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Theoretical Background

Social identity theory (Tajfel & Turner, 1979), uncertainty identity theory, similarity-attraction paradigm (Byrne & Lamberth, 1971), and attraction-selection-attrition framework (Schneider, 1987) explain why traditional expatriates are so homogeneous contextually that they exclude other diversities regardless of talent. With respect to human capital and innovation, details of how a homogeneous group impacts innovation will be further discussed later in this section.

Social Identity Theory and Uncertainty Identity Theory

Social identity theory (Tajifel, 1982) states that people tend to identify themselves as members of a social group (i.e., demographic characteristics are likely to be used as bases for social categorization such as gen?der, social class, marital status, nationality, etc.) and differentiate their own group (us) from other groups (them). To increase their positive distinctiveness, people unconsciously or automatically have more favorable views of “in-group” rather than the “out-group” (Ashforth & Mael, 1989). This human tendency to favor “in-group,” known as “in-group favoritism,” triggers bias and discrimination against the “out-group,” and this bias is quite independent of talent.

The Second World War was highly influential in the formation and development of social identity theory. Having a strong connection to a certain group identity was said to buffer the stress of uncertainty. As a response to prevailing uncertainties during the war, collective identification was inspired while limiting individualistic approaches to the study of intergroup relations (Oyserman, 2007).

With the emphasis on its resolving uncertainties, social identity theory has been subsequently extended to uncertainty identity theory (Hogg, 2007). According to uncertainty identity theory, people fundamentally want to reduce uncertainty and an uncertain environment motivates such basic needs of uncertainty reduction by means of reinforcing group identification (Grieve & Hogg, 1999; Hogg & Grieve, 1999; Hogg & Mullin, 1999).

Uncertainty is an integral part of expatriation; living abroad, working in a multinational environment, and dealing across cultures are fraught with uncertainty. To the MNE, sending an expatriate overseas entails uncertainty. Aside from the loss of key global talent, the financial costs of expatriate failure, either direct or indirect, and its underperformance implications are usually formidable (Collings, Scullion, & Morley, 2007; Harzing & Christensen, 2004; Meyskens et al., 2009). Given the number of uncertainties related to expatriation, MNEs are attracted to those who are more similar to the traditional expatriate when it comes to selection. In other words, MNEs tend to opt for the safer choice, which is generally the white male.

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