The Diffusion of Calculative and Collaborative HRM Practices in European Firms

The aim of this paper is to trace and explain variations in calculative and collaborative human resource management (HRM) practices between companies and across national borders. Variations and similarities are explained in terms of the convergence and divergence of HRM practices determined by national institutions, and the increasing influence of multinational companies (MNCs). We explore the diffusion of HRM practices in Europe over time, using data sets from two surveys conducted in several European countries in 1995 and 2000. We use institutional explanations for the development of three selected bundles of HRM practices: individual, calculative performance‐oriented practices; collective incentive schemes for the alignment of interests; and collaborative practices that seek to enhance the commitment of employees. We found substantial effects of country‐specific institutions and of the country of origin of MNCs, which clearly support the institutional duality thesis. Foreign‐owned MNCs, especially those that are US‐based, appear to moderate country‐specific institutional effects on the diffusion of the three HRM bundles.     

Host country uncertainty,intra‐MNC production shifts,and subsidiary performance

This study examines whether or not production shifts occur among the foreign subsidiaries of multinational corporations (MNCs) under the influence of differing macroeconomic conditions in their host countries. This study compares intra‐MNC production shifts under the influence of exchange rate changes across different host countries. Our findings indicate that the increase of a subsidiary's production at the time of its host country currency depreciation decreases the production of other subsidiaries within the same MNC network. Our empirical evidence also shows that MNC subsidiaries that engage in production shifts with other affiliated subsidiaries command a higher performance. Copyright © 2012 John Wiley & Sons, Ltd.     

R&D subsidiary isolation in knowledge-intensive industries: evidence from Austria

We investigate R&D subsidiary isolation within Multinational Corporations (MNCs) competing in knowledge-intensive industries. For such MNCs, accessing knowledge and nurturing the innovative potential of R&D subsidiaries is vital for on-going competitiveness. This, according to conventional thinking, requires integration of the subsidiary within the host country as well as internally within the MNC. Recent studies have shown, however, that overseas subsidiaries can become isolated (i.e., losing requisite integration), even in high-technology sectors. We tackle this issue by focusing on organizational factors at corporate and subsidiary levels that have the potential to explain subsidiary isolation. We analyze a sample of 45 foreign-owned Austrian subsidiaries undertaking R&D in knowledge-intensive industries using a combination of questionnaire and secondary data. The results suggest that parent and subsidiary experience, the degree of early-stage research conducted by the subsidiary and the use of training and rotation practices by the subsidiary, all act to counter isolation. Interestingly, we find that proximity between parent and R&D subsidiary does not play a significant role in predicting isolation. We also show how these factors influence communication frequency between the R&D subsidiary and various actors within the internal and the external networks in different ways.     

The increasing role of subsidiary boards in MNCs: An empirical study

Little research has been done to date on the role of subsidiary boards (SBs) in MNCs. A two-phase survey research design has yielded responses from 90 subsidiaries in 36 MNCs based in Europe, North America, and Japan. The sample provides evidence that: (1) SBs are perceived to be in transition from lesser to greater proactivity, and (2) MNCs with parent headquarters in North America, Europe, and Japan perceive the usefulness of these boards in different ways. The results indicate an increasingly active use of these boards in selective advisory and strategic roles. Some recommendations are presented for CEOs, chairmen, and subsidiary directors who are interested in designing their SBs to take better advantage of already legally mandated, but often underutilized, structures. SBs are not a panacea for resolving tensions between parents and subsidiaries and for monitoring changes in host country environments; however, they can provide added strategic governance for subsidiaries.     

MNEs and corruption: the impact of national institutions and subsidiary strategy

We argue that the pressure MNE subsidiaries face to engage in corrupt practices in their host country varies positively with the institutionalization of corrupt practices in both host and home country environments. We further argue that the relationship between an MNE's home country environment and the pressure it faces in the host country is moderated by its localization strategy. Results suggest a positive relationship between the host country corruption environment and the pressure subsidiaries face to engage in bribery locally. Mixed results emerged concerning MNEs from home countries participating in the OECD Convention for Combating Bribery. Results concerning the impact of the home country corruption environment are best viewed in light of significant moderating effects. When MNEs did not have local partners, firms from less corrupt home countries reported less pressure to engage in corrupt practices locally; however, the presence of local partners eliminated this relationship. Results will help managers understand the pressures their firm is likely to face when operating in corrupt host country environments, and also offer guidance concerning how the firm might reduce its exposure to those local institutional pressures. Copyright © 2010 John Wiley & Sons, Ltd.     

The framework of a global company: A conceptualization and preliminary validation

Clearly, a substantial challenge for multinational corporations (MNCs), in the current environment of intensified competition and rapid industry consolidation, is one of much greater worldwide integration. Necessitated by intense competitive pressures, MNCs are integrating their disparate country operations in order to achieve economies across markets and operating units. This article integrates the motives and facilitators of the progression towards commonality in practices and metrics across subsidiaries and affiliates into a comprehensive framework of a global company. Preliminary results from a pilot study of the characteristics of common global practices among a sample of MNCs are presented as an initial validation of the conceptualization. The article also explores the benefits MNCs derive from the implementation of common practices across their worldwide operations, in pursuit of a global strategy.     

The Dominance Effect? Multinational Corporations in the Italian Quick‐Food Service Sector

This paper is based on a study of the employment practices of one Italian‐owned multinational corporation (MNC) and one US‐owned MNC in the Italian quick‐food service sector and examines such issues as work organization, unionization, employee representation and pay and conditions. The paper focuses on the concept of ‘dominance’ and the related convergence and divergence theses. The findings suggest that dominance can not only be interpreted as a mode of employment or production emanating from one country, but could also be associated with one dominant MNC in one sector. Consequently, it is argued that while the effect of host and home country influences may be significant factors in cross‐border employment relations practices, more attention needs to be paid to organizational contingencies and the sectoral characteristics within which firms operate.     

MNC foreign investment and industrial disasters: The moderating role of technological,safety management,and philanthropic capabilities

Research Summary: We investigate how industrial disasters can discourage FDI and how MNCs' technological, safety management, and philanthropic capabilities can moderate these effects. Using two unique panel data sets of entry and expansion of U.S. wholly‐owned manufacturing subsidiaries overseas, we found that industrial disasters are associated with reduced foreign entry of wholly‐owned subsidiaries in the disaster industry, but not for all firms in the host country experiencing the disaster. We also found that MNCs' technological, safety management, and philanthropic capabilities can, in some cases, positively moderate the negative relationships between industrial disasters and the foreign entry and expansion of wholly‐owned subsidiaries. Additionally, three‐way interactions with government stability suggest that technological and safety management capabilities substitute government stability in managing industrial disasters, while philanthropic capability complements government stability. Managerial Summary: How can MNCs' technological, safety management, and philanthropic capabilities overcome the effects of industrial disasters such as chemical spills and explosions in host countries? Our results show that industrial disasters are associated with reduced foreign entry of wholly‐owned subsidiaries in the industry in which the industrial disaster occurs, but not for other firms operating in the country experiencing the disaster. However, an MNC's technological capability can, in general, lower the negative consequences of industrial disasters in both the entry and expansion of its wholly‐owned subsidiaries. Regarding the institutional quality of a host country, the results imply that MNCs should develop philanthropic capability when the government stability of the host country is strong, and develop technological and safety management capabilities when the government stability is weak.     

Dominance Effects from Local Competitors: Setting Institutional Parameters for Employment Relations in Multinational Subsidiaries; a Case from the Spanish Supermarket Sector

Dominance effects are normally associated with multinational corporations (MNCs). However, we argue that a strong local competitor can create ‘dominance effects’ setting the institutional parameters for employment relations in multinational subsidiaries. Moreover such an effect can be persistent. In this case the Spanish‐owned El Corte Inglés (ECI) used its power and influence to establish an employer's federation and two ‘yellow unions’. These yellow unions infiltrated the French‐owned MNC Carrefour and most of the Spanish supermarket sector by the early 1980s and continue to dominate collective bargaining rounds and works council elections, marginalizing the main independent trade unions. This has resulted in poor pay and working conditions and a lack of effective employee representation across most of the Spanish supermarket sector. The fact that Carrefour established an international framework agreement to observe union rights in 2001 has as yet not changed this situation.     

Automation,skill requirements and labour‐use strategies: high‐wage and low‐wage approaches to high‐tech manufacturing in the automotive industry

In light of debates about advanced manufacturing and concepts like Industrie 4.0, this article compares labour‐use strategies in highly automated automotive supplier plants in a high‐wage country (Germany) and a low‐wage region (Central Eastern Europe). It shows considerable differences regarding skill requirements on the shop floor and the use of precarious employment contracts and examines three potential factors that explain them: national institutional frameworks, the power of employee representatives and the role of the plant within the companies and value chains. The analysis shows that the labour‐use strategies depend less on process technologies per se, but rather on the institutional framework and the role of the factory in the rollout and ramp‐up of new products and new process technologies. Such a role requires close cooperation between employees in the manufacturing areas and in product development, which in turn requires particularly high skills. The role of employee representatives in influencing labour‐use strategies proves less important. The article uses quantitative data from a survey of employee representatives, as well as qualitative data from in‐depth company case studies.     

R&D employee tenure in MNC subsidiaries: the role of institutional distance and experience

Long tenure of research and development (R&D) employees helps organisations to utilise employees' knowledge over a sustained time period and strengthen their competitive advantage. It also allows organisations to benefit from the training investments made on their R&D employees. Thus, identifying the determinants of R&D employees' tenure is crucial for designing effective R&D employee retention strategies. This paper analyses the factors explaining R&D employees' tenure in the subsidiaries of multinational corporations (MNCs). Building on institutional theory, we claim that formal and informal institutional distance between MNCs' home and host country might lead to R&D employees' short tenure in subsidiaries. We further suggest that R&D employees' international experience and MNCs' host country experience play a moderating role. We find support for our hypotheses by mobilising an original database that combines patent data and the LinkedIn profiles of 939 R&D employees in 256 MNC subsidiaries in India.     

The Layering of Meso‐Level Institutional Effects on Employment Systems in Japan

Japan's corporate governance and employment relations systems have been under considerable pressures to reform towards a more Anglo‐American model, against a back‐drop of intensified global competition and slow economic growth over two ‘lost’ decades. But what is the relationship between these systems, and specifically, how does corporate governance structure condition employment relations practice? This paper adopts the ‘Systems, Society, Dominance and Corporate (SSDC) effects’ framework in order to contextualize and evaluate the outcomes of these pressures, particularly in the period following the 2007–2008 global financial crisis. It reports case study data from various parts of the Japanese economy drawn from a series of firm‐based interviews and a variety of secondary sources. It is argued that there has been a strong degree of continuity in certain employment practices, such as lifetime employment, even in relatively new high technology firms, but that the pattern for other practices, such as seniority‐based pay, is more mixed with increasing differentiation between industries and individual organizations. We articulate a layered assessment of the varying SSDC effects at play in corporate Japan. This differentiation across industries and organizations is a function both of strategic choice (corporate effects) and also the increasing variation in the meso‐level institutional pressures that are experienced at organizational level; that is, the differentiation in the sources and nature of dominance effects that are relevant.     

Multinationals' response to major disasters: how does subsidiary investment vary in response to the type of disaster and the quality of country governance?

We investigate the response of multinational corporations (MNCs) to major disasters at the subsidiary level. We examine the type and severity of the disaster and whether and how country governance moderates the relationship between exogenous disaster risk and subsidiary investment. We test our hypotheses with a panel dataset of 71 large European MNCs and their subsidiaries (2001–2006) with 31,285 total observations. Findings suggest that the number of a firm's foreign subsidiaries is likely to decrease in response to terrorist attacks or technological disasters but not natural disasters, regardless of the severity of the event. For terrorist activities, MNC subsidiary‐level disinvestment is less likely when the quality of host country governance is higher. Copyright © 2011 John Wiley & Sons, Ltd.     

The effect of host country long term orientation on subsidiary ownership and survival

This paper examines the role which the long term orientation (LTO) dimension of host country culture plays in transforming multinational corporations’ (MNCs’) focus from transaction cost to transaction value in the context of MNC subsidiary ownership and survival. We used a sample of 10,236 overseas subsidiaries established by 1,291 Japanese MNCs in 29 host countries with varying levels of LTO to test our hypotheses. Results first showed that LTO has a direct positive effect on ownership levels. Second, we observed that there were positive interactions between LTO and cultural distance, and between LTO and geographic distance, on ownership levels. Third, we found that there were positive interactions between LTO and subsidiary ownership level, and between LTO and cultural distance, on subsidiary survival. The theoretical and practical implications of these findings are discussed in terms of the vital role LTO plays in determining whether transaction value or transaction cost considerations prevail in MNCs’ ownership strategies, and how MNCs can better take advantage of host country LTO and improve the survival likelihood of their subsidiaries.     

Economic Citizenship and Workplace Conflict in Anglo‐American Industrial Relations Systems

This article argues that the expansion of individual employment rights is presenting a series of challenges to the collective model of economic citizenship that prevailed in most of the Anglo‐American world during the last century. We examine developments in the management of workplace conflict in Anglo‐American countries to highlight the institutional manoeuvrings that have been taking place to mould the nature of national regimes of employment rights. We argue that Governments almost everywhere are actively seeking to create institutional regimes that weaken the impact of employment legislation and we find that statutory dispute resolution agencies are eagerly trying to develop organizational identities that are aligned with rights‐based employment disputes.     

Once bitten twice shy? Experience managing violent conflict risk and MNC subsidiary‐level investment and expansion

Research summary : Researchers have increasingly emphasized the need to better understand how context affects the value of experiential learning. We address this gap by investigating when corporate‐level experience can be leveraged across borders and when experience needs to be country‐specific to be valuable. We test our hypotheses using a unique multi‐source panel dataset of 379 large MNCs from 29 home countries and their subsidiaries in 117 host countries over a 10‐year period, 1999–2008. In contrast to prior research, we find that the ability of a firm to leverage its experience with political risk across borders is limited by the type of risk involved. Experience with nonstate violent conflicts may be transferrable, but only country‐specific experience appears to yield measureable benefits for conflicts involving the host country government . Managerial summary : Violent conflicts not only increase social unrest but also impose added costs of doing business. For managers who find themselves in the midst of violent conflicts or who wish to survive and potentially gain a competitive advantage in operating in such challenging environments, is it possible to learn to manage such a seemingly “unmanageable” problem? In contrast to studies that have examined other types of political risk, we find that the ability of a firm to leverage its experience with violent conflict risk across borders is limited. Specifically, only country‐specific experiential knowledge about how the host government prepares and manages such conflict risks yields measureable economic benefits for MNCs and their subsidiaries operating in countries during conflict . Copyright © 2016 John Wiley & Sons, Ltd.     

The importance of internal and external R&D network linkages for R&D organisations: evidence from Singapore

This paper examines the importance of internal and external R&D networks for R&D organisations of multinational firms (MNCs) in Singapore and investigates corresponding R&D management requirements in this context, namely a late-industrialising country in Asia. A unique feature of Singapore is its ability to attract 'high quality' foreign direct investment, involving activities of higher value added and more complex technology without having developed full-fledged R&D activities among its business organisations, thus creating a challenging situation for subsidiary R&D managers, both in the internal R&D organisation as well as in the external research environment. This paper analyses these issues.
Based on in-depth interviews with 53 R&D subsidiaries of MNCs operating in Singapore, this paper identifies internal and external R&D management needs. Through our analysis of data gleaned from these interviews, we found that subsidiary R&D managers need to increase and/or maintain the strategic importance of their R&D site internally within their global corporate R&D organisation. This requires constant upgrading of the technological level at the R&D subsidiary and intense communication with headquarters as well as other R&D subsidiaries. Furthermore, our findings indicate that in the external research environment, subsidiary R&D managers need to create an efficient local network of external players. If these internal and external issues are properly addressed, the R&D subsidiary can effectively contribute to the corporate R&D organisation and be a critical partner in the local research network. Lessons learned from the Singapore experience include the need to develop sufficient local expertise as well as to change the mindset of managers to focus on creativity rather than precise execution.     

Unraveling Home and Host Country Effects: An Investigation of the HR Policies of an American Multinational in Four European Countries

This article argues that the institutional "home" and "host" country effects on employment policy and practice in multinational corporations (MNCs) need to be analyzed within a framework which takes more account both of the multiple levels of embeddedness experienced by the MNC, and processes of negotiation at different levels within the firm. Using in-depth case study analysis of the human resource (HR) structure and industrial relations and pay policies of a large U.S.-owned MNC in the IT sector, across Germany, Ireland, Spain, and the United Kingdom, the article attempts to move towards such a framework.     

Rule Enactment in a Pan‐European Labour Market: Transnational Posted Work in the German Construction Sector

This article analyses the micro‐level rule enactment of the posting of workers framework in the German construction sector. I examine how actors draw on different power resources in order to influence policies without formal negotiation within transnational workspaces and thereby initiate institutional change. Drawing on interviews with posted workers, managers, unionists, works councillors and labour inspectors I show how transnational subcontracting allows the emergence of different regulatory spaces at national and workplace level. The article concludes that the informal renegotiation of employment relations in transnational workspaces is likely to destabilize the posting framework negotiated at policy level.     

Does the UK have a ‘comparative institutional advantage’ that is supportive of the IT services sector?

This paper applies a ‘sector‐in‐country’ approach to examine the institutional conditions associated with the recent expansion of the information technology services sector in the UK. The findings reveal both synergies and tensions between the business and employment conditions of the sector and the wider institutional characteristics of the UK employment model.