MNCs and Skills Policy Networks: Endogenising Labour Market Skills
This paper considers the influence of subsidiaries of MNCs in external labour markets. We suggest that viewing labour markets as an endogenous MNC resource brings the roles of firms and skills policy actors into focus and questions how traditional roles and resources are viewed. This paper draws on interview data and social network analysis to identify the ways in which foreign MNC subsidiaries engage with labour market skills actors in two subnational regions of England. Our analysis suggests the interplay between firm and policy actors is greater than traditional HRM and IR approaches might suggest, and can involve firms moving beyond raids on external labour market skill toward the co-creation of talent resources and partial endogenisation of labour markets skill. The implications for MNC subsidiary strategy, national policy and individuals are considered.
INTRODUCTION
The competitive value of human resources is derived from a firm’s capacity to align and integrate its human resource management (HRM) decisions with its operational and strategic objectives (Huselid, 1995). It is this co-ordination and control of the human resources – that fall within an organisational boundary - that define an HRM system and its component parts as endogenous firm resources (Huselid, Jackson and Schuler, 1997). The talent that resides outside the firm, in for example labour markets and educational environments is viewed as an exogenous resource which firms have limited influence or control of. Nevertheless, the significance of these latter resources to the sustained competitive advantage of a firm and the attraction and retention of FDI are notable. We argue distinctions between endogenous and exogenous resources may be theoretically constraining, limiting our ability to appreciate how labour market skills systems and firms are reciprocally impacted. The international business literature has recognised the limitation of such divisions which can underestimate the change and learning that takes place between firms and their practices on the one hand and policy actors and institutional structures on the other (Monaghan et al 2015). For a subsidiary of a multinational the local talent environment often takes on a particular strategic saliency, because of local talent’s implicit or explicit link to the initial investment decision or on-going retention of the subsidiary in that locality. How a subsidiary might seek to manage labour market talent as a resource to meet firm’s needs is called into question. By conceptualising external labour markets as an endogenous MNE resource it heightens, theoretically, the legitimacy of the firm’s interests in a skills environment more traditionally associated with policy actors; and at the same time recognises that this is likely to be contested terrain where public and private interests may conflict and diverge and where the divergent nature of the actors involved is relevant. The paper therefore poses two questions: how do MNEs seek to endogenise labour market skills and b) what sorts of talent related resources does this endogeneity yield. Through the research we will identify the key structural and relational features of MNE-skills networks in two subnational regions of the UK and show who they give rise to, or limit, a variety of endogenous talent resources for the MNE.
We suggest the paper has a number of contributions to make. First, it attempts to bridge a gap left by traditional human resource management (HRM) and industrial relations (IR) research. Specifically, the focus by HRM scholarship on the co-ordination and integration of endogenous human resources to deliver competitive advantage has led to an emphasis on organisational level explanations. Meanwhile IR scholars have tended to focus on the exogenous economic and political factors as a system creating talent and therefore have focused on macro societal factors with the organisation and firm becoming less prominent (Keep 2010; 2014; Finegold 1999; Lewis 2014). We suggest that by seeking to understand how MNCs might endogenise labour market talent it provides a means of opening the black box on the multi-level interplay between firms and institutions. Second, the work makes an empirical contribution as it builds on network perspectives to examine the structure and relational context of the dynamics between subsidiaries of multinational companies and relevant (policy) skills actors. We move beyond previous work by combining qualitative scrutiny, with network visualisation and quantification, to tease out the interplay between actors; and by focusing on the question of how MNCs might endogenise labour market talent we shine an analytical light on the outcomes of these networks.
This work is important to both practice and academic communities in that for the former it raises implications for firms and policy actors in terms of the skills and capabilities required to operate at the firm-institution interface; and for the latter it offers insight on the multi-level processes at work and methodological tools that may offer potential for future conceptual development.
The paper begins by setting out the theoretical framework which combines research on talent management strategies, FDI location and network theory. Mixed methods are used, combining qualitative interviews with MNC and governance actors to explore the form and context of collaboration alongside a formal social network analysis to systematically map the structure and function of the MNC and governance network.
Referernces
Huselid, M. A. (1995). The impact of human resource management practices on turnover, productivity, and corporate financial performance. Academy of Management Journal, 38(3): 635-72.
Huselid, M., Jackson, S. E. and Schuler, R. S. (1997). Technical and strategic human resources management effectiveness as determinants of firm performance. Academy of Management Journal, 40(1): 171-188.
Keep, E. (2014). ‘What does skills policy look like now the money has run out?’ SKOPE, ESRC Centre on Skills, Knowledge & Organisational Performance: Oxford.
Keep, E. and Mayhew, K. (2010). ‘Moving beyond skills as a social and economic panacea’. Work, Employment and Society, 24(4): 565–577.
Lewis, P (2014). ‘The over-training of apprentices by employers in advanced manufacturing: a theoretical and policy analysis’. Human Resource Management Journal, 24(4): 496–513.
Monaghan, S. Gunnigle, P. and Lavelle, J (2014). Courting the multinational:
Subnational institutional capacity and foreign market insidership. Journal of International Business Studies, 45: 131–150