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

Christian Nowak and Christian Linder

Journal of Global Mobility, 2016, vol. 4, issue 1, 88-107

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.

Keywords: International assignments; Cost management; Assigned expatriates; Return on investment (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eme:jgmpps:v:4:y:2016:i:1:p:88-107

DOI: 10.1108/JGM-10-2015-0043

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