstede 1983], the dominant cultural assumption is that superiors do not need performance feedback from subordinates, and to request it would potentially undermine the superior's authority and position.

Third, common method variance can occur when respondents provide information on both independent and dependent variables through a common data collection method, and because of the respondent's need to provide logically consistent information, the relationship between independent and dependent variables is often distorted. While some attempts were made to reduce, but not eliminate, the effects of common method variance in this study (e.g., using a variety of response formats and scale anchors interspersed throughout the questionnaire), common method variance likely exerted some influence on the empirical results. Consequently, the results of this study should be viewed cautiously until future research with multiple data collection methods or multiple data collection sources examines expatriate performance appraisal practices and their perceived accuracy.


While the number of firms responding in this study was relatively small, the demographic information provided on respondent firms suggests that this sample is relatively representative of a larger population of firms operating in an international business environment (e.g., sample firms operated in twenty- four different industries, had an average of 29% of employees outside the U.S., etc.) However, the sample is somewhat biased toward large firms in that the average number of employees was 17,690. The relatively low response rate may result from several factors. For example, in followup telephone conversations with respondent HR executives, they indicated consistently that they have received an increasing number of academic surveys and their limited time precludes them from responding to all requests. Thus, given the intended exploratory nature of this research and the relatively low response rate, the results of this study should not be generalized to all sizes of firms; and until future studies are conducted with larger sample sizes, the results of this study should be viewed tentatively and with appropriate caution.

CONCLUSIONS

This study is one of the first to explore empirically the appraisal practices of multinational firms for expatriate employees. The primary objective was to explore how the unique context of EPAs may affect their design and perceived accuracy. The data indicate that the following hypothesized variables relate positively to perceived EPA accuracy for those firms sampled in this study: using standardized forms that are also customized for local contexts, conducting performance appraisals annually and semiannually, incorporating raters with proximal relationships to the expatriate (i.e., host-country supervisor), and balancing the location of raters between both within and outside the host country.

The descriptive statistics and frequencies in this study indicate, however, that many firms do not actually follow these practices. Such practices often require that firms extend greater effort, both in increased time and resources, than is expended currently on expatriate performance appraisal. This lack of effort may be problematic for the firm and the expatriate. For example, as a firm fails to account for international and cross-cultural variables when assessing expatriate performance, it may not respond effectively to local competitive conditions but may exert more corporate headquarters' control over foreign operations than the situation requires. For expatriates, multinational firms' failure to pay explicit attention to important international criteria may lead to career derailment either during or after their overseas assignment [Adler 1991; Black and Gregersen 1991; Black et al. 1992a, 1992c; Gregersen and Black 1996; Harvey 1989; Napier and Peterson 1991].

As international activities of firms increase and employees are sent on foreign assignments to implement either global or regional strategies, accurate EPAs will likely become more critical to developing a locally responsive and globally


integrated organization. To attain higher positive returns on these significant international human resource investments, it seems likely that firms could benefit by developing and using more accurate EPA systems to determine if strategic purposes are accomplished in overseas operations. Perhaps, through the preliminary results of this study and, more important, through the findings of future research in this area, firms may develop a better picture of what factors are most relevant to the effectiveness of expatriate performance appraisal systems.

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Documents

EXPATRIATE PERFORMANCE APPRAISAL IN U.S