When too much adjustment is bad: A curvilinear relationship between expatriates' adjustment and social changes in HCNs

Mumtaz, Sana; Nadeem, Sadia Article When too much adjustment is bad: A curvilinear relationship between expatriates' adjustment and social changes in HCNs Cogent Business & Management Provided in Cooperation with: Taylor & Francis Group Suggested Citation: Mumtaz, Sana; Nadeem, Sadia (2020) : When too much adjustment is bad: A curvilinear relationship between expatriates' adjustment and social changes in HCNs, Cogent Business & Management, ISSN 2331-1975, Taylor & Francis, Abingdon, Vol. 7, Iss. 1, pp. 1-13, https://doi.org/10.1080/23311975.2020.1857064 This Version is available at: https://hdl.handle.net/10419/245017 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen. 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This open access article is distributed under a Creative Commons Attribution (CC-BY) 4.0 license. Published online: 17 Dec 2020. Submit your article to this journal Article views: 411 View related articles View Crossmark data MANAGEMENT | RESEARCH ARTICLE When too much adjustment is bad: A curvilinear relationship between expatriates’ adjustment and social changes in HCNs Sana Mumtaz 1 * and Sadia Nadeem 1 Abstract: The antecedents of expatriates’ adjustment have received considerable attention in the international business research in the recent years. However, there has been a limited understanding regarding the outcomes of expatriates’ adjustment on host country nationals (HCNs). Thus, examining the existing literature and analyzing it using social identity theory, we hypothesized an inverse curvilinear relationship between expatriates’ interaction adjustment and development of trust, shared vision and intercultural communication in HCNs. We tested our hypotheses by conducting a multilevel regression analysis on dyadic data collected from Chinese expatriates and Pakistani HCNs. The findings confirm an inverse U-shape relationship between expatriates’ interaction adjustment and trust, and between expatriates’ interaction adjustment and intercultural communication. In contrast to the focus of existing literature on static changes, our findings highlight a dynamic nature of social change experiences by suggesting that too much adjustment of expatriates negatively impacts work relationships between expatriates and HCNs in the long-run. Based on the empirical findings, we offer insights to HR professionals ABOUT THE AUTHORS Sana Mumtaz (MS, Air University, Islamabad, Pakistan) is a PhD Scholar at FAST School of Management, National University of Computer and Emerging Sciences, Islamabad, Pakistan. She is also serving as a lecturer at Shaheed Zulfikar Ali Bhutto Institute of Science and Technology (SZABIST), Islamabad. Her research interests are cross-cultural HR, expatriate adjustment and leadership. She has several publications and conference papers in these areas. Sadia Nadeem (PhD, Cass Business School, London, UK) is a professor at FAST School of Management, National University of Computer and Emerging Sciences, Islamabad, Pakistan. She has approx. 20 years of experience in the field of HR, and has published and presented her work to a variety of stakeholders in over 50 research outputs, including three publications in FT 50 journals. Her research interests include cross-cultural HRM, high-performance work practices, discrimination and disadvantage in the labor market, trust and leadership. PUBLIC INTEREST STATEMENT Over the last decade or two, a growing number of expatriates have moved to other countries for work assignments in the last few years. As a result, the concept of cross-cultural management and the factors affecting expatriates’ adjustment have been examined in several studies. However, there is a limited understanding of how expatriates’ adjustment impacts host country nationals (HCNs). Therefore, this study examines the dynamic nature of the relationship between expatriates and local employees. Based on the analysis of the data collected from Chinese expatriates and Pakistani managers, the results suggest that the lower to mid level of expatriates’ adjustment facilitated local employees in developing trust and intercultural communication with expatriates. However, trust and intercultural communication among the two groups was weakened when expatriates reached higher levels of adjustment. The findings guide that organizations should carefully manage the relationship between expatriates and local employees by facilitating expatriates in managing an optimum level of adjustment in a host unit. Mumtaz & Nadeem, Cogent Business & Management (2020), 7: 1857064 https://doi.org/10.1080/23311975.2020.1857064 Page 1 of 13 Received: 03 September 2020 Accepted: 24 November 2020 *Corresponding author: Sana Mumtaz, FAST School of Management, NUCES-FAST, Islamabad, Pakistan E-mail: sana_mumtaz91@hotmail. com Reviewing editor: Len Tiu Wright, De Montfort University Faculty of Business and Law, UK Additional information is available at the end of the article © 2020 The Author(s). This open access article is distributed under a Creative Commons Attribution (CC-BY) 4.0 license. and suggest managing expatriates’ adjustment to an optimal level in a host unit where expatriates and HCNs can develop an adequate level of trust and intercultural communication with each other. Subjects: Asian Studies; Self & Social Identity; Social Influence; Group Processes; Intergroup Behavior Keywords: expatriates’ adjustment; social identity theory; trust; shared vision; intercultural communication 1. Introduction Transformation in social identities of individuals as a result of working in diverse social settings has been explored in a large body of literature (Hogg et al., 2017; Nadeem & Mumtaz, 2018; Peltokorpi & Zhang, 2020). The above literature has integrated social identity theory for suggesting a critical role of membership of new social groups for individuals (Jetten et al., 2002). In general, the dynamic nature of social identity theory has been studied under two major dimensions, including social identity changes (Tajfel, 1981) and self-categorizations (Davis et al., 2019; Turner et al., 1987). Social identity changes, also referred to as positive social identity changes, reflect individuals’ willingness to identify themselves with other groups and help individuals in embracing social changes (Brown, 2020; Tajfel, 1981). In contrast, self-categorizations, commonly referred to as negative social identity changes, reflect internal values that trigger individuals to maintain their internal position and hinders them from accepting social changes (Mummendey et al., 1999; Turner et al., 1987). To date, most of the social identity literature has focused more on developing an understanding of the positive social identity changes (e.g., Di Bernardo et al., 2019; Hogg et al., 2017; Nadeem & Mumtaz, 2018), while conditions under which individuals use identity management strategies and refuse social identity changes have been inadequately examined (e.g., Martiny & Nikitin, 2019; Peltokorpi & Pudelko, 2020). In line with the literature on social identity theory, which suggests that social identity changes are not static and change with time (Jetten et al., 2002), we argue that a holistic understanding of the dynamic nature of social identity theory may be developed by including positive as well as negative social identity changes in a single model. The complex nature of positive and negative social identity changes may be adequately revealed by focusing on multicultural social groups with distinct self-identities and significant differences (Davis et al., 2019; Peltokorpi & Pudelko, 2020; Sharma, 2016). Hence, we have focused on social groups in international assignments to develop a deeper understanding of the relationship between expatriates’ adjustment and social change experiences of HCNs. Using the social identity theory, it is argued that when individuals from diverse social groups are in the phase of transition, they adapt to social identity changes and proactively make efforts to understand each other. This adaptation is necessary for individuals’ survival and facilitates them in getting social support from each other. However, when individuals become stable in their communication and develop an adequate understanding of the characteristics of other groups, they think about protecting their individualized self-categorizations. Therefore, individuals may discard new social memberships after frequent socialization and realization of the key differences in protecting their psychological sense after some time (Ethier & Deaux, 1994; Peltokorpi & Pudelko, 2020). Multicultural organizations must focus on the social identity change experiences of the employees, as these individualized changes are also linked with the internal mindset of employees and eventually impact their work and non-work performance (Peltokorpi & Pudelko, 2020). Based on the above, it is suggested that expatriates’ interaction adjustment is likely to facilitate the development of trust, shared vision and intercultural communication among expatriates and HCNs (Ang & Tan, 2016; Wang & Varma, 2018). However, some literature highlights an essential Mumtaz & Nadeem, Cogent Business & Management (2020), 7: 1857064 https://doi.org/10.1080/23311975.2020.1857064 Page 2 of 13 role of contextual differences in this regard and suggests that differences between two countries may also lead to interpersonal conflicts between expatriates and HCNs (Kang & Shen, 2018; Ljubica et al., 2019). In parallel, other literature argues that global leadership skills, along with cultural intelligence facilitate expatriates in socializing with HCNs despite the differences between the two countries (e.g., Ali et al., 2019; Tuffour & Matey, 2019; Vlajcic et al., 2019). Thus, it can be argued that while adjustment is good, too much adjustment of expatriates and frequent interactions between the two groups may trigger HCNs to protect their self-categorization (Fee, 2020). Such intentions may weaken their new social relationships and reduce trust, shared vision and intercultural communication among HCNs and expatriates over time. Hence, we propose an inverted U-shape relationship between expatriates’ interaction adjustment and HCNs development of trust, shared vision and intercultural communication. The contributions of the current study are twofold. First, we focused on the multiple aspects of social identity theory and simultaneously incorporated positive and negative dimensions in a single model for holistically theorizing how expatriates’ interaction adjustment leads to the development of trust, shared vision and intercultural communication in HCNs. Second, this is one of the few studies that provide empirical evidence regarding the nonlinear relationship between expatriates’ interaction adjustment and trust, and between expatriates’ interaction adjustment and intercultural communication. Based on the findings, we suggest managing the optimal level of expatriates’ adjustment in a host unit for effectively managing the expatriates-HCNs relationship. Further, as this research was conducted in 2018, and since then COVID-19 has led to significant changes in multinationals’ way of work and the nature of interactions between expatriates and HCNs, we also offer guidance to researchers on how the current pandemic may affect this area of study in the future. The forthcoming section summarizes the literature on social identity theory and the key variables, and hypothesizes the curvilinear relationships between variables. This is followed by the methodology and the findings sections. Finally, theoretical discussion, future research directions and managerial implications have been presented. 2. Theoretical framework Based on the social identity theory, we hypothesize curvilinear relationships between expatriates’ interaction adjustment and changes in trust, shared vision and intercultural communication of HCNs in this section. 2.1. Interaction adjustment and trust development When expatriates move to a host country, they are expected to adjust to the general, work and interaction environment; this is referred to as socio-cultural adjustment (Black & Stephens, 1989). Despite a crucial role of all the three dimensions of adjustment, expatriates’ interaction adjustment is mainly considered as complex and dynamic, as it is linked with their internal psychological processes and leads to the development of unique social categorizations of HCNs in a host unit (Fee & Michailova, 2020). In general, interaction adjustment refers to adjustment with the socialization patterns of HCNs, which facilitate expatriates in adapting to day-to-day basis conversations with the local people (Fee & Michailova, 2020; Waxin, 2004). The expatriation literature suggests that successful interaction adjustment enables expatriates in easily interacting with HCNs and facilitates social exchange between the two groups (Ang & Tan, 2016; Fee & Michailova, 2020; Ismail, 2015). In line with the above, the social identity theory also emphasizes an essential role of thoughtful communication in embracing new social changes (Davis et al., 2019). It suggests that the initial level of mindful communication between the two distinct groups improves the psychosocial adjustment of both groups and leads to trust development between individuals (Ashforth & Mael, 1989; Jones, 2017). Trust development refers to the positive expectations of individuals towards each other and indicates the initiation of emotional and cognitive bonding between them (Rousseau et al., 1998). Furthermore, trust is considered as Mumtaz & Nadeem, Cogent Business & Management (2020), 7: 1857064 https://doi.org/10.1080/23311975.2020.1857064 Page 3 of 13 a reciprocal quality where individuals from two groups understand and match each other’s expectations (Rotenberg, 2019). We use social identity theory to hypothesize that when expatriates are at an initial level of interaction adjustment in a host unit, their adjustment leads to stability in their communication with HCNs, brings the two groups closer and develops HCNs’ trust in expatriates. Some recent literature guides that initiation of social relations among individuals leads to trust and raises expectations towards each other (Peterson & Stewart, 2020). However, the presence of too much trust and reliance is likely to change the nature of trust-based relationships over time (Rotenberg, 2019). The presence of high cognitive trust makes people believe that all information will be shared unasked (Jeffries & Reed, 2000). Social identity theory also guides that violation of expectations leads to trust betrayal and weakens social bonds between the two groups (Elangovan & Shapiro, 1998). Hence, we propose that higher levels of interaction adjustment of expatriates may raise expectations of HCNs towards expatriates, as HCNs might rely on expatriates for getting additional support and guidance. However, HCNs may experience violations of their expectations because of different mindsets and work styles of expatriates (Arman & Aycan, 2013; Kang & Shen, 2018; Toh & Srinivas, 2012). Based on the above, we hypothesize that initial levels of expatriates’ interaction adjustment leads to the development of HCNs’ trust in expatriates; however, higher levels of expatriates’ adjustment leads to a reduction in this trust. Hypothesis 1: There is a curvilinear (inverted U-shaped) relationship between expatriates’ interaction adjustment and HCNs trust in the expatriates. 2.2. Interaction adjustment and shared vision Being a liaison between headquarters and a subsidiary, one of the primary goals of expatriates is to direct HCNs behaviour and performance in a unified direction after they adjust in a host unit (Ismail, 2015) and to create a collaborative culture for employees (Ang & Tan, 2016; Ali et al., 2019; Fee & Michailova, 2020; Toh & Srinivas, 2012). We argue that there is a dynamic relationship between interaction adjustment of expatriates and the development of a shared vision in HCNs. Shared vision refers to a mutual agreement of individuals on acceptable beliefs and ways of work and indicates a culture of togetherness (Tsai et al., 2014). Social identity theory guides that interaction among diverse groups improves an understanding of each other’s behaviour, and improves social cohesion among individuals (Brown, 2020). Hence, we expect that the initial level of expatriates’ interaction adjustment is likely to enhance similarity in thoughts among expatriates and HCNs, and consequently may lead to the development of shared vision between them. The dynamic social identity theory further guides that frequent interactions among diverse groups allow members to make predictions about beliefs and comfort zone of others (Honeycutt et al., 1983). Moreover, it leads to the development of a comprehensive understanding of each other’s weaknesses and strengths (Peterson & Stewart, 2020; Wise, 2014). Using the social identity theory, it is argued that too much understanding about each other help individuals in clearly recognizing the differences between two social groups and in developing a deeper knowledge of vision of the other groups (Lincoln, 2000). Therefore, a thorough understanding of the long-term goals may make people believe that it is not as beneficial as initially perceived and may reduce individuals’ propensity to follow the vision (Mummendey et al., 1999). Based on the above argument, we hypothesize that a higher level of interaction adjustment of expatriates is likely to change the level of comfort of the HCNs with the vision of the expatriates because of new social relationships; hence HCNs may experience a reduction in shared vision over time. Hypothesis 2: There is a curvilinear (inverted U-shaped) relationship between expatriates’ interaction adjustment and development of a shared vision between HCNs and expatriates. Mumtaz & Nadeem, Cogent Business & Management (2020), 7: 1857064 https://doi.org/10.1080/23311975.2020.1857064 Page 4 of 13 2.3. Interaction adjustment and intercultural communication Expatriates’ interaction adjustment facilitates the initiation of mindful communication between expatriates and HCNs and encourages the development of intercultural communication between the two groups (Vlajcic et al., 2019; Zhang & Peltokorpi, 2016). Intercultural communication refers to the development of a thoughtful understanding of each other’s culture where individuals proactively engage in information-seeking behaviour and effectively interpret verbal and nonverbal communication of diverse groups (Baldwin & Hunt, 2002). There is an overall consensus in the expatriation literature that frequent interaction between expatriates and the local workforce leads to a positive impact on the behaviour of HCNs (Ang & Tan, 2016; Ali et al., 2019; Nadeem & Mumtaz, 2018; Vlajcic et al., 2019). In line with the above, social identity theory also elaborates that interactions play an essential role in developing social bonds and intercultural communication (Brown, 2020; Hogg, 2016). It further suggests that the development of a healthy relationship facilitates individuals in embracing social identity changes (Ashforth & Mael, 1989). Hence, we expect that expatriates’ interaction adjustment is likely to lead towards the development of intercultural communication among HCNs. Going beyond the above, we expect a dynamic change in this relationship with time and suggest that higher levels of interaction adjustment of expatriates might reduce intercultural communication among HCNs after some time. Social identity theory suggests that newcomers initially engage in thoughtful conversation and carefully learn their roles and processes. These interactions are mindful, as individuals prefer engaging in bounded discussions and consciously choose their topics during initial adjustment (Davis et al., 2019; Firth et al., 2014). However, frequent socialization and development of a comfort level leads to in-depth discussions about values and beliefs among them (Nadeem & Mumtaz, 2018). The literature suggests that several costs may be associated with deep social relationships, as social interactions may turn out to be negative over time and compromise the internal well-being of individuals (Lincoln, 2000). The development of a more in-depth understanding of diverse groups sometimes leads to a negative impact on the self-categorization of individuals, as suggested by social identity theory (Ashforth & Mael, 1998). Limited expatriation literature also hints that adjustment and continuous learning of others’ cultures may collide with internal values and thought processes of individuals (Peltokorpi & Pudelko, 2020). Hence, the presence of a discrepancy between inner thoughts and expected behaviour might lead to discomfort and weaken the relationship between expatriates and HCNs (Kang & Shen, 2018). Based on the above discussion, we hypothesize that higher levels of expatriates’ interaction adjustment may reduce intercultural communication between expatriates and HCNs. Hypothesis 3: There is a curvilinear (inverted U-shaped) relationship between expatriates’ interaction adjustment and intercultural communication between expatriates and HCNs. 3. Materials and methods The current study tests for quadratic relationships between expatriates’ interaction adjustment and development of trust, shared vision and intercultural communication among HCNs in a multicultural context by focusing on Chinese expatriates and Pakistani HCNs. We found it relevant to test the curvilinear relationship in this social context, as the initiation of the Belt and Road Initiative and China-Pakistan Economic Corridor projects have led to the movement of a large number of Chinese expatriates to Pakistan in recent years (Irshad, 2015). Alongside this, the presence of the Pak-China friendship and the collectivistic culture of both societies facilitates positive relationship development between the two countries (Nadeem & Mumtaz, 2018). However, differences in the fundamental cultural values, religious beliefs, along with unique work style of Chinese employers, create some barriers in the adjustment of employees with Chinese employers across the globe (Zheng & Smith, 2019). Thus, we expected that expatriates’ Mumtaz & Nadeem, Cogent Business & Management (2020), 7: 1857064 https://doi.org/10.1080/23311975.2020.1857064 Page 5 of 13 interaction adjustment may have a unique impact on the development of trust, shared vision and intercultural communication between Chinese expatriates and Pakistani HCNs. 3.1. Participants and procedures We relied on a multisource time-lagged research design and collected dyadic data from Chinese expatriates at Time 1 [T1] and Pakistani managers at Time 2 [T2]. The process of data collection was initiated in March 2018, and it was completed in October 2018. Since data regarding the exact number of Chinese companies in Pakistan was not available, we initially compiled a list of Chinese companies in Pakistan. Following this, we approached the HR departments of Chinese companies in Islamabad and Lahore and collected data from Chinese expatriates regarding their interaction adjustment in Pakistan. To get an objective representation of the population, data were collected from no more than three Chinese managers in a single company. The criteria for inclusion of Chinese expatriates in this research was a minimum of one-year work experience in Pakistan. The use of purposive (Palinkas et al., 2015) and snowball sampling techniques (Ghaljaie et al., 2017) helped us in getting data from a large number of Chinese expatriates and several sectors in Pakistan. Overall, survey data were collected from 109 Chinese expatriates working in 66 Chinese companies in 17 sectors in Pakistan at the end of T1. Most of the companies belonged to construction (N = 10; 15%), manufacturing (N = 9; 13%) and power sectors (N = 9; 13%), while other sectors included food, banking, education, electronic, procurement, research and retail. After three months, all the 66 Chinese companies were approached again for data collection at T2 from Pakistani managers who were working under the direct supervision of the 109 Chinese expatriates to collect data on trust, shared vision and intercultural communication. Survey questionnaires were distributed to around 550 Pakistani managers, which resulted in final data collection from 301 Pakistani managers working under 97 Chinese managers. The response rate was 54.7%. After data cleaning, the final sample size comprised data of 93 supervisors and 239 employees. 3.2. Measures In T1 and T2 questionnaires, all the questions were developed on a five-point Likert scale ranging from “1 = strongly disagree to 5 = strongly agree”. We also included demographic questions in both questionnaires for understanding the characteristics of the sample, along with identifying their potential impact on dependent variables. Following are the details of the instruments: Interaction adjustment [T1]: Black and Stephens (1989) four items scale was adopted for measuring interaction adjustment of Chinese expatriates in Pakistan. A sample question is, “I can comfortably socialize with the host nationals/local people in Pakistan.” [Cronbach alpha = 0.77]. Trust [T2]: Chow and Chan (2008) three items scale were adopted for measuring employees’ perception of trust development. A sample question is, “I can always rely on top management Chinese expatriates to make my job easier.” [Cronbach alpha = 0.79]. Shared vision [T2]: Chow and Chan (2008) three items scale were adopted for measuring employees’ perceptions of the shared vision. A sample question is, “Top management Chinese expatriates and I always share the same ambitions and vision.” [Cronbach alpha = 0.76]. Intercultural communication [T2]: Neuliep and McCroskey (1997) 14 items scale was adopted for measuring employees’ perceptions of intercultural communication. A sample question is, “While conversing with Chinese top management expatriates in this organization, I feel very relaxed.” [Cronbach alpha = 0.83]. 4. Results The supervisors’ dataset comprised of a considerable proportion of males (N = 80) and a few females (N = 13). The average total experience of Chinese expatriates was 14 years (SD = 6.40) and Mumtaz & Nadeem, Cogent Business & Management (2020), 7: 1857064 https://doi.org/10.1080/23311975.2020.1857064 Page 6 of 13 their average length of stay in Pakistan was three years (SD = 2.54). The sample characteristics of data from Pakistani managers indicated data collection from a majority of male managers (N = 217) and a few female managers (N = 22). The average total experience of Pakistani managers was around seven years (SD = 5.47). Before testing our hypotheses, we established discriminant validity of T2 measurement model by conducting confirmatory factor analysis in the Mplus software and analyzed the following indices: Tucker Lewis Fit Index (TLI), Comparative Fit Index (CFI), Root Mean Square Error of Approximation (RMSEA) (Kenny, 2015). One-factor model [trust + shared vision + intercultural communication] and three-factor model [trust; shared vision; intercultural communication] were tested. As expected, the three-factor model [TLI = 0.961; CFI = 0.951; RMSEA = 0.048] was a superior fit as compared to the one-factor model [TLI = 0.771; CFI = 0.725; RMSEA = 0.115], hence indicating distinctiveness of all the dependent variables. Table 1 provides the results of descriptive and zero-order correlations between all the variables. The results suggested no relationship between interaction adjustment and all the three dependent variables (i.e. trust, shared vision and intercultural communication). To test the multilevel regression, Mplus software was used. Multilevel models were tested using TYPE = COMPLEX function for examining the cluster effects (Muthen & Muthen, 2012). Interaction adjustment was specified at Level-1, while trust, shared vision and intercultural communication were specified at Level-2. We used the Bayesian estimation technique for computing standardized regression results, as this technique helps provide objective results on small sample sizes as well (Depaoli & Clifton, 2015; Holtmann et al., 2016). Model 1 and Model 2 were separately tested for respectively computing regression results for linear and curvilinear models. In Model 1, we tested the direct impact of expatriates’ interaction adjustment on employees’ perceptions of trust, shared vision and intercultural communication in a host unit. All the variables were initially mean-centered for managing potential multi-collinearity bias (Aiken et al., 1991). In Model 2, we calculated the square of trust, shared vision and intercultural communication for testing curvilinear effects of interaction adjustment. The results of Model 1 verified that expatriates’ interaction adjustment has no impact on trust [β = 0.053, ns], shared vision [β = 0.020, ns] or intercultural communication [β = 0.302, ns]. Hence, we did not find evidence of a linear relationship of interaction adjustment with trust, shared vision and intercultural communication. In Model 2, we entered the squared trust, squared shared vision and squared intercultural communication and found that squared trust and squared intercultural communication were Table 1. Descriptive and correlation results Mean SD 1 2 3 4 Between level variable 1.Interaction adjustment (T1) 4.01 0.61 - Within level variables 2.Trust (T2) 3.69 0.80 −.029 - 3.Shared vision (T2) 3.93 0.78 −.038 .536** - 4. Intercultural communi cation (T2) 3.87 0.68 .035 .467** .518** - Mumtaz & Nadeem, Cogent Business & Management (2020), 7: 1857064 https://doi.org/10.1080/23311975.2020.1857064 Page 7 of 13