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The purpose of this paper is to examine whether organizations can encourage the loyalty of their international employees through the composition of their expatriate packages.

Two separate but complementary theoretical perspectives – the total reward approach, and the exchange‐based construct of state of the psychological contract (SPC) – are used to explain the affective commitment of expatriates. Hypotheses are developed and tested on a sample of 263 assigned and self‐initiated expatriates from Finland.

A positive SPC relating to tangible universal rewards (i.e. the compensation package traditionally considered in previous expatriate research) is not linked to an increase in the overall affective commitment of expatriates. In contrast, a very strong positive relationship was found between the expatriates' SPC relating to total rewards (which include intangible particularistic rewards (IPR)) and affective commitment.

The sample only includes highly educated Finnish expatriates, which limits the external validity of the results. Moreover, the cross‐sectional nature of this study does not allow for confirmation of the cause‐effect relationship between the SPC and affective commitment.

The results suggest that, as a rule, organizations could improve the retention of their valuable international employees via the exchange of IPR usually found in socio‐emotional and trusting employment relationships.

First, this paper focuses on expatriate perceptions regarding their compensation. Second, it applies the “concreteness” and “particularism” dimensions developed by Foa and Foa to distinguish between the constituting components of the bundle of total rewards and provide an evaluation‐oriented measure of the SPC relating to this bundle. Third, this approach enables explaining expatriates' affective commitment.