When organizations operate globally, their employees are very likely to be citizens of more than one country. Employees may come from the employer’s parent country, a host country, or a third country. The parent country is the country in which the company’s headquarters is located. For example, the United States is the parent country of General Motors, because GM’s headquarters is in Michigan. A GM employee who was born in the United States and works at GM’s headquarters or one of its U. S. factories is therefore a parent-country national.
A host country is a country (other than the parent country) in which an organization operates a facility. Great Britain is a host country of General Motors because GM has operations there. Any British workers hired to work at GM’s British facility would be host-country nationals, that is, employees who are citizens of the host country. A third country refers to a country that is neither the parent country nor the host country. (The organization may or may not have a facility in the third country. ) In the example of GM’s operations in Great Britain, the company could hire an Australian manager to work there.
The Australian manager would be a third-country national because the manager is neither from the parent country (the United States) nor from the host country (Great Britain). When organizations operate overseas, they must decide whether to hire parent country nationals, host-country nationals, or third-country nationals for the overseas operations. Usually, they hire a combination of these. In general, employees assigned to work in another country are called expatriates. In the GM example, the U. S. and Australian managers working in Great Britain would be expatriates during those assignments.
The extent to which organizations use parent-country, host-country, or third country nationals varies. In Venezuela, Pfizer’s strategy to begin selling its medicines to clinics serving the poor included hiring residents of the slums and training them to call on doctors’ offices. While it might seem easier to hire college graduates, Pfizer decided that training street-savvy local residents in biology would be more effective that training educated people to navigate the neighborhoods safely without losing samples to theft. Companies face a different challenge with regard to management talent: the astest economic growth has been occurring in Asia, where people with knowledge of business management have been scarce. U. S. companies have filled positions with parent-company and third-company nationals, but companies and governments in these countries have been ramping up their development of local management talent. Some U. S. companies have decided they need to be more involved, so they don’t lose the war for local talent. For example, IBM worked with Boston’s Northeastern University to set up an MBA training program for IBM employees in India.