The advantages and disadvantages of using PCNs, HCNs or TCNs
Advantages DisadvantagesPCNs (Parent country • familiarity with the home • difficulties in adapting to
nationals) office’s goals, objectives, the foreign language and
policies and practices the socioeconomic,
- technical and political, cultural and
managerial competence legal environment - effective liaison and • excessive cost of selecting,
communication with training and maintaining
home-office personnel expatriate managers and - easier exercise of control their families abroad
over the subsidiary’s • the host countries’
operations insistence on localising
operations and on
promoting local nationals in
top positions at foreign
subsidiaries - family adjustment
problems, especially
concerning the unemployed
partners of managers
HCNs (Host country • familiarity with the • difficulties in exercising
nationals) socioeconomic, political effective control over the
and legal environment subsidiary’s operation
and with business practices • communication difficulties
in the host country in dealing with home-office - lower cost incurred in personnel
hiring them as compared • lack of opportunities for the
to PCN and TCN home country’s nationals to - provides opportunities gain international and
for advancement and cross-cultural experience
promotion to local
nationals and,
consequently, increases
their commitment
and motivation - responds effectively to
the host country’s demands
for localisation of the
subsidiary’s operation
TCNs (Third country • perhaps the best • host country’s sensitivity
nationals) compromise between with respect to nationals of
securing needed technical specific countries
and managerial expertise • local nationals are impeded
and adapting to a foreign in their efforts to upgrade
socioeconomic and their own ranks and assume
cultural environment responsible positions in the - TCNs are usually career multinational subsidiaries
international business
managers - TCNs are usually less expensive
to maintain than PCNs - TCNs may be better informed
about the host environment
than PCNs
TABLE 10.1