case study mnc

8/2/2019 Case Study Mnc

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Marta KahancovMax Planck Institute for the Study of Societies, Cologne, Germany

WIBAR-2 Conference, Brussels, October 16, 2008

Work Practices in Multinational Companies:Theoretical and Empirical Considerations


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Transnationality indexof European countries 1999 2002 Central/Eastern

EuropeCzech Republic 17.6 30.9 Estonia 23.2 39.0 Latvia 18.3 18.8 Lithuania 13.2 23.3 Slovakia 7.1 27.5 Slovenia 7.9 22.3 Poland 11.5 15.6 Romania 9.4 12.1

Ukraine 4.8 10.3

Western EuropeBelgium andLuxembourg

66.0 77.1

Denmark 17.9 35.3 France 9.4 13.5 Germany 10.6 14.3

Ireland 35.7 69.3 Netherlands 25.2 38.4 Spain 14.7 20.5 Sweden 33.0 28.5 United Kingdom 14.5 16.8

Source: Drahokoupil, J. (2008) Globalization and the State in Central andEastern Europe: The Politics of Foreign Direct Investment. London: Routledge.

287% increase182% increase

97% increase

94% increase


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Multinational companies (MNCs)

> Important for accelerating transnationalization in production> Metal and electronics sectors one of the most transnationalized sectors

> Cross-border transfer of work practices

> MNCs become embedded in host country labor markets

> potential to change, influence and challenge nationally specificwork standards and regulations

> produce a response of national trade unions, governments andother organizations


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Understanding what MNCs do

> Need for internationally comparable empirical data

> Case study evidence from particular MNCs (General Motors,Volkswagen, Renault, Philips, Siemens)

> Internationally comparable survey data (Wage Indicator)

> How do MNCs construct work practices in different host countryconditions?

> What is the role of local trade unions in shaping MNCs workpractices?

> Why do we find differences in MNCs work practices in differentcountries?


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Presentation outline

> Theoretical considerations

> Case study of a Dutch MNC in electronics

> Conclusions and policy implications


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Theoretical considerations

> Organizational and management perspective: diffusion of best workpractices across MNC subsidiaries in different countries

> Institutionalist perspective: adaptation of work practices to nationalstandards in host countries

> Reverse diffusion of work practices

> Hybridization of work practices

> Sociological perspective: social relations influence what MNCs do;strong role of host country trade unions in constructing work practices inMNC subsidiaries


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How work practices in MNCs emerge

Organizational influences(profits, market power of the firm)

Stability/change in work standards, harmonization across Europe

Institutional influences(laws, norms, collective agreements)

Economic behavior of MNCs

Social interaction with employees, trade unions (trust, informal relations)

Outcome: work practices in MNC subsidiaries


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Case study I.

> Multico a Dutch MNC in the electronics sector, established in late 19 th century, about 159,000 employees worldwide (in 2005)

> Long history of international operation

> Past: decentralized company with a portfolio of independent businesses> Recent reorganizations: integrated organizational structure, centralization

of core competencies, but Human Resource Management staysdecentralized

> Five product divisions, focus on Consumer Electronics with fourproduction sites in Europe: Belgium, France, Poland, Hungary


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Case study II.

Television factories

Belgium France Poland Hungary

Western EuropeExtensive legal regulation ofemployment practices

Strong trade unions

Centralized collective bargaining

Central / Eastern EuropeLess extensive legislation onemployment practices

Weak and fragmented trade unions

Decentralized collective bargaining


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Findings

> Consistent with the Wage Indicator survey, justifies a combination ofresearch methodologies (surveys and case studies)> Wages 10-20% above average wages in the electronics sector in host

countries

> Higher employment flexibility compared to non-MNCs, thus less directcompensation for overtime

> Internal promotion possibilities vary across subsidiaries> Better working conditions than non-MNCs, thus higher job satisfaction> Intensive training and coaching in all countries

> Higher unionization rates than non-MNCs in all countries> Unions more involved in constructing MNC work practices in

subsidiaries where informal relations between management andunionists are cooperative


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Interpretation of findings

> Why do we find differences in MNCs work practices in differentcountries? No diffusion of best practices within MNCs, no adaptation in workingconditions to non-MNCs in host countries; but making the most of local diversity to develop subsidiary-specific work practices

> How do MNCs construct work practices in different host countryconditions? Innovative practices regardless of an East-West divide result ofsocial interaction between the MNC and local trade unions

> What is the role of local trade unions in shaping MNCs workpractices? social interaction with MNC managerscross-border cooperation of trade unions at company level


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Conclusions and policy Implications I.

>Making the most of diversity: work practices in MNCs beyond hostcountry standards instead of adaptation

> Organizational and institutional factors alone cannot account for whatMNCs do and why

> Central role of MNCs and host country trade unions in shaping workingstandards in European countries

> Social networks that MNCs and unions form are important for the kindand quality of working conditions and their harmonization acrosscountries

> MNC behavior vis--vis trade unions: profit interest, a power perspective,but also moral company values. Outcome: trust building joint informalagreements construction of work practices and institutional changefrom below


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Conclusions and policy implications II.

> Trust and personal relations between managers and trade unionists maybe an additional resource for strategies (next to legal resources andunions internal capacities for action)

> Attention to diversity among MNCs each company is unique in itsvalues, interests and openness to social interaction with trade unions

> Transnationalization of trade union initiatives should mirror the intensivetransnationalization of production in metal and electronics

> National/local trade unions to substitute nationally embedded interests forinternational structures with a common strategy


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Cross-border cooperation of trade unions

> Legitimacy effect : allows national/local trade unions to bypass MNCsubsidiary managements and to access MNC headquarters to create aninternational alliance

> Information effect : trade unions, by being more exposed to interactionwith their foreign counterparts, draw on international resources and arethus better equipped for collective bargaining in national conditions

> These effects not only relevant for national trade union (con)federations,but mainly for company-level unions

case study mnc

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