GaWC Practitioner Brief 2

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Firms Still Love Expats

J.V. Beaverstock

Despite all recent advances in technology and more frequent business travel, transnational corporations (TNCs) still value expatriation. A recent study of expatriation by global companies in the financial services sector reveals that while the time-scales of expatriation will contract in future expatriation will continue as an important organisational strategy.

Several factors explain the continuing appeal of expatriation, argues researcher Dr Jonathan Beaverstock of Loughborough University. TNCs expatriate staff for three main reasons: staffing (e.g. to provide expertise and technical skills to international offices, as well as balancing skills shortages); management development; and organisational development (e.g. to disseminate corporate culture and policy). Moreover, IT cannot replace the importance of face-to-face contact with clients and competitors alike. Much of the value of expatriation comes from the networks that expatriates develop, and the opportunity to exchange skills and knowledge both in and outside the workplace. In future, however, expatriation will become more frequent, short-term and project- based. Expatriates will concentrate in large markets (such as London, New York, Tokyo) and then undertake more regional business travel.

One issue raised by this research is the importance of City of London as a key location for foreign skilled workers. "Expatriation into London is a key factor which ensures that it remains a leading international financial centre," he suggests. "An important constituent of the City of London's competitive advantage is the critical mass of foreign bankers, brokers, accountants, lawyers for example who are drawn from cities like New York City, Tokyo, Paris and Frankfurt." But, he does suggest that skill shortages in London's financial sector will require new ways of managing immigration into the UK from outside of the EEA "The role of the work permit system for skilled workers and the development of fast quota systems for immigrants in key skill shortage areas (e.g. e-commerce) could be explored. Managing immigration to alleviate skill shortages in key sectors of the new knowledge economy will be a major challenge for future governments."

The research team:

Dr Jonathan V. Beaverstock (Reader in Economic Geography)

Dr Richard A.M. Bostock

Dr James T. Boardwell

Edited and posted on the web on 6th August 2001

Note: This Practitioner Brief has been published in The Edge, 7 (July 2001), 19