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Do you know how much your expatriate costs? An activity-based cost analysis of expatriation

Author

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  • Christian Nowak
  • Christian Linder

Abstract

Purpose - – The purpose of this paper is to assess the costs and benefits of expatriation persists as a difficult challenge for many organizations and scholarly guidance on the process of compiling and allocating the costs of expatriation remains insufficient. The authors argue therefore that there is a need for developing an instrument that enables practitioners to calculate an estimate of the total cost of expatriation which can eventually be set in relation to the expected benefits of an assignment. Design/methodology/approach - – To investigate how the total cost of expatriation can be computed, the authors provide an exploratory overview of previous research on international assignments, expatriate return of investment (eROI) and principles of cost accounting. Then, essential costs of expatriation are discussed and combined in one model for assessing the total cost of expatriation. Findings - – The authors will demonstrate that expatriation costs are best understood as process costs. In addition, the authors will provide a tool to calculate eROI. Originality/value - – The paper show how to determine the costs of major phases of expatriation. It allows us to calculate the break-even point of an international assignment and it can be used to compare this investment with alternative methods of international mobility. Most importantly, the authors are able to identify crucial cost drivers which allow the development of more precise and targeted recommendations for management action.

Suggested Citation

  • Christian Nowak & Christian Linder, 2016. "Do you know how much your expatriate costs? An activity-based cost analysis of expatriation," Journal of Global Mobility, Emerald Group Publishing Limited, vol. 4(1), pages 88-107, March.
  • Handle: RePEc:eme:jgmpps:v:4:y:2016:i:1:p:88-107
    DOI: 10.1108/JGM-10-2015-0043
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    Citations

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    Cited by:

    1. Guttormsen, David S.A. & Francesco, Anne Marie & Chapman, Malcolm K., 2018. "Revisiting the expatriate failure concept: A qualitative study of Scandinavian expatriates in Hong Kong," Scandinavian Journal of Management, Elsevier, vol. 34(2), pages 117-128.
    2. Bonache, Jaime & Zárraga-Oberty, Celia, 2020. "Compensating international mobility in a workers’ cooperative: An interpretive study," Journal of World Business, Elsevier, vol. 55(5).
    3. Geneviève Morin & David Talbot, 2023. "Cultural intelligence of expatriate workers: a systematic review," Management Review Quarterly, Springer, vol. 73(1), pages 413-454, February.
    4. Renshaw, Phil St John & Dickmann, Michael & Parry, Emma, 2022. "The value of international assignments through the lens of real-options-reasoning," Journal of Business Research, Elsevier, vol. 151(C), pages 423-434.
    5. Cai, Yahua & Zheng, Weili & Wang, Yu & Li, Xiang & You, Shuyang, 2024. "Why and when expatriates’ experiences of daily meaningful work facilitate life satisfaction: The roles of positive affect and calling," Journal of Business Research, Elsevier, vol. 174(C).

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