Advantage and disadvantages of using parent country nationals, host country nationals and third country nationals as employees

Meaning of Parent country nationals(PCN)

The employees nationality is the same as the organizations. For example, a German citizen working for a German company in India.

Meaning of Host country National(HCN)

The employees nationality is the same as the location of the subsidiary. For example, a Indian citizen working for a German company in India.

Meaning of Third country nationals(TCN)

The employees nationality is neither that of the organization nor that of the location of the subsidiary. For example, an Sri Lankan citizen working for a German company in India.

PCN advantages:
Knowledge of Firms culture and products Loyalty Influence at headquarters Easier to access Foreign Image Groom executives for top management International exposure to promising managers.

PCN disadvantages
Difficulty in adapting to foreign country Excessive cost of selecting, training and maintaining expatriates. Promotional opportunities less for HCNs Compensation difference for HCNs and PCNs Communication problems abroad Low productivity in early part of tenure Family adjustment problems

HCN advantages
Familiar with local environment Goodwill Less expensive than hiring a PCN Knows local business Can be productive right away Locals motivated due to promotional opportunities No language barrier

HCN disadvantages
Loyalty maybe to country not company Limited familiarity with firms own operation and culture PCN at headquarters may lack sufficient understanding of the subsidiarys needs and corporate strategy for the subsidiary may suffer as a result. Communication problem with parent company personnel.

TCN advantages
Knowledge of specific cultures and languages Greater familiarity with host country culture than PCN, but loyalty will be to the firm Relocation costs lower that the PCNs Salary and benefits lower than PCNs Truly International managers

TCN disadvantages
May have a ulterior motive Locals may prefer their own citizens for managerial positions Some cross-cultural preparation may still be required Potentially suffering from a lack of knowledge of the corporate culture Using TCNs to the exclusion of HCNs may create the same problem or blocked career advancement that occurs when PCNs are used in this manner.

Thank You

By Anand Parameshwaran MBA B section