Please note, a later, revised and corrected version of this paper is currently in the process of revision for journal publication. Please contact Phil Almond before referencing this version.

Sub-national Embeddedness Amid Institutional Instability? The Case of England

Phil Almond

with

Anthony Ferner, Olga Tregaskis

Paper Prepared for CRIMT 2011 International Conference “Multinational Corporations, Global Value Chains and Social Regulation”, HEC Montréal, 6th-

8th June

contact: palmond@dmu.ac.uk

P a g e | 2

P a g e | 3

Introduction

This paper is based on interim results from England1 for an ongoing, cross-national research project2 into the links between foreign-owned multinational firms, economic governance actors present at a sub-national level in their host countries, and issues relating to skills and human resources. It covers both what we define as direct interactions between MNCs and governance actors (by which we mean activities in the sphere of attracting inward investment, aftercare, and negotiations between the public sphere and individual MNCs), and what we term proximate interactions (i.e. attempts, at sub-national levels to shape or adapt elements of business systems, particularly what have been termed “skills ecosystems” (Finegold 1999) in ways that seek to attract, retain and embed high skilled, high value added investment).

Overall, the project seeks to explore three dimensions. First, it seeks to identify who are the key state and civil society governance actors (e.g. local/regional economic development and political bodies, the training and education sector, social partners, and so on, in different sub-national institutional settings, their respective roles, and how they engage with MNCs. Second, it looks at whether and how the supply and demand of skills and competencies by foreign MNCs is shaped by the above relationships, and what governance actors do in different national and sub-national contexts in order to improve the supply of skills, whether these be firm-specific or more generic. Finally, it asks whether variations in these relationships, both within and between countries, have the potential to affect the extent to which MNC units can be said to be locally/regionally embedded. In particular, how do differences in the governance actor-MNC relationship affect the ability of firms to maintain and improve positions in value chains, and to participate in the endogenous creation of skills that can drive wider development within the region or locality.

The current paper deals mainly with identifying the nature of governance actor/MNC relationships in England, particularly under the governance arrangements established by the New Labour governments (1998-2010). It also gives preliminary indications of actor perspectives on the quality of such relationships. Our data is drawn primarily from semi-structured interviews in two case study regions, supported by relevant secondary documentation from development agencies and other governance actors, policy documents of central government, and, particularly for recent policy developments, on reports from the financial media.

The paper is organised as follows. After this brief introduction, the first main section briefly reviews the logic behind investigating the relationships between sub-national institutional

1 Our empirical work concerns regions of England. The regional institutions of significance for this paper have developed somewhat differently under the various political settlements in Scotland, Wales, and Northern Ireland. The term United Kingdom is used in this paper only for questions of the general political economy of the national state.2 The regions covered in the research are: East Midlands and North West of England (Phil Almond, Anthony Ferner, Olga Tregaskis, all DMU); Asturias (Maria Gonzalez, David Luque, University of Oviedo) and the Madrid region (Javier Quintanilla, IESE) in Spain; the Shannon and Gaeltacht regions of Ireland (Paddy Gunnigle, Jonathan Lavelle, Sinead Monaghan, all University of Limerick); and the Kitchener-Waterloo (Tod Rutherford, Syracuse, and John Holmes, Queen’s University) and Québec (Gregor Murray, University of Montreal) regions of Canada.

P a g e | 4

complexes and MNCs, at a general level. The second section examines the context in England, which, as we will see, has, particularly in the years following the election of the first Blair government in 1997, been characterised by a considerable degree of institutional instability regarding institutions dealing with sub-national economic development in general, and the interface between public actors, foreign direct investors, and the skills sector, in particular. Following an outline of research methods, the next main section reviews provisional empirical evidence on the nature of governance/MNC interactions as developed over the last decade. There then follow some brief remarks, drawn from our most recent interviews, on the nature of reforms by the current Conservative/Liberal Democrat government. Finally, we conclude with some reflections on internationally comparative questions raised by the English cases.

Rationale

The literature on human resource management and industrial relations within MNCs frequently discusses ‘host country effects’ (e.g. Ferner et al 2001; Bae et al 2001; Tuselmann et al 2010). Very broadly, this research deals with two concepts, albeit often within the same research projects.

Firstly, and perhaps predominantly, this literature has looked at the existence of imperative regulation in host countries, particularly collective and individual labour legislation, which might be seen as constraints on foreign multinationals acting within the host country. It then, typically, looks at whether and how MNCs, or particular types or nationalities of MNCs, conform with, seek to avoid, or seek to negotiate the nature of host country imperative constraints.

Second, particularly where based on a more serious engagement with the national business systems literature (Whitley 1999), some literature examines how MNCs may attempt to use institutionally embedded resources such as skills institutions, R&D infrastructures, and the presence of clusters of competent firms to engage as suppliers (e.g. Kristensen and Morgan 2007). Such resources are seen in this literature as the domain in which older industrialised countries compete for foreign direct investment (FDI), through what has been termed ‘societal comparative advantage’ (Sorge 1991).

This literature has tended primarily to deal with national effects. Yet both constraints and resources can also vary at sub-national levels. With regard to constraints, there is, in some cases, formal sub-national variation in the nature of business and employment regulation as applied to MNCs. Examples include the ‘Right To Work’ states in the USA, or Special Economic Zones in developing countries and some Eastern European states, while countries such as Canada and Australia have some degree of internal variability in industrial relations frameworks. Meanwhile, Locke (1992) has shown the importance of regional political econ-omy in affecting HR environments in different parts of Italy, and Elger and Smith’s work (2005) on Japanese MNC units shows clearly that their ‘peripheral’ employment relationships in the UK were facilitated by low unionization and lack of alternative employment in the relevant local labour market. Similarly, greenfield inward investors who initially opted for higher-road variants of non-unionism in the UK often located in areas remote from the

P a g e | 5

traditional patterns of British employment relations (Hudson, 1994). Regarding resources, clearly nation states do not normally constitute homogenous economic spaces. Existing economic structures within localities and regions shape the labour markets from which firms, including MNCs, can draw. There are also possibilities for governance actors within regions more actively to attempt to shape the resources available to inward investors, through localised productivity coalitions, strategic attempts to attract specific types of public and private investment, and through enabling desirable forms of coordination between the various business system actors present in their geographical space.

Sub-national variation in elements of business systems is clearly not new. However, a range of literature suggests that it may, or should, have increased in recent years, and gained in importance. This includes:

a) Macro-level work in political economy, particularly that influenced by the Régulation School (e.g. Jessop 2004), which suggests that the broad shift away from state protection of national firms towards competition for global FDI, has, in our terms, led to host-country effects being less and less about imperative regulation/constraints, and more and more about the competitive provision of resources, a process which is said to be easier to enact at more local levels than the national.

b) Meso-level work in economic geography (for a review see Gertler 2003), which broadly argues that globalisation processes have led to tacit knowledge, said to be embedded in localised networks, being key to the economic competitiveness of MNCs and their subsidiaries.

c) Work on the increasing fragmentation of global production networks (e.g. Rutherford and Holmes 2008; Herrigel and Zeitlin 2010), which implies an increasing sophistication in how lead firms make location decisions, with obvious effects on supply chain firms. This again would require a more localised concern with the competitive provision of resources than was hitherto the case.

These arguments are pursued in more detail in an already published conceptual paper (Almond 2011). The Table below provides a brief summary of these arguments.

P a g e | 6

Table 1 Summary of change tendencies affecting sub-national/MNC relations

Change tendency Causes Modified by Effects

Spatial nature of economic governance: movement of authority to supra-national levels, and of responsibilities to sub-national levels

Crisis of Fordism

Attempts to secure supply of innovation within broadly neo-liberal globalization

Pre-existing nature of sub-national vs. national political and economic governance

‘Spatial fix’ setting nature of business systems moves upwards (to supra-national) and downwards (to sub-national) actors

Provision of some ‘host’ resources moves down to sub-national levels, with increased potential for powerful MNCs and their local units to affect nature of host systems

Knowledge economy Increased importance of (tacit) knowledge to international competitiveness

Belief that tacit knowledge is easier to transfer on a local basis

Capacity of MNCs to transmit tacit knowledge across geographically dispersed organizations

Continuing importance of cost and market reasons for MNC location

Attempts to create relatively localized ‘ecosystems’ within which geographical spaces can compete on value and innovation

Increased importance of localized knowledge resources may promote increased cooperation within host regions, i.e. increased ‘embeddedness’ of host units in sub-national geographies

Spatial and organizational fragmentation of production

Technology, globalization and shareholder value considerations

Continuing importance of large MNC corporate hierarchies

Move away from ‘branch plants’ to need to imbricate MNC units (and other local businesses) in global production networks

Increased need for flexible high skills ‘ecosystems’, involving MNCs, governance actors and other local firms in production networks

Source: Almond (2011: 537)

The case of England

The remainder of this paper is concerned with the extent to which, and how, the regional economies of England have followed the ‘regionalised competitive provision of resources’ narrative posited by a large range of authors from the fields mentioned above, on the basis of transformations to internal political economy, technology, and corporate governance. Before reviewing material drawn from our case studies, it is therefore necessary to review the English context.

The UK as a whole is generally characterised as approximating to the ideal types of a ‘compartmentalised business system’ (Whitley 1999), or ‘liberal market economy’ (LME) (Hall and Soskice 2001). In other words, the coordination of economic activity is broadly conceived of as a matter for the hierarchies of firms, as shaped by relatively open and

P a g e | 7

competitive markets. This, as societal institutionalists have long argued, is reflected in many of the ‘spheres’ that collectively cohere to govern the economy. The state has historically taken comparatively little interest in proactively governing industrial development, and been largely unsuccessful when it has sought to do so (Hirst 1989; Thompson 1987). The financial system has militated against long-termist attitudes to investment and to firm-level employment policies (Rubery 1994). The skills development and control system has suffered from chronic relative underinvestment and instability (Keep 2006). Finally, the fragmented nature of the industrial relations system has mitigated against either cross-class or intra-class collaboration on productivity and skills, with national and sectoral institutions remaining relatively weak (Crouch 1993).

In the political sphere, the UK, unlike most other large economies which approximate to the LME model, has traditionally been a very centralised country, with state power largely being concentrated in Westminster3. Therefore, regional economic policies, such as they have existed, have historically tended either to be centrally-driven according to the concerns of the central government of the day, or have represented the ad-hoc, and typically under-resourced, initiatives of county councils or collectives of local authorities.

The combination of poor industrial competitiveness in the post-war era, combined with a tradition of support for financial capitalism which was further reinforced in both the Thatcher/Major and Blair/Brown regimes from 1979, has, unsurprisingly given the concentration of the globally competitive financial services sector around London, given rise to substantial regional economic disparities. Even within England, which is richer than the other three component parts of the UK, the average GDP per person in the Northern, Midlands and South Western regions, taken together, is marginally under the European Union (EU) average, while that in regions roughly coterminous with a common-sense understanding of the South-East is over 50 per cent higher (see Table 2).

Table 2: Regional economic disparities in England, 2007 4

Region GDP/inhabitant (PPS) as percentage of EU average

North East 90.4North West 99.2Yorkshire and the Humber 97.5East Midlands 103.0West Midlands 99.6South West 106.8Total non-metropolitan 99.89East of England 111.6London 197.0South East England 124.3Total London and South East 150.2

3 This statement remains current for England. Scotland, Wales and Northern Ireland have, to varying extents, gained degrees of political autonomy in the period from 1997. 4 Source Eurostat (2011). Total non-metropolitan and London and South East figures are averages weighted per head of population own calculations, given disparities in the size of regions.

P a g e | 8

FDI and regional policy since 1979

1979-1997

Even during the Fordist period, the UK had a high share of inward FDI within Europe, both because of close links with the dominant US economy, the relatively open nature of the economy, and the existence of London as a financial centre. More recently, the Conservative governments from 1979 to 1997 pursued, as is well known, a strong form of neo-liberalism. For our purposes, particular emphasis should be placed on the early adoption, certainly compared to countries of comparable income and size, of an FDI-oriented economic development policy. The ‘Fordist’ idea of protecting national industrial capital was rejected much earlier and much more decisively than elsewhere in Europe. Instead, enabled by the enlarged domestic market of (then) Western Europe, the government sought actively to attract large industrial MNCs, particularly from Japan and later Korea, as a partial replacement for declining domestic industrial employment. At this stage, the offer to foreign MNCs was largely based on relatively low labour costs and weak labour protection, within an EU context, particularly for largely semi-skilled assembly work. UK Trade and Investment (UKTI), part of the then Department for Trade and Industry5 became, at national level, perhaps the best resourced inward investment body in the world (Breeze 2010). Given high levels of unemployment in manufacturing industry, and the consequent importance of attracting the incoming greenfield investment available, local and county authorities began to set up their own agencies specifically targeting inward investment from around 1984 onwards.

1997-2010

By the time of the election of the first Blair government, attracting and retaining mobile investment (including mobile UK-owned units as well as foreign FDI) had become a more difficult business. The eastwards expansion of the European economic space, alongside declining trade barriers and new, ICT-driven possibilities of serving UK markets from overseas, meant that competing mainly on costs, or the numerical flexibility of employment, had become untenable. From this comes new Labour’s close attachment to what Jessop (2004) calls ideas of the ‘Schumpterian workfare state”. From this point, there is a marked convergence between UK government rhetoric and initiatives with concerns about moves into higher value added activities (see Cerny and Evans 2004). Keen students of at least some globalisation narratives (e.g. Leadbetter 2002; Hutton and Giddens 2000), there does appear to have been some reflection on some of the trends mentioned in the first part of this paper.

In concrete terms, regional economic development in England was devolved to nine Regional Development Agencies (RDAs), covering the regions named in Table 2 above. Their coverage in terms of population varied from 2.5 million (North East) to 7.2 million (London), but averaged around 5 million.

5 The Government Department covering trade and industrial policy has been renamed, reformed and merged with other Departments frequently by governments of all parties. Currently, the Department of Business, Innovation and Skills covers this area. The trade and investment body UKTI, however, has survived these various reforms structurally intact.

P a g e | 9

In the introduction to this paper, we distinguished between direct and proximate sub-national institutions. RDAs were intended to be significant actors in both dimensions. They were legally responsible for seeking new inward investment, and for “investor development”, that is, ongoing relationships with inward investors and other large private sector firms in their region. The national UKTI retained a role as the ‘account manager’ for the largest inward investors in the UK, and as a national inward investment promotions agency. Finally, although at least initially usually much less importantly, local and sub-regional agencies also had some role in attracting investment, on a much more ad-hoc basis. As is perhaps implicit from this, where one agency ended and another began was not always particularly clear.

However, this ‘tactical’ role of RDAs was not their main function. Their main scope was as what we termed a proximate institution, with wide responsibilities for economic development and regeneration, the promotion of business efficiency, investment and competitiveness, the promotion of employment, enhancing the development of skills, and to contribute to sustainable development. This was all brought together in the requirement to produce Regional Economic Strategies, which were intended to formulate clear priorities for seeking to improve regional economic performance, and to identify strategies for achieving them; these were intended to influence public, private and non-profit actors within their regions.

While the inward investment role would typically be performed mainly by the RDAs themselves, most of their other responsibilities were delivered by other actors and institutions. As such, RDAs were primarily intended as strategic enabling bodies, and as brokers between firms and state-sponsored (including EU-sponsored) support.

RDAs therefore to at least some extent fitted within the contemporary academic narrative within spatial political economy of the re-scaling of the state. However certain caveats must be placed on this to avoid reaching over-functionalist conclusions. First, with the exception of London, this experiment in regional governance was not accompanied by regional government; the RDAs were ‘business led’ institutions with board members appointed by central government (in practice, this meant that the boards of RDAs were largely made up of individuals from the private sector, representatives of some of the local authorities covered, education providers, and occasional individuals from civil society organisations and occasionally trade unions. As is historically typical of British voluntarism in such bodies, the entrepeneurs, managers and trade unionists on their boards were not ‘representatives’ of their wider group/class interests in any strict sense, but were nominated and appointed in personal capacities). Second, the original establishment of RDAs was related to more purely political concerns about devolution following the establishment of devolved assemblies in Scotland and Wales. Regional assemblies were set up for a time, but later wound down as the lack of public appetite for directly elected regional assemblies in England became clear6.

6 The regional assemblies were not directly-elected, but were mainly constituted representatives of sub-regional authorities along with some civil society bodies. New Labour was split as to the desirability of any political devolution to English regions. In the end, a decisive rejection of such an assembly in a referendum in the North-East – reckoned to be the region most likely to support such an initiative – ended this debate for the foreseeable future.

P a g e | 10

Elsewhere, New Labour continued the great British tradition of continual reforms to its vocational training system. A concern with ‘lifelong learning’, the UK’s only real answer to the question of flexible skills ecosystems or the European flexisecurity agenda, led to the replacement of Training and Enterprise Councils – themselves only established in the late 1990s – with a Learning and Skills Council (2001), responsible both for youth further education and for adult learning. This body had a substantial regional presence, worked closely with the RDAs, and was important to employers seeking funding for the upskilling of workforces. However, a scandal concerning the management of further education construction projects led to Gordon Brown’s government abolishing this body in 2009, and replacing it with a more or less exclusively nationally focused Skills Funding Agency.

Enter the Maoists

The 2010 election of a Conservative-Liberal Democrat coalition, particularly in the context of the continuing macro-economic crisis and a concentration on deficit reduction over growth stimulation, spelt the end for the RDAs, which are currently in the process of being wound down. The process of doing this has, somewhat oddly, been described by the Liberal Democrat Minister responsible as “somewhat Maoist and chaotic” (Financial Times, 12th November 2010).

The provision of inward investment services has been concentrated at UKTI, with the provision of the service itself contracted out to a private sector provider. Local or county authorities remain free, in principle, to participate in the sphere of inward investment. In reality, however, the scale of cutbacks to local authorities mean that even core services are seriously under threat, and few authorities, even in combination, will be able to retain the quantity and quality of staff to deal with inward investors.

More proximate questions of regional development will be dealt with by Local Enterprise Partnerships (LEPs). There remit remains somewhat unclear, but is likely to include influencing how local authorities spend their funding in the areas of transport, housing and economic development, and the interactions between local authorities and the formal education sector. These are once again set up to be employer-led bodies. They will cover much smaller areas than the RDAs, typically equating to one or two counties, or to ‘city regions’. However arguments about the scalar nature of these institutions are to a large extent missing the point: the main purpose of the change was to cut costs, meaning that central government support for any sort of sub-national economic policy within England has been reduced dramatically. More generally, the government has announced that subsidies to individual businesses will cease, except in “exceptional circumstances” (FT, 30th June 2010), although the full ramifications of this remain uncertain. Some funding has also been announced for “Enterprise Zones”; few details are available at the time of writing, but these appear largely to be business parks with exemptions from elements of planning regulations, etc.

P a g e | 11

Methodological notes

The initial planning for this research occurred in the period when RDAs were clearly the most strategically important sub-national governance actors in coordinating the direct and proximate interactions with MNCs that were our concern. Our approach was therefore, across two regions in England, to interview those with responsibility for inward investment in the RDA, asking them both about the processes of attracting and seeking to retain FDI, and to identify strategically important foreign MNCs, as well as to confirm whether other governance actors in our initial list were of significant importance, and to add others as appropriate. The design was then to approach these other governance and MNC actors to conduct a similar exercise. The approach to selecting interviewees was therefore a form of snowballing. Interviews are based on a semi-structured interview guide, which was agreed by the international team, subject to modifications where there were known national or regional differences in the economic governance structure. Interviews typically last between one and two hours, and are fully transcribed and recorded. A coding structure, using QSR software, has been agreed by the international team. A social network analysis tool (SNA, not reported on in this paper, partly because of difficulties posed by changes to the network during the process of investigation, see above) was also constructed, primarily for the purposes of the comparative component of the work.

The winding down of the RDAs has meant that it has also been important to contact a number of local and sub-regional authorities which were less important to the original research design, as much of their roles were formerly undertaken by the RDAs themselves. This process is still ongoing, but is of particular importance to some of the observations in the closing empirical section of this paper. Additionally, for reasons of triangulation, a number of smaller MNC units were also approached for interview. These are typically MNCs that were reported by RDAs or by local development agencies as ‘success stories’.

At the outset, the eventual number of interviews was intended to total around 25 for each region, or 50 for each country. The project runs until January 2012. In England, the total number of interviews as of June 2nd 2011 is 32; as some covered more than one individual, the total number of interviewees is 36. To date, interviews have been undertaken in 11 MNCs, and with 20 governance actors, of which 12 are in the field of economic development, and 8 are in the skills/employment sector.

As the economic and political situation has changed substantially in the course of our research, for more recent interviews in England we have amended the interview guide somewhat, to allow for comments on emerging (or in some cases anticipated) institutional arrangements as well as reflection on the status quo ante.

What do/did regional actors do?

Clearly, research which seeks to investigate the sub-national embeddedness of MNC units has to take account of a wide variety of potential factors. As Figure 1 below reflects, these include factors related to the MNC - the nature and specificity of skills and knowledge (Foss and Pedersen 2000), the nature of the value chain (Phelps and Fuller 2001), parent orientation

P a g e | 12

(as possibly shaped by country of origin business systems, cf. Morgan and Kristensen 2006) – as well as those related to the host national business system and degree (and nature) of sub-national business system autonomy. Our MNC interviews cover a range of companies which, in any given set of sub-national institutions, would be expected to have different levels of material interest in establishing active links, given their differences in terms of skills needs, value chain nature and degree of real mobility.

Figure 1: Summary of factors affecting sub-national host embeddedness

Skills and knowledge

MNC need to access geographically-specific combinations of skills and knowledge.

Value chain

Need and possibility for subsidiary unit to bid for new investment in higher positions within global value chains

Parent orientation

Ability of MNC to engage with ‘high trust’ relations with local firm and governance actors (shaped by dominant conventions of trust within MNC)

↓MODIFIED BY

Host national business system

Difficulties of coordination in compartmentalised business systems

Difficulties of ensuring adaptability in systems with greater degree of non-market coordination

Degree of sub-national business system autonomy

Higher levels of autonomy (political, but also of other business system actors) may create greater scope for institutional innovation

↓DEGREE OF IMPORTANCE OF HOST SUB-NATIONAL BUSINESS

SYSTEM TO MNC UNIT

source: Almond (2011)

P a g e | 13

The purpose of the current paper is not, then, fully to establish the sufficient and necessary conditions for active embeddedness. We would argue in any case that this requires cross-national comparative research. Here, as an interim stage towards building such conclusions we concentrate on the bottom of Figure 1 above, and particularly on the bottom right hand segment. Below, then, our interim question is what do (or did?) sub-national actors do in their direct and proximate interactions with foreign-owned MNCs?

Direct actions of RDAs

As stated above, RDAs were primarily responsible for the attraction of new FDI, as well as ‘investor development’, or aftercare type work.

In terms of the attraction of new FDI, or “location marketing”, both the regions under direct investigation here, perhaps to slightly different degrees, emphasized a sectoral approach, or focusing on specific areas in which the region had capabilities. This sometimes went hand in hand with targeting offer on specific locations, in order to try to generate cluster-type effects. Similarly, there was a degree of ‘supply-chain marketing’, or trying to establish the possibilities afford to potential new investors by the presence of foreign multinationals or large British firms at the top of supply chains. Certainly, the older model of attending trade and investment fairs to seek any possible investment was explicitly rejected by our interviewees. This is not to say that RDAs would not work with investors who explicitly sought location in order to perform relatively low value-added work for reasons concerned with market structure. For example, one of the largest recent new investments in one region was a Taiwanese TV manufacturer, which elected to manufacture close to the distribution centre of a large electrical retailer, largely on the basis that demand for their product, towards the bottom segment of their product market, fluctuated on the basis of demand from the UK’s very integrated retail sector. The RDA worked closely with skills suppliers and agencies to ensure that the relevant, fairly basic, manufacturing skills, were available at a local level, in a local area of relative poverty. More generally, however, RDAs attempted to concentrate on securing relatively high value-added investment, given one of the main targets they were measured against by national government was regional Gross Value Added (GVA).

Investor development work, our more obvious concern in this paper, consisted, at a basic level, of being, in the words of one MNC manager,

“a bit like a kind of umbrella for a lot of the other agencies for a lot of the other agencies which are going to help with the activity we’re going to do” (Human Resource Manager, auto manufacturer).

A lot of such work was fairly routine, consisting of site visits, reporting back on issues raised, trying to deal with these where possible through brokering relations with other public agencies, and compiling data on issues raised to inform Regional Economic Strategies, and to feed back to the national level.

Some RDAs claimed to go well beyond this, however. In the North West, a split was made between traditional aftercare, i.e. dealing with day-to-day operational issues, and what was regarded as more strategic work, “about challenging a company, where are you going to be in

P a g e | 14

five or ten years’ time” (inward investment manager), the latter being organised through a sectoral approach. The manager explained the logic of this through an example;

Hitachi made TVs in North Wales. And one day it closed, and everyone went “Ugh!”, and four, five hundred people closed. Well actually, if you’d known the sector, you’d have known that cathode-ray tube televisions were on their way out, everybody was buying flat-screens, but nobody actually challenged Hitachi in that factory, how they were adapting to the new technology. Nobody said, where you going to be in four, five years time, and actually plan to either downscale that plant, so there’s a managed closure, or look to work with Hitachi to actually bring in new technology. So I think the sector approach does allow you to have those very informed discussions on where those factories are going”.

There was, therefore, a recognition of the potential transcience of FDI. This is quite obvious in a relatively high proportion of cases, where FDI is related to particular supply contracts which may not be renewable. RDA representatives therefore aimed to ensure that new investment would at least leave some ‘legacy’ of a better-skilled workforce with greater employability. More generally, a considerable amount of the workload, particularly but not only following the beginning of the economic crisis, of firms, was to do with outplacement support for workers made redundant, and trying to achieved ‘managed closures’ where this was necessary.

In general, the extent of investor development work seemed to be highly variable across regions, from some of the attempts to create a strategic approach indicated above, to outsourcing this work in a minority of RDAs (not those under direct investigation in this project), while keeping initial investor attraction in-house. One of the reasons for this, in a very target-driven governance structure, was the intangibility of investor development work, meaning that this area was to some extent deprived of a bottom-line in intra-RDA contests of power regarding the allocation of resources. In the words of an inward investment manager in a region which had outsourced, whom we interviewed for the purposes of triangulation:

“Inward investment is a very tangible activity, you can see a new company coming in, you can see the 100 jobs associated with all of that so it’s quite tangible. Investor development was much more intangible, you have worked with a company that’s already here, what have you actually done to help them?”

This case of outsourcing was clearly against the wishes of the inward investment managers themselves:

“The reason I say it really wasn’t the best solution is that (the third party provider) are delivering a good service but they are delivering a good service because of the money they make from that contract, rather than because per se they want to deliver aftercare to companies in the region. Whereas the RDA was delivering it because that was the service they wanted to deliver, the fact that we made a profit or otherwise was incidental in that particular process” (inward investment manager)

There were some instances where RDA intervention had been key to the attraction of new or replacement investment, and where the domain of skills had been important in this. One very large project relating to an auto manufacturer in the North-West of England, on which a considerable amont of (EU) public money was spent, involved upgrading of skills at both basic and more advanced levels not only within the subsidiary unit itself, but also across local suppliers. This was very closely tailored to the needs of the firm, with the training package fitted around company practices and shift patterns. RDA workers were also co-responsible

P a g e | 15

for writing a bid for EU funding for this project. In this case, the idea of a “region state-MNC nexus”, as elaborated by Phelps (2001), seems appropriate.

This does not appear to be a typical case, however. The MNC unit was unusual both for its size, and for the fact that UK subsidiary managers had to be, for structural reasons, committed to participating in bidding processes for new models in order to secure the viability of production facilities7. The necessity to bid for a specific new model was also, in this case, predictable enough for national and local subsidiary managers to begin to prepare a strategy some years in advance. The skills domain was also seen as one of the few areas in which achieving the parent company’s aim of a rapid ramp-up of production at minimum cost could be influenced, as other costs are largely fixed. It is also possibly easier, in this type of firm, to make the case that ensuring the upskilling of the workforce and of suppliers has wider benefits to the local economy, thus mitigating somewhat questions about the obvious state subsidy to an individual foreign enterprise. Regional development bodies, in this case, were useful to securing relatively high-paid employment, in conjunction with local productivity compromises and interactions with national government.

Other multinationals, generally those of less transcendent individual importance to their local economies, had a variety of perspectives on the utility of their local RDAs. In general, the reaction to them was more positive among the largest investors we have spoken to to date, who saw it as useful to have a local partner. Views were, though, overwhelmingly negative among managers and directors of smaller FDI units, and/or those in areas far from the de facto centre of gravity of the region. In some cases, MNC respondents were highly critical of RDAs, and/or said that they had had little or no interaction with them, even where RDA interviewees had talked of invesor development work that had taken place with them. This may be due to MNC managers’ unrealistic expectations as to what support can legally be offered to individual firms, but also is very likely to reflect resources issues within RDAs. Other managers cite very little interaction even where the relevant MNCs’ investment was presented publically by the RDA as a success story. As the director of one company recently acquired by a large Japanese corporation put it; “they got involved in the celebrations and publicity”.

Proximate interactions

RDAs, to varying extents, attempted to act as coordinators within the context of a compartmentalised business system. Indeed, one of the stated aims in the legislation setting up RDAs was to deal at a regional level with ‘market failures’.

Investor development managers presented a number of examples where their aftercare duties had led to the aggregration of skills demands, sometimes correcting very basic failures of firms with similar needs to coordinate without ‘state’ intervention. For example, on one site visit by an aftercare representative, one large biotech MNC in the Midlands complained about

7 This is not universally the case even within large auto manufacturers. A Japanese manufacturer visited in the course of this project tends, on the whole, due to lesser capacity within Europe, simply to allocate new models to factories according to the size of the model, and to place little emphasis on intra-site competition (at least in the short-term).

P a g e | 16

struggling to find intermediate level lab technicians, a skillset for which there was no appropriate apprenticeship or similar qualification within the local area. RDA employees then contacted other biotech and healthcare companies, found similar problems, and created, alongside a skills sector partner, workshops bringing together for HR managers, creating an aggregate level picture of demand for the relevant skill. Diploma-level provision was then organised on a local basis.

A similar case, although in some ways more significant in that more workers were concerned, and more surprising in that the large firms concerned were all located within a very small space of each other, was reported by an economic development manager in the North-West;

“Now the advantage of, if you like the sector approach is, Company A said to us, with their investment skills was a major issue. They had to upskill....and they wanted to put in certain process in place. We said well actually we’ve been talking to Company B, and we’ve been talking to Company C as well, that have exactly the same issues as you around this, we will look to fund a cross-company training programme, if those companies support it as well, if they put some funding it. So we put matched funding in, the programme was incredibly successful, I think it won all sorts of national training awards, but that actually benefitted three or four biomed companies in (the same industrial estate) because they all had the same issues. Now they weren’t talking to each other, but because our sector team was key account managing three or four of them, we could draw out those common issues.”

This sort of interest aggregation is more formally the role of Sector Skills Councils – ‘employer-led’, but mostly state-funded, bodies which are intended to be the ‘strategic’ skills bodies representing sectors, establishing qualification frameworks and also influencing national government policy. These bodies have a national scope, but also have regional representatives which seek to aggregate needs at local/regional levels. Inward investment managers would therefore also attempt to act as a bridge between the MNC and the relevant Sector Skills Council; “We’ll bring the Sector Skills Council into them basically to get a view as to what the specific challenges are for their business and how they can engage with ensuring that future provision meets their need” (inward investment manager).

Also, on a more strategic basis, RDAs, again to different extents, encouraged systematic employer coordination through the establishment and co-resourcing of regional sector bodies (e.g. “North West Automotive Alliance”), with the aim of developing and exploiting regional expertise. We intend to investigate such bodies at a later stage in our research. Again, though, they can be said to be an attempt to coordinate actors within a compartmentalised business system. Whether, having been established with public subsidy, such institutions have established sufficient track record in the eyes of their members to survive without RDA support, is an open question. It should be noted that various bodies attempting to aggregrate the interests of large firms on regional levels in the interests of productivity have at times appeared, usually with public subsidy, but without leaving much long-term footprint.

RDAs also had skills directorates. RDAs had a general responsibility for coordinating relationships with the local skills networks, which would include such bodies as job centres, the (then) Learning and Skills Council, universities, local authorities, etc. The actions of these various bodies in the skills domain were intended to be strategically coordinated at a regional

P a g e | 17

level as part of wider Regional Economic Strategies, the publication of which were a formal requirement.

Within this, though, different RDAs interpreted their responsibilities in the skills domain somewhat differently. The skills directorates of RDAs differed in the extent to which they had links to an investment agenda, and therefore worked closely with the inward investment area, or otherwise. This is not altogether surprising as the skills area was targeted at a wide range of goals, with issues around social inclusion and employability, or on what one inward investment manager saw as “the SME agenda”, as well as at productivity/investment issues. Overall, four out of the nine RDAs had skills departments which structurally were situated within the broad area of economic development, while skills sections of the remainder sat more within a ‘communities’, or social inclusion agenda.

Therefore in one region under direct consideration here, inward investment managers did not work closely with their skills directorate, preferring to deal directly with regional skills actors on the ground (e.g. the Learning and Skills Council, Sectoral Skills Councils). The sometimes low evaluation of the competencies of skills directorates is captured by a quote from an investment manager in a region outside our direct remit;

“we do have skills people internally that we would work with, but we would tend to go to real industry experts”.

In another region, however, the skills area was placed structurally within the economic development directorate, alongside inward investment and the science and innovation area. In this latter case, the skills team was actively involved in dealing with the skills needs of specific investors, as well as having a wider strategic responsibility. Both teams in this RDA argued that this relationship worked well, and as seen above, this interaction was important in securing new investment from a global auto manufacturer.

Specific problems of RDAs

One clear problem for RDAs was the lack of economic functionality of regions. The “regions” which the RDAs eventually came to cover were originally constructed because of EU requirements to divide England into a number of regions for statistical purposes, rather than as regions on which to constitute a governance structure. They were, as seen above, typically very large, and did not coincide with local or city region labour markets. This was seen as a barrier to active embeddedness by some:

“at a regional level the RDAs never managed to convince (large MNCs) to be involved...because they didn’t recognise that artificial geography...where we can influence them to get involved...is by saying most of their workforce...are local people. And I think that’s where we need to engage with them and say well what are your future skills needs...I think they found it difficult with RDAs to get that because...it was never an economic functional area, the needs of Northants compared to those in North Derbyshire are completely different” (Local Enterprise Partnership director).

As one Sector Skills Council partner reflected, the cities of the East Midlands had different skill sets and economic strengths, with ‘clusters’ that would inevitably attract certain kinds of investment, and have different economic and labour market problems. Furthermore, in spite of the size of the regions, commuting areas inevitably cross them. The scarcity of relatively

P a g e | 18

well-paid manufacturing jobs means that commutes of 30-40 miles (50-65 km) are common. Both the auto manufacturers involved in our fieldwork had substantial numbers of production employees from outside their regions. Among other things, this presented what MNC managers saw as bureaucratic problems with state co-funding for skills certification, which is based on the individual’s place of residence.

This problem was exacerbated in areas with weak regional identity. It is probably fair to say that the overwhelming majority of the population in the North West, as well as the North East and Yorkshire and the Humber regions, would have at least some degree of regional identity, or at least would agree with the regional assignation of their locality. Although we cannot demonstrate causality, there are also some indications that regional governance developed more strongly, and with more employer support, in these regions. However, in many of the other regions, any sort of identity between county level and nationality is weak or non-existent. As one skills actor reflected:

“Where’s the identity of the East Midlands, people don’t know it. They still don’t. We’ve been here for I don’t know how long in terms of, you know, a government region but where is the East Midlands. You ask people where it is outside of the region, perhaps even ask people in the region, and they’ll tell you wrongly...we’ve still got this identity crisis in the East Midlands. People in Northamptonshire think they belong to the Home Counties and London, and people in Lincolnshire think they’re in Holland. So, you know.”

Related to this, there are problems of fragmentation of delivery. RDAs’ activity, in inward investment and in other areas related to economic development, including skills, was supplemented by work in local authorities, or local or city region development bodies sponsored by aggregations of local authorities. Although in theory the co-construction of Regional Economic Strategies meant the work of the various actors involved was intended to be co-ordinated, in reality this was not always the case. Perhaps predictably, the relations between sub-regional bodies and the RDAs were not always easy, and intra-regional contests for investment, particularly between the geographically close city regions of Manchester and Merseyside, led to inward investment managers in sub-regions seeking to over-ride some of the responsibilities of the RDAs. This, alongside the complicated sub-contracting relationships that sometimes were in place between RDAs and sub-regional public bodies, led to some confusion about private sector managers about precisely who they were talking to;

“Do they operate through their local, they call them strategic partnerships, or is it the RDA directly. Because they’ve got the Leicestershire Strategic Partnership. There seem to be all these layers that I’ve never quite got my head round. I think there’s a city one, there’s a Leicestershire one and then there’s EMDA and I can never quite work out...” (Subsidiary managing director, MNC)

Multiplicity of delivery was also built into the relationship between RDAs and the national investment agency UKTI, which were co-responsible for attracting investment, and in the case of the largest investors, for aftercare. RDA managers were generally fairly critical of UKTI, claiming that the investment reaching non-metropolitan regions from the national body tended to be small-scale and ‘low value-added’. UKTI’s inward investment work was (and is) exclusively nationally targeted, meaning that, in the eyes of the regions, the ‘easy sell’ of London and the South-East meant targets could be reached without benefitting other regions sufficiently. There were also conflicts, particularly around cost, but also about the

P a g e | 19

dangers of repeating a UK offer, on the extent to which regional bodies should have offices or travel overseas attempting to attract new investment.

General problems of coordination

The RDAs, then, clearly had a number of specific problems. In the inward investment sphere, they did make some attempts at ‘embedding’ FDI, or at least the skills involved, but they suffered from multiple problems, related to resources, their geographical scope, their relative lack of legitimacy as perceived by employers. While their abolition was far from universally supported (and clearly they had other roles which are not part of our scope here), and many actors have concerns about what will replace them (see below), their success in the direct and proximate arenas surrounding FDI was hard to measure and at best mitigated. In a comparative spirit, however, it is necessary to make some comments on the more general landscape on which they operated, and under which UK regional business systems operate.

From our interviews, the first, and most obvious point, is that the instability of institutions, particularly but not only in the skills sector, was universally recognised as a problem. Compared to a textbook presentation of a liberal market economy, or compartmentalised business system, what emerges from researching the interface between the economic development and skills parts of the institutional complex is decisively not a lack of institutions, but rather a multiplicity of institutions, some public, some para-public, some private, each lacking the coordinating capacity to pursue strategic aims. This was an almost universal complaint from both governance and MNC actors:

I would like a period of stability, I would like a period whereby we all knew what was available, we all knew how to get hold of what was available. And by that I mean cash and training, and qualifications. Qualifications are constantly changing we have NVQ down to QVC. So I would like a period of stability so we can go in this direction, go on one course and stay there for a while and consolidate for a while. Rather than just change again, lets get something that we all think is the right thing to do and stick with it for a while (Training Manager, auto manufacturer)

Because it is, it’s alphabet soup, it’s like make your way through a labyrinth basically. Now if we can hide the wiring and just get the right people in at the right time to do the right things with that company, so much the better. And that’s essentially what we’re trying to do, it’s certainly what I’m trying to do anyway because I agree with you, it is totally confusing. And when I used to work at the EEF and we had member companies, member companies would ring me up and say what the hell is happening, how the hell do I get to all this, can you help me get through this maze. And that’s what I did a lot of the time and that’s still what I think we should be doing as an organisation now. (Sector Skills Council Regional Business Partner)

So it’s so complicated, and there are so many different pots, that people try to make it more efficient by getting these private contractors involved in delivering but it does hamper that co-ordination and it does make it challenging at times to really co-ordinate that recruitment and training provision (Inward Investment Manager)

On the face of it, it is not easy to see how these problems are likely to be rectified by yet further haphazard institutional reform.

Secondly, many MNC managers tend to emphasize that their skill requirements are “firm-specific”. This is obviously likely to be the case in some specialist cases. But given firms themselves seem from some of the material reported above to be slow to engage each other in

P a g e | 20

the skills sphere, it is at least possible that some of skills sets required by employers in general, and mobile MNCs in particular, are in fact somewhat more general than is sometimes portrayed. On top of well-known problems of collective interest articulation in this area, it is perhaps worth adding that, in the view of one RDA skills director, the Sector Skills Councils, which are nationally licensed to send coherent demand signals and act upon them, are themselves underresourced and, in spite of having some regional presence, lack “the granularity at regional and sub-regional level”, “in order for it to make any sense so providers can deal with it”. The Sector Skills Councils themselves are licensed by Government on a five-yearly basis, perhaps making long-term commitments difficult. While they are intended to be ‘business led’ institutions, and senior executives of major companies do sit on their boards, at least in manufacturing sectors, the private sector has contributed much less to their funding than was the original target (Payne 2008).

This pattern of “business-led” institutions, with targets servicing the interests of the private sector, but funded largely by the state and with little employer buy-in, is symptomatic of the wider problems of coordination in a liberal market economy, which regional or local institutions can only do limited amounts to ameliorate. There were occasional cases where, with the support of (EU) state funding, large firms (Nissan in the North East is one example), collaborated with an RDA in order to organise skills upgrading that went beyond the immediate supply chain, but these are isolated. More generally, weak employer association – in turn related to the fragmented and decentralised nature of UK industrial relations – often mean that little is done to rectify skills supply and demand problems without intervention by state-sponsored bodies.

It is unfair to blame all this on managers of individual firms. We have spoken to a number of managers whose personal commitment to improving skills, and to regional and national manufacturing in general, goes well beyond the rhetorical, or what is economically necessary for the subsidiary unit involved. Some such individuals have attempted to create collective goods within their sector. However, if a general upgrading of local and regional labour markets is a goal, reliance on such activist individuals within firms is clearly not going to be sufficient to achieve it.

The emerging context

As stated earlier, the current government has abolished RDAs. The inward investment role has been awarded to a national private-sector provider. Local authorities (or combinations of such, will be entitled to perform FDI-related work if local funding is available) Some of the more general economic development work of RDAs is in the process of being (partially) replaced by Local Enterprise Partnerships. More generally, the government has signalled that it will not, except in very specific circumstances not yet highlighted, provide funding for individual companies.

All these processes are ongoing at the time of writing, so any comment on them is largely speculative. Although one inward investment manager for a large city was relatively optimistic, arguing, perhaps reflecting earlier conflicts, that much of the RDA work in inward investment was replication of what occurred at local level, others were much less optimistic.

P a g e | 21

One RDA inward investment manager argued that only three of the forty local authorities in his region “would have any service of any degree of scale and professionalism”. The rest “would all have something but it would be part of somebody else’s job that does it almost as a part time resource, rather than a dedicated high profile inward investment team”.

It is possible, therefore, that economic development work in major cities and city regions will be of reasonable quality, at least as regards the initial attraction of investment. However, it is argued that this is unlikely to be the case in the majority of areas.

If true, this would exacerbate problems caused by centralising centrally-funded inward investment support at national level, leading to a substantial risk of increased regional inequality in the destination of investment;

There is an issue there and I think that probably ultimately will be a national issue because my understanding is that type of activity, rather than each region sort of pitching for these companies coming in, ...it’s going to be UK PLC if you like looking at that and saying we want to attract that inward investment. How they then determine where those people come to I don’t know and there’s a big danger in my mind that actually potentially you’ll end up with even more of a north/south divide because everyone will want to go to the south east because of the proximity to London. (Sector Skills Council Regional Business Partner)

The danger is that regions will be seen as having niche offering only, and that these will be based on an over-simplified sector or cluster mentality, with insufficient attention paid either to local needs (e.g. replacing lost investment with new FDI of a similar quality), or to the fact that MNCs do not always seek to be close to existing labour market competitors (our interviews provide some anecdotal evidence of this phenomenon of ‘anti-clustering’ in places).

Local Enterprise Partnerships do, it is argued, often map onto labour market areas more accurately than RDAs did. They are also the result of voluntary combinations by local authorities. However their resources will be extremely limited, and interviewees reported concerns about whether managers of prominent firms are likely to be attracted to performing a role in them. Some recent interviewees in the economic development field seemed to be engaging with LEPs, faute de mieux, without any great enthusiasm. This is largely related, of course, to resource issues, rather than arguments around geographical scope etc.

Some managers of larger MNC units argued that the lack of a regional interlocutor of some kind might create problems in attracting further investment, and consequently in securing their own firms’ investments. For example, UK directors in one of the auto manufacturing MNCs was in the process of attempting to increase the UK supply footprint, which involves the attraction of Asian MNCs into the relevant region:

There I am, I am trying to bring company XYZ from China to here, they are already supplying us with parts and are desperate to establish a manufacturing base say somewhere within the UK, it’s going to bring jobs which is exactly what the government wants. RDA has gone away who the hell do I talk to...I had the RDA people involved and its now ground to a halt.

P a g e | 22

More broadly, there is clearly a risk to some existing institutions, such as the productivity coalitions indicated above, following the withdrawal of RDA-brokered funding.

Comparative questions

Finally, we briefly reflect on how this element of our English cases might inform our comparative work. A number of questions are raised. First, as England combines a liberal market economy with very limited sub-national autonomy of business systems, and the latter is likely is reality only to decrease, it is worth considering whether a degree of real autonomy for regional business or political systems is a sufficient or necessary condition for developing territorial embeddedness among those MNC units for whom this is a desirable and feasible object. Research in other broadly liberal economies, with a greater degree of sub-national autonomy, such as Canada, might be instructive here.

Second, the launch and then abandonment of a regional governance structure for England does raise the question of relations between politically and economically constructed space. In particular, the levels at which any significant sub-national autonomy within the business system occur, and the extent to which they coincide with labour markets, is an interesting comparative question, albeit one that is difficult to isolate from other factors.

Finally, in considering the question of “embedding” MNCs within sub-national economies – and not ignoring the fact that there were at least some signs of active embeddedness in the English context – it is useful to consider to what extent some of the problems raised above are universal, more likely in some kinds of economy, namely LMEs, or are specific to the UK (or English) context. Particularly, in the skills arena, whether the designation of skills sought as “firm specific” vary at all according to national or sub-national context, and whether skills ecosystems developed in other places allow more general identification of skills supply and demand issues, are significant policy as well as conceptual questions. Comparing our results with those obtained in a variety of political and business systems should help shed some light on this type of question.

Acknowledgement

This research is funded by the Economic and Social Research Council (ESRC), award number ES-062-23-1886.

P a g e | 23

References

Almond, P. (2011) ‘The sub-national embeddedness of international HRM’, Human Relations, 64, 4, 531-552.

Bae, J., Chen, S-J. and Lawler, J. (2001) ‘Variations in human resource management in Asian countries: MNC home-country and host-country effects’ International Journal of Human Resource Management, 9, 4, 653 - 670

Breeze, A. (2010) Inward Investment Begins At Home: A localist approach to attracting jobs and investment. Warrington: Breeze Strategy.

Cerny, P. and Evans, M (2004) “Globalisation and Public Policy Under New Labour” , Policy Studies, 25, 1, 51-66.

Crouch, C. (1993) Industrial Relations and European State Traditions, Oxford: OUP.

Elger, T. and Smith, C. (2005) Assembling Work. Oxford: Oxford University Press.

Eurostat (2011) Regional GDP per inhabitant 2007, accessed online at http://epp.eurostat.ec.europa.eu/cache/ITY_PUBLIC/1-18022010-AP/EN/1-18022010-AP-EN.PDF

Ferner, A., Quintanilla, J., and Varul, M. (2001) Country-of-origin effects, host-country effects, and the management of HR in multinationals: German companies in Britain and Spain, Journal of World Business, 36, 2, 107-27.

Financial Times (2010) ‘Business fears grow as RDAs axed’, 30th June

Financial Times (2010) ‘Cull of development agencies ‘Maoist’, admits Cable’, 12th November.

Finegold, D. (1999) Creating self-sustaining, high-skill ecosystems, Oxford Review of Economic Policy, 15, 60-81.

Foss, N. and Pedersen, T. (2000) Transferring knowledge in MNCs: the role of sources of subsidiary knowledge and organisational context, LINK Discussion Paper, Copenhagen Business School, October.

Gertler, M. (2003) Tacit knowledge and the economic geography of context, or the undefinable tacitness of being (there), Journal of Economic Geography, 3, 75-99.

Hall, P. and Soskice, D. (2001) Varieties of Capitalism. Oxford: OUP.

Herrigel, G. and Zeitlin, J. (2010) Interfirm relations in global manufacturing: Disintegrated production and its globalisation, in G. Morgan, J. Campbell, C. Crouch, P. Kristensen, O. Pedersen and R. Whitley, eds, The Oxford handbook of comparative institutional analysis, Oxford: Oxford University Press.

P a g e | 24

Hirst, P and Zeitlin, J. (1989) Flexible specialisation and the competitive failure of UK manufacturng, Political Quarterly, 60, 2, 164-178.

Hudson , R.(1994) New production concepts, new production geograhies? Reflections on changes in the automobile industry, Transactions ofthe Institute of British Geographers, 19: 331-45.

Hutton, W. and Giddens, A., eds. (2000) On the edge: living with global capitalism. London: Jonathan Cape

Jessop, B. (1993) Towards a Schumpetarian workfare state? Prelimiary remarks on Post-Fordist political economy, University of Lancaster.

Keep, E. (2006) State control of the English education and training system-playing with the biggest train set in the world, Journal of Vocational Education and Training, 58, 1, 47-64.

Kristensen, P. and Morgan, G. (2007) Multinationals and institutional competitiveness, Regulation and Governance, 1, 197-212.

Leadbetter, C. (2002) Up the down escalator. Why global pessimists are wrong. London: Penguin.

Locke, R. (1992) The demise of the national union in Italy : lessons for comparative industrial relations theory, Industrial & Labor Relations Review, 45, 229-49.

Morgan, G. and Kristensen, P. (2006) The contested space of multinationals: varieties of institutionalism, varieties of capitalism, Human Relations, 59, 1467-90.

Payne, J. (2008) ‘Sector skills councils and employer engagement – delivering the ‘employer-led’ skills agenda in England’, Journal of Education and Work, 21, 2, 93-113.

Phelps, N. and Fuller, C. (2001) Taking care of business: after-care and the state-MNE nexus in Wales, Environment and Planning C, 19: 817-832.

Rubery, J. (1994) The British production regime: a societal-specific system?, Economy and Society, 23, 3, 335-54.

Rutherford, T. and Holmes, J. (2008) ‘The flea on the tail of the dog’: power in global production networks and the restructuring of Canadian automotive clusters’, Journal of Economic Geography, 8, 519-44.

Sorge, A. (1991) Strategic fit and the societal effect, Organization Studies, 12, 161-90.

Thompson , G.(1987) The American industrial Policy debate: any lessons for the UK?, Economy and Society, 16, 1, 1-74.

Whitley, R. (1999) Divergent Capitalisms The Social Structuring and Change of Business Systems. Oxford: OUP.

P a g e | 25