MNC Restructuring, Local Trade Union Strategies and Institutional Embeddedness: A Comparative Analysis of France and Canada
The issue of the embeddedness of firms and multinational corporations (MNCs) in regional institutions and business systems has been of increasing interest to researchers in the social sciences (see, for example, Almond, 2011; Almond and Ferner, 2006). While treating economic activities as a social process and as complex sets of interactions between firms, workers, and institutions (Dicken, 2011) yields important theoretical and empirical insights, the ways that trade unions interact with regional institutions and political authorities have been insufficiently investigated. This is particularly the case because, in a context of economic crisis and multinational restructuring, unions’ capacities for mobilizing institutions and public policies are crucial to enhancing their power and to preserving industrial competitiveness.
Different theoretical approaches have been advanced to understand these issues. Rutherford and Holmes (2008, 2012) argue that unions, institutions and labor law are of diminishing influence in North America’s regional auto clusters, since lead firms in the sector have played a critical role in innovation and the restructuring of production networks. This highlights the apparent importance of contingencies relating to MNC structures, which seem too have more explanatory power than agency theories for understanding restructuring processes. In contrast, Pulignano and Stewart (2012) have shown that unions from certain regimes (i.e. « high density » or « corporatist » institutional regimes) can use regional institutions and public policies to build effective strategies against restructuring. Thus, regime-type still appears to matter when seeking to explaining differences in trade union actions with regards to MNC restructuring. A core problem with the institutional literature on this question is its inadequate treatment of power in labor relations. This paper draws on the work of Lévesque and Murray (2005, 2010), who have argued that power resources (internal, external and strategic capacity) are the main factors differentiating “proactive” from “defensive” strategies in the context of restructuring.
From a methodological standpoint, this paper is based on local case studies on firms that have faced restructuring in the auto suppliers sector in particular regions in France and Canada. France (corporatist) and Canada (liberal) represent two different institutional regimes and political traditions. The aim of examining two case studies in each country was to explore in-country and between-country variations, so as to understand how local unions build up strategies and interact with economic development and political institutions in order to save their plants from closure. The in-country variation ensures that institutional arguments are not given determinative weight, merely because of the research design. This study involved 45 qualitative interviews, conducted from 2012 to 2015, with union officers, employees and researchers. Secondary source documents were also collected and analyzed to complement these interviews. Three frames of analysis informed our analysis: an union power resources, social dialogue and relationships with managers, and institutional interactions.
This paper argues that we cannot ignore the power dynamics and social relations within the firm, as these are critical aspects of effective strategies towards multinational restructuring. This argument goes beyond the narrative arguing that trade union embededdness in regional institutions is important. Even though institutional regimes and densities have impacts on trade unions’ strategic repertoires, these structural aspects do not explain how and whyactors, inside and across regimes, will build one strategy in favour of another. Furthermore, this paper also raises questions about the effects of public policies and institutions on economic development in an era of globalization.
The main results of this study show that, while all local trade unions in the four cases have tried to mobilize regional/economic development institutions and political networks in order to save plants from closure, this mobilization remained ineffective and was not a crucial factor to strategic success. Moreover, while France and Canada show differences in institutional structures, political traditions and trade union strategic repertoires, those differences do not fully explain the variations in terms of responses to restructuring. Despite the significant variations between the contexts, our analysis does not find significant differences in the mobilization of regional development institutions or public policies. In the four contexts, policy makers had no impact on the process and have revealed, to different degrees, some indifference regarding the manufacturing sector and local plants. However, the types of power and social relations observed across the four cases were highly important to the unions' strategic success. One case in France and another in Canada demonstrated similar types of power (high levels of strategic capacity, internal and external solidarities) as well as a tradition of rich social relations within their firms. These cases were associated with a “proactive” strategy on the part of the unions. However, the other two unions examined in the two countries (one in each country) possessed far fewer power resources and demonstrated different pattern of social relations within their MNC. These cases were associated with “defensive” strategies. Unions in this scenario were significantly less effective at countering restructuring.
The results of this study are thereby consistent with the argument of Rutherford and Holmes (2012), which is that the influence of laws and institutions on workplace governance in the auto sector appears to be diminishing. Contrary to mainstream institutional literature on restructuring, this study finds that power relations play the most critical role in shaping strategic orientations and outcomes. Furthermore, our research shows that the development of power resources can enhance union capacity (Fairbrother, 2015; Lévesque and Murray, 2005, 2010), which is of critical importance to the effectiveness of union strategies. Given these findings, trade unions must explore new ways to construct strategies in response to plant closure threats. Strategies should take into consideration how interactions between local contexts, new frames of reference, and social relationships can precipitate, under certain circumstances, the more effective regulation of multinational corporations. This is particularly crucial in a context where a certain disengagement of the state with regards to economic development in the manufacturing sector is much in evidence.