The Distinctiveness of Employment Relations within Multinationals: Empirical Evidence on Patterns of Developmental Concerns

Many questions remain unsolved as regards the distinctiveness or specificity of employment relations within multinationals. What does it change for workers (and their unions) to be employed by an MNC, as opposed to working for a domestic organization that shares many similar features? In this study we draw from the conceptualization of employment relations within MNCs as a ‘contested terrain’ (Edwards and Bélanger, 2009) to elaborate further on the internal regime competition that fosters political games between HQs and subsidiaries within MNCs. We consider these issues of power and politics as central to understanding the distinctiveness of employment relations within MNCs (e.g. Morgan, 2011; Geppert and Dӧrrenbӓcher, 2014). Does internal regime competition influence the conduct of labour relations? Does it foster more negotiation and deliberation between local management and labour regarding longer-term arrangements, in spite of the structural divide that characterizes the employment relationship?

On the basis of recent field research in the subsidiaries of four multinationals located in four countries in Europe, we study the social processes leading to emerging forms of negotiation based on ‘developmental concerns’ (Edwards et al., 2006; Bélanger and Edwards, 2007). These arrangements occur between local managers, employees and local unions regarding the regulation of flexibility and job security. By applying the concept of developmental concerns, we make the connection between two areas that have so far been kept too distant in the literature, that is the study of MNCs and the well-established stream of workplace industrial relations, in particular its analyses of the politics of production. Different patterns of developmental concerns are explained by analysing relations that occur ‘vertically’, between HQs and subsidiaries, and those by which local plants are led to interact and to compare each other ‘horizontally’, in various countries.

Methodology and Research Design

We study some subsidiaries of two US and two French-based mechanical engineering multinationals that are located in Germany, Belgium, Italy and the United Kingdom, using a total of 16 cases. The cases were specifically selected to foster comparative analysis on both institutional and production matters. The empirical data presented here stem from 96 semi-structured interviews (90-120 minutes long) and document analysis. Interviews were carried out between 2010-2012. Follow-up interviews were conducted in 2013. This research design allows for multi-level analysis within the four companies (workplace, European headquarters) and comparison between four countries.

Findings

Flexibility and employment security practices differed in different national institutional systems, particularly collective bargaining structures. However, those systems proved empirically insufficient to explain the variety of arrangements and social compromises between management and labour, at the subsidiary level. Comparative analysis illustrates that such arrangements are influenced by key structuring factors such as the level of competition, the technology and the nature of the product, which are likely to create more or less favourable ground for dealing with developmental concerns. They also relate to the patterns of corporate control and the horizontal set of relations between subsidiaries, mentioned above.

It is the combination of these factors, in a given operating unit of a given multinational, that creates a workplace regime offering more or less favourable conditions for management and labour to find ground for compromise (or not). We empirically and conceptually identify two different patterns of ‘developmental concern’ arrangements (‘consensus-based’ and ‘concession-based’) made between management and labour. ‘Consensus-based’ arrangements consist in the construction of positive-sum compromises between local agents, at the subsidiary level, in order to maintain or reinforce their strategic position within the multinational. This is the result not only of local union capacities within their own distinctive institutional context, but also dependent on corporate features, and in particular on the type of control between HQs and subsidiaries. Overall, the case studies did not directly reveal distinct country-of-origin effects on local flexibility-security outcomes. However, the country of origin dimension came up through the control mechanisms within companies. 

Theoretical implications

Two observations have broader implications for theory. First, each multinational corporation has its own particular traits, its own ways of operating and ‘doing politics’. In the words of Elger and Smith, each firm has its own ‘distinctive corporate repertoire’ (2005: 64). As shown eloquently by Kristensen and Zeitlin (2005), this has much to do with the ‘historical legacies’ of the MNC which our study confirms. These notions lead us to be more specific about what is too generally referred to as ‘corporate effects’. Some of these traits and ways of ‘doing business’ often prevail over national institutions. Second, and relatedly, it is now acknowledged in the literature that institutions should not be conceived as ‘given’ or static (for instance, Ferner et al., 2012), although the implications of this are too often overlooked. This paper documents how the agents involved in employment relations within MNCs interpret institutions, use them (or not) as strategic leverages and play political games within this set of constraints and opportunities, bending the rules if necessary.

References

Bélanger, J. and Edwards, P. (2007). ‘The Conditions Promoting Compromise in the Workplace’. British Journal of Industrial Relations, 45 (4): 713-734.

Edwards, P., Bélanger, J. and Wright, M. (2006) ‘The Bases of Compromise in the Workplace: A Theoretical Framework’. British Journal of Industrial Relations, 44 (1): 125-145.

Edwards, P. and Bélanger, J. (2009). ‘The Multinational Firm as a Contested Terrain’. In D. Collinson and G. Morgan (eds.), Images of the Multinational Firm. Wiley, 193-216.

Elger, T. and Smith, C. (2005). Assembling Work. Oxford UP.

Ferner, A., Edwards, T. and Tempel, A. (2012). ‘Power, Institutions and the Cross-National Transfer of Employment Practices in Multinationals’. Human Relations, 65 (2): 163-187.

Geppert, M. and Dӧrrenbӓcher, C. (2014). ‘Politics and Power within Multinational Corporations’. International Journal of Management Reviews, 16 (2): 226-244.

Kristensen P.H. and Zeitlin J. (2005). Local Players in Global Games. Oxford UP.

Morgan, G. (2011). ‘Reflections on the Macro-Politics of Micro-Politics’. In C. Dӧrrenbӓcher and M. Geppert, M. (eds.), Politics and Power in the Multinational Corporation. Cambridge UP, 415-436.