THE ROLE OF TALENT MANAGEMENT IN TALENT MIGRATION IN EMERGING MARKETS: FROM BRAIN DRAIN TO BRAIN GAIN
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Introduction 6
Chapter 1. THEORETICAL FOUNDATIONS OF TALENT MIGRATION AND TALENT
MANAGEMENT 11
1.1. Talent migration 11
1.2. Talent management 21
1.3. Global talent management as a mean of reversing brain drain 30
Summary of chapter 1 38
Chapter 2. RESEARCH METHODOLOGY 41
2.1. Setting and data 41
2.2. Questionnaire design 44
2.3. Variables and measures 45
Summary of chapter 2 48
Chapter 3. RESULTS AND DISCUSSION 50
3.1. Factors of talent migration from Russia 50
3.2. Role of talent management practices in reversing brain drain 63
Summary of chapter 3 68
Conclusion 70
List of references 76
Appendix
Chapter 1. THEORETICAL FOUNDATIONS OF TALENT MIGRATION AND TALENT
MANAGEMENT 11
1.1. Talent migration 11
1.2. Talent management 21
1.3. Global talent management as a mean of reversing brain drain 30
Summary of chapter 1 38
Chapter 2. RESEARCH METHODOLOGY 41
2.1. Setting and data 41
2.2. Questionnaire design 44
2.3. Variables and measures 45
Summary of chapter 2 48
Chapter 3. RESULTS AND DISCUSSION 50
3.1. Factors of talent migration from Russia 50
3.2. Role of talent management practices in reversing brain drain 63
Summary of chapter 3 68
Conclusion 70
List of references 76
Appendix
Topicality. It is hard to overestimate the importance of talents in nowadays business reality determined by globalization, growing knowledge intensity and increasing role of emerging economies (Schuler, Jackson, and Luo, 2004; Ahammad et al., 2018). Those companies that fail to manage talents properly end up losing their competitive advantage on the global level (Morris, Snell, and Bjorkman, 2016).
One of the obstacles faced predominantly by firms from developing countries (Marchiori, Shen, and Docquier, 2013) is the fact that due to low international barriers and new reality of global war for talents, talented well-educated employees with high level of human capital have more opportunities than ever to leave a home country to seek better standards of living and career opportunities on developed markets (Clemens, Montenegro, and Pritchett, 2008; Grogger and Hanson, 2008; Tung, 2016). This talent migration phenomenon is often referred to as “brain drain” (Salt, 1997). Despite the ambivalent nature of brain drain outcomes (Doquier and Rapoport, 2009; Coniglio and Brzozowski, 2018; Docquier, 2018), it is its negative effects on source country and local firms that are of particular interest for academics. On the country level, talent outflow reduces per capita growth (Haque and Kim, 1995; Mandelman and Zlate, 2017), erodes domestic knowledge networks (Agrawal et al., 2011), deteriorates country competitiveness (Khilji, Tarique, and Schuler, 2015) and slows down local economic development (Beine et al., 2001). Domestic organizations suffer from decreased firm performance (Latukha, 2015), legitimacy issues (Thunnissen, Boselie, and Fruytier, 2013) and loss of competitive advantage (Tarique and Schuler, 2010).
The concept of global talent management was introduced to let the companies win in this global battle for the best employees. It gained its popularity as a part of strategic management theory for several reasons. First, the companies all over the world acknowledge the importance of talented manager that is able to ensure the success of multinational corporation (MNC), given the increased competition on a global arena (Bartlett and Ghoshal, 1989; Tarique and Schuler, 2018). Moreover, the awareness about the role of global talent management in successful development of competitive advantage enhances as the companies understand that talents may be found on any level of organization (Ready and Conger, 2007). Finally, due to stronger international competition of companies for the same talents (Stahl et al., 2007), the scarcity of talents on the global level becomes evident (Cascio and Boudreau, 2016). As opposed to talent migration, the concept of talent management is a comparatively new research area. This phenomenon has been thoroughly reviewed in theoretical and empirical studies in the context of European, Asian and North American countries. A number of scientific papers are devoted to the discussion of talent definition standalone (e.g. Tansley, 2011; Nijs et al., 2014; Ganaie and Haque, 2017). While most of the research remain focused on the analysis of talent management concept in general (see Aston and Morton, 2005; Collings and Mellahi, 2009; Tarique and Schuler, 2010), some authors discuss discrete talent management practices (e.g. Vaiman, Scullion, and Collings, 2012; Garavan, Carbery, and Rock, 2012; DeTuncq and Schmidt, 2013). Due to significant number of such practices, scholars tend to allocate them in accordance to three major dimensions: talent attraction, development and retention.
Despite the clear importance of talent management for organizational success, according to The Boston Consulting Group (2015), the companies experience many difficulties in this area. MNCs can hardly identify talented employees, especially if they are located in geographically remote areas (Collings, Scullion, and Morley, 2007; Saadat and Eskandari, 2016).
Recent studies claim that the war for talents is about to break out again different from what it used to be (KPMG, 2014). New emerging professional roles, increasing amount of young skilled employees and global environment challenge talent management functions in companies all over the world. However, emerging markets, which still lack managerial skills despite their huge role in world economy (Aulakh, 2007; Budhwar et al, 2017), experience the biggest pressure.
Russia currently faces the most intensive talent outflow in its newest history: the annual number of highly qualified emigrants doubled since 2013 and totaled in 44 thousands of people in 2016 (Russian Academy of Science, 2018). At least quarter of migrants leave the country to obtain better career opportunities and working conditions, and only one third of Russian emigrants consider returning to the home country (Russian Federal State Statistics Service, 2017). Despite the governmental effort, the trend remains negative: since 1990s the number of scientists decreased at least three times compared to 2% increase in developed European countries or 8% raise in developing China (Russian Academy of Science, 2018). All this reveals the urgent need for finding new approaches to retaining talents within the country, and this study proposes talent management to be companies’ response to that. It is especially relevant as talent management systems are underdeveloped in Russian companies: they are often isolated from overall organizational strategy and the implementation of talent management practices lacks regularity (Latukha, 2014).
Research gap. The scholars have been involved in research on global migration for more than a century. While studies exploring the international migration traditionally were economic in nature, its branch devoted to migration of talented individuals endowed with substantial level of human capital, i.e. the phenomenon of brain drain, got considerable popularity with business community. Here, the works that focus on specific groups of migrants (see Gibson and Mckenzie, 2011; Bassioni, Adzaho, and Niyukuri, 2016) are of particular interest. Within the talent migration theory, the special attention has been historically paid to identification of factors that drive this process. The classical research (e.g. Sjaastad, 1962; Hirschman, 1970; Portes, 1976) provides a macro perspective on this issue, whereas more recent studies (including Tung, 2008; Papademetriou and Sumption, 2013; Beamond et al., 2016; Al Ariss and Sidani, 2016 and others) follow more detailed approach. At this time, one of the most commonly addressed classifications of talent migration factors remains to be push and pull approach introduced by Lewin (1951). Some researches (e.g. Kaufmann and Malul, 2015) also mention factors that do not fall under one of these groups though have influence over migration likelihood of individual. Talking about migration, many papers mention the influence it has over different parties: among them, for example, Bhagwati and Hamada (1974), Tung (2008) and Khilji et al. (2015).
While scholars actively discuss policy implications that could mitigate brain drain adverse influence, a role of managerial actions and, specifically, talent management practices is understudied. There are only few researches touching on this point, like one of Hooks et al. (2006), which addressed how human resource management practices can mitigate push factors that make valuable employees to emigrate, and reverse the brain drain process on an organizational level. Within human resource management framework, talent management is perceived as the main tool of attracting, developing and retaining talents (Tarique and Schuler, 2009; Collings, 2014), which strongly implies its potential application to the problem of talent migration. Putting together the facts that talented management practices in general (Latukha, 2015) and talent development practices in particular (Latukha, 2018) are linked to a firm’s performance, the role of talent management in attraction and retention of employees, skill and knowledge outflow from emerging economies, the necessity for further investigation of the role of talent management practices in addressing brain drain, specifically in preventing talent migration from emerging markets, becomes evident.
One of the obstacles faced predominantly by firms from developing countries (Marchiori, Shen, and Docquier, 2013) is the fact that due to low international barriers and new reality of global war for talents, talented well-educated employees with high level of human capital have more opportunities than ever to leave a home country to seek better standards of living and career opportunities on developed markets (Clemens, Montenegro, and Pritchett, 2008; Grogger and Hanson, 2008; Tung, 2016). This talent migration phenomenon is often referred to as “brain drain” (Salt, 1997). Despite the ambivalent nature of brain drain outcomes (Doquier and Rapoport, 2009; Coniglio and Brzozowski, 2018; Docquier, 2018), it is its negative effects on source country and local firms that are of particular interest for academics. On the country level, talent outflow reduces per capita growth (Haque and Kim, 1995; Mandelman and Zlate, 2017), erodes domestic knowledge networks (Agrawal et al., 2011), deteriorates country competitiveness (Khilji, Tarique, and Schuler, 2015) and slows down local economic development (Beine et al., 2001). Domestic organizations suffer from decreased firm performance (Latukha, 2015), legitimacy issues (Thunnissen, Boselie, and Fruytier, 2013) and loss of competitive advantage (Tarique and Schuler, 2010).
The concept of global talent management was introduced to let the companies win in this global battle for the best employees. It gained its popularity as a part of strategic management theory for several reasons. First, the companies all over the world acknowledge the importance of talented manager that is able to ensure the success of multinational corporation (MNC), given the increased competition on a global arena (Bartlett and Ghoshal, 1989; Tarique and Schuler, 2018). Moreover, the awareness about the role of global talent management in successful development of competitive advantage enhances as the companies understand that talents may be found on any level of organization (Ready and Conger, 2007). Finally, due to stronger international competition of companies for the same talents (Stahl et al., 2007), the scarcity of talents on the global level becomes evident (Cascio and Boudreau, 2016). As opposed to talent migration, the concept of talent management is a comparatively new research area. This phenomenon has been thoroughly reviewed in theoretical and empirical studies in the context of European, Asian and North American countries. A number of scientific papers are devoted to the discussion of talent definition standalone (e.g. Tansley, 2011; Nijs et al., 2014; Ganaie and Haque, 2017). While most of the research remain focused on the analysis of talent management concept in general (see Aston and Morton, 2005; Collings and Mellahi, 2009; Tarique and Schuler, 2010), some authors discuss discrete talent management practices (e.g. Vaiman, Scullion, and Collings, 2012; Garavan, Carbery, and Rock, 2012; DeTuncq and Schmidt, 2013). Due to significant number of such practices, scholars tend to allocate them in accordance to three major dimensions: talent attraction, development and retention.
Despite the clear importance of talent management for organizational success, according to The Boston Consulting Group (2015), the companies experience many difficulties in this area. MNCs can hardly identify talented employees, especially if they are located in geographically remote areas (Collings, Scullion, and Morley, 2007; Saadat and Eskandari, 2016).
Recent studies claim that the war for talents is about to break out again different from what it used to be (KPMG, 2014). New emerging professional roles, increasing amount of young skilled employees and global environment challenge talent management functions in companies all over the world. However, emerging markets, which still lack managerial skills despite their huge role in world economy (Aulakh, 2007; Budhwar et al, 2017), experience the biggest pressure.
Russia currently faces the most intensive talent outflow in its newest history: the annual number of highly qualified emigrants doubled since 2013 and totaled in 44 thousands of people in 2016 (Russian Academy of Science, 2018). At least quarter of migrants leave the country to obtain better career opportunities and working conditions, and only one third of Russian emigrants consider returning to the home country (Russian Federal State Statistics Service, 2017). Despite the governmental effort, the trend remains negative: since 1990s the number of scientists decreased at least three times compared to 2% increase in developed European countries or 8% raise in developing China (Russian Academy of Science, 2018). All this reveals the urgent need for finding new approaches to retaining talents within the country, and this study proposes talent management to be companies’ response to that. It is especially relevant as talent management systems are underdeveloped in Russian companies: they are often isolated from overall organizational strategy and the implementation of talent management practices lacks regularity (Latukha, 2014).
Research gap. The scholars have been involved in research on global migration for more than a century. While studies exploring the international migration traditionally were economic in nature, its branch devoted to migration of talented individuals endowed with substantial level of human capital, i.e. the phenomenon of brain drain, got considerable popularity with business community. Here, the works that focus on specific groups of migrants (see Gibson and Mckenzie, 2011; Bassioni, Adzaho, and Niyukuri, 2016) are of particular interest. Within the talent migration theory, the special attention has been historically paid to identification of factors that drive this process. The classical research (e.g. Sjaastad, 1962; Hirschman, 1970; Portes, 1976) provides a macro perspective on this issue, whereas more recent studies (including Tung, 2008; Papademetriou and Sumption, 2013; Beamond et al., 2016; Al Ariss and Sidani, 2016 and others) follow more detailed approach. At this time, one of the most commonly addressed classifications of talent migration factors remains to be push and pull approach introduced by Lewin (1951). Some researches (e.g. Kaufmann and Malul, 2015) also mention factors that do not fall under one of these groups though have influence over migration likelihood of individual. Talking about migration, many papers mention the influence it has over different parties: among them, for example, Bhagwati and Hamada (1974), Tung (2008) and Khilji et al. (2015).
While scholars actively discuss policy implications that could mitigate brain drain adverse influence, a role of managerial actions and, specifically, talent management practices is understudied. There are only few researches touching on this point, like one of Hooks et al. (2006), which addressed how human resource management practices can mitigate push factors that make valuable employees to emigrate, and reverse the brain drain process on an organizational level. Within human resource management framework, talent management is perceived as the main tool of attracting, developing and retaining talents (Tarique and Schuler, 2009; Collings, 2014), which strongly implies its potential application to the problem of talent migration. Putting together the facts that talented management practices in general (Latukha, 2015) and talent development practices in particular (Latukha, 2018) are linked to a firm’s performance, the role of talent management in attraction and retention of employees, skill and knowledge outflow from emerging economies, the necessity for further investigation of the role of talent management practices in addressing brain drain, specifically in preventing talent migration from emerging markets, becomes evident.
This master thesis aimed at defining factors that influence talent migration from Russia and investigation of the role of talent management practices in preventing talented graduates’ migration from Russia. In order to fulfil this goal, a number of objectives were met.
First of all, talent migration theories were reviewed and analyzed. As a result, human capital theory was proposed as the most prominent theoretical foundation of talent migration phenomenon. Brain drain and brain gain concepts were introduced in order to obtain better understanding of the nature and the outcomes of talent migration. As migration of talents is claimed to lead to brain drain and, consequently, decrease of national human capital more often than to its increase in the result of brain gain process, it was important to identify common factors that stimulate talent migration and analyze their peculiarities in the context of Russia. For that purpose, push-pull approach to their classification was adopted and enriched through introduction of three levels of factors, namely country-level, business-level and individual-level. Moreover, the additional type of factors — facilitating — was introduced based on the literature review. Since identification of drivers of talent migration was believed to underlie the ability to reverse brain drain, and the literature failed to provide unambiguous answer to that question in regards to Russia, it was necessary to find out what factors influence migration intention of talented graduates in Russia and how push, pull and facilitating factors influence migration intention of Russian talented graduates. To do that, the quantitative research was conducted. Statistical analysis allowed to slightly amend the proposed classification of talent migration drivers. While business- and individual-level groups of factors were fully verified by factor analysis, country-level factors got allocated to two new groups: internal and external country-level push and pull factors, where the former described overall situation in the country and was proposed to be better observed from inside, and the latter group included factors that are likely to have an impact on external investment decisions because of their external orientation. Facilitating factors were validated in full correspondence to proposed structure.
Despite the theoretical premises of influence of all of the factor groups, only five of them were found to be related to probability of positive migration decision within studied sample, which are individual-, business- and external country-level push factors, closeness to family and international experience. The positive relationship between individual-level push factors and the possibility of positive migration decision is proposed to results from higher psychological affinity of these factors to talented individuals compared to other factors, an individualistic behavior common for generation studied graduates belong to, which makes factors that are more personal- oriented more relevant than more collectivistic drivers, and discussed in previous studies overall importance of non-economic factors for people with high human capital level. As far as relevance of business-level factors is concerned, the rationale behind it is suggested to be based on career- focused attitude of studied group and increased requirements in regards to return on investments in education caused by high quality of educational background of respondents. As for the importance of external country-level push factors, a low level of country development in regards to them is likely to signal about low value any kind of work in local environment may bring to studied graduates, which makes non-return migration the way of increasing this value. Family closeness and international experience are proposed to be significant for migration decision since high affection to family members ties students to home countries even if they see better opportunities elsewhere, while intensive international experience, on the contrary, increases possibility of migration because it makes disadvantages of current situation more obvious as it provides benchmarks from abroad.
Talent management was proposed to be an instrument that allows to fight the national problem of brain drain on the level of separate firms. On the one hand, it was suggested to be an additional help to governmental policies and efforts as currently they seem to be insufficient standalone. On the other hand, implementation of talent management practices was proposed to show faster results and be able to easier adapt to changing conditions of labor market. As the role of managerial actions, specifically in the area of talent management, in tackling problems related to talent migration is not covered in contemporary literature yet, it was crucial to understand whether talent management practices are able to contribute to prevention of brain drain in Russian context. The results of analysis showed that talent attraction, talent development and talent retention practices are of average to high influence over migration decision. Interestingly, all three groups of practices were discovered to be of higher impact for those students who are prone to driving factors of business- and external-country levels, which additionally highlights the crucial role of these practices in reversing brain drain. Moreover, it was found out that talent attraction practices are of higher value for those graduates who have already decided to migrate as well as for those who find individual-level factors relevant, which implies necessity of additional attention towards these practices from the employers’ side.
Based on the results of the research, a number of theoretical and managerial implications might be derived.
First of all, talent migration theories were reviewed and analyzed. As a result, human capital theory was proposed as the most prominent theoretical foundation of talent migration phenomenon. Brain drain and brain gain concepts were introduced in order to obtain better understanding of the nature and the outcomes of talent migration. As migration of talents is claimed to lead to brain drain and, consequently, decrease of national human capital more often than to its increase in the result of brain gain process, it was important to identify common factors that stimulate talent migration and analyze their peculiarities in the context of Russia. For that purpose, push-pull approach to their classification was adopted and enriched through introduction of three levels of factors, namely country-level, business-level and individual-level. Moreover, the additional type of factors — facilitating — was introduced based on the literature review. Since identification of drivers of talent migration was believed to underlie the ability to reverse brain drain, and the literature failed to provide unambiguous answer to that question in regards to Russia, it was necessary to find out what factors influence migration intention of talented graduates in Russia and how push, pull and facilitating factors influence migration intention of Russian talented graduates. To do that, the quantitative research was conducted. Statistical analysis allowed to slightly amend the proposed classification of talent migration drivers. While business- and individual-level groups of factors were fully verified by factor analysis, country-level factors got allocated to two new groups: internal and external country-level push and pull factors, where the former described overall situation in the country and was proposed to be better observed from inside, and the latter group included factors that are likely to have an impact on external investment decisions because of their external orientation. Facilitating factors were validated in full correspondence to proposed structure.
Despite the theoretical premises of influence of all of the factor groups, only five of them were found to be related to probability of positive migration decision within studied sample, which are individual-, business- and external country-level push factors, closeness to family and international experience. The positive relationship between individual-level push factors and the possibility of positive migration decision is proposed to results from higher psychological affinity of these factors to talented individuals compared to other factors, an individualistic behavior common for generation studied graduates belong to, which makes factors that are more personal- oriented more relevant than more collectivistic drivers, and discussed in previous studies overall importance of non-economic factors for people with high human capital level. As far as relevance of business-level factors is concerned, the rationale behind it is suggested to be based on career- focused attitude of studied group and increased requirements in regards to return on investments in education caused by high quality of educational background of respondents. As for the importance of external country-level push factors, a low level of country development in regards to them is likely to signal about low value any kind of work in local environment may bring to studied graduates, which makes non-return migration the way of increasing this value. Family closeness and international experience are proposed to be significant for migration decision since high affection to family members ties students to home countries even if they see better opportunities elsewhere, while intensive international experience, on the contrary, increases possibility of migration because it makes disadvantages of current situation more obvious as it provides benchmarks from abroad.
Talent management was proposed to be an instrument that allows to fight the national problem of brain drain on the level of separate firms. On the one hand, it was suggested to be an additional help to governmental policies and efforts as currently they seem to be insufficient standalone. On the other hand, implementation of talent management practices was proposed to show faster results and be able to easier adapt to changing conditions of labor market. As the role of managerial actions, specifically in the area of talent management, in tackling problems related to talent migration is not covered in contemporary literature yet, it was crucial to understand whether talent management practices are able to contribute to prevention of brain drain in Russian context. The results of analysis showed that talent attraction, talent development and talent retention practices are of average to high influence over migration decision. Interestingly, all three groups of practices were discovered to be of higher impact for those students who are prone to driving factors of business- and external-country levels, which additionally highlights the crucial role of these practices in reversing brain drain. Moreover, it was found out that talent attraction practices are of higher value for those graduates who have already decided to migrate as well as for those who find individual-level factors relevant, which implies necessity of additional attention towards these practices from the employers’ side.
Based on the results of the research, a number of theoretical and managerial implications might be derived.