Foreingnness - curse or blessing?: A case study on Swedish companies in Chile

Abstract: Much of the academic literature in international business presupposes that foreignness is associated with costs and difficulties, e.g. difference in languages, lack of networks and distrust and hostility from local actors. Much of these cost are related to a presumed lack of local legitimacy for foreign companies. This thesis explores the concept foreignness, studying also possible beneficial effects of it. Swedish companies in Chile are investigated and foreignness is related to the possible transfer of their Swedish human resource (HR) practices. The impact of such transfer is thereafter examined; on the Swedish subsidiaries and on Chilean society. The thesis looks into whether foreign market entry and HR practices can, in some way, have positive effects on development. It is an explorative case-study and the aim is not to define reality but rather to contribute to theory and open up for discussion. The results, which are not to be generalized to other populations, show that the Swedish companies in Chile enjoy a very good reputation and that the effects of foreignness are mainly positive to them. This positive image of being Swedish facilitates for them to implement some of their Swedish HR management (e.g less hierarchical organization, more autonomous workers as compared to Chile) and it appears that this increases subsidiary performance. As for the impact on Chilean society, there are indications that implementation of Swedish HR practices can contribute marginally to raise the capabilities of the Chilean workforce and Chilean organizations. This can possibly translate to e.g. higher productivity and a more innovation-friendly environment.