Whether a firm should use expatriates, host-country nationals, third-country nationals (or a mixture of the three) to run its overseas operations depends on the answers to several other questions. Some of these are as follows.
Are the overseas operations new or established?
In the case of a completely new venture in a foreign country, it will usually be necessary to provide a strong lead from the company headquarters. An expatriate who has a detailed operational knowledge of the firm and is completely familiar with its culture will usually need to be in charge, with one or more lieutenants from the host country who are familiar with the business and legal climate of the new arena.
What is the business of the firm and how does the overseas operation relate to that business?
If the firm is, for instance, a retailer and its overseas operations consist purely of manufacturing, it may be possible and desirable for this to be run largely or entirely by host-country nationals or third-country nationals. However, if the retailer wished to run retail outlets in that country, expatriates from the headquarters would probably have to oversee the branding, consistency, and quality control, at least initially.
How much does the firm’s business vary between countries?
On a related note, how truly international is the business? That is to say, does it rely on international cooperation and coordination, or is it merely replicating the same model in various countries? This is particularly relevant for firms which sell services. Take an international law firm as an example. It will obviously need to appoint an expatriate familiar with the governing law of the firm’s home country as well as a host-country national who knows the law of the new jurisdiction. Who ultimately runs the firm will probably depend on where the majority of the firm’s business is located.
In general terms, expatriates from the firm's central office will generally be necessary in the early stages. Host-country nationals will initially play more of a supporting role, though they may take over in time after they have absorbed the culture of the firm. Some countries, particularly in the Middle East, may require the involvement of host nationals in the firm's administration as a matter of law.