Expatriates of Host‐Country Origin in South Eastern Europe: Management Rationales in the Finance Sector

Multinational companies coming to grips with the major challenges of international staffing have developed a new practice. In recent years management scholars observed the assignment of so‐called ‘expatriates of host‐country origin’ (EHCOs), that is, employees of migrant backgrounds in the companies’ parent country sent to work in their country of origin. This paper explores management rationales behind this practice focusing on the posting of employees to transition economies in south eastern Europe. Data from Austrian banks and insurance firms operating in Bosnia and Herzegovina and in Croatia provide the empirical basis. The analysis reveals that headquarters’ management believe that due to their specific competencies EHCOs facilitate the relationship between the headquarters and the subsidiary, enhance resource accrual and offer competitive advantage. As institutional complexity in the host country and the cultural distance between parent and host countries increase, so do the relative advantages of EHCOs for management.