One Company, Four Factories: Coordinating Employment Flexibility Practices with Local Trade Unions

International audienceThis article reports a case study of employment flexibility patterns in four factories of a multinational company in western and central Europe. There is remarkable variation in these patterns, which structural and institutional factors alone do not explain. Rather, the interests of management and local unions, and the character of their mutual interaction, are central for workplace employment practices. In factories with cooperative industrial relations, unions are extensively involved in employment flexibility even if management lacks a legal obligation or economic incentives to do so. In consequence, the company policy is neither a straightforward adaptation to host country institutions, nor a simple diffusion of corporate ‘best practice'

Making the Most of Diversity: Social Interaction and Variation in Employment Practices in a Multinational Company

List of Figures List of Abbreviations Acknowledgements Chapter 1 Introduction 1.1 Defining the multinational company and its context 1.2 Current debates on multinationals’ employment practices 1.3 Research questions 1.4 The argument 1.5 Outline of chapters Chapter 2 Paving the way to workplace employment practices: Theoretical perspectives on social interaction between multinationals and other actors 2.1 Theoretical approaches to company behavior 2.1.1 Microeconomic theory – rational choice approach 2.1.2 Discretionary behavior and negotiation 2.1.3 Structural contingency theory 2.1.4 Resource dependence theory 2.1.5 Summary and evaluation 2.2 Assumptions on behavior and social interaction 2.3 Micro-foundations of multinationals’ behavior and social interaction in shaping employment practices 2.3.1 Actors and their attributes 2.3.2 Social interaction channels – analytical framework 2.3.3 Forms of social interaction 2.3.4 Effects on employment practices 2.4 Conclusions Chapter 3 Social interaction in a multinational company’s reality: Operationalization and research design 3.1 The case study of Electra 3.1.1 Electra and its subsidiaries in Western and Eastern Europe 3.1.2 Employment practices 3.2 Unit of analysis 3.3 Social interaction channels: an operationalization 3.3.1 Electra headquarters and subsidiaries 3.3.2 Interaction between Electra’s sister subsidiaries 3.3.3 Electra and the local society 3.3.4 Management-workforce interaction in the subsidiaries 3.3.5 Electra and employee representatives 3.3.6 International trade union interaction and the European works council 3.4 Research methods 3.4.1 Qualitative comparative approach 3.4.2 Social interaction in a game-theoretical perspective 3.5 Conclusions Chapter 4 Who rules the multinational company? Corporate interests, headquarter-subsidiary interaction and effects on subsidiary behavior 4.1 Electra’s past legacy and current challenges 4.1.1 Administrative heritage 4.1.2 Developments in organization, strategy and human resource management 4.2 Internal and external forces shaping Electra’s organization and behavior 4.3 Interaction between headquarters and Electra factories 4.3.1 Production planning 4.3.2 Employment issues 4.4 Interaction between Electra’s sister factories 4.5 Analysis of interaction within Electra 4.6 Conclusions Chapter 5 Committed to being local? Electra, the local society and hard employment practices in Western and Eastern European workplaces 5.1 Behind the gates: Electra factories and local conditions 5.2 Electra’s social interaction with the local society 5.2.1 Labor market actors 5.2.2 Municipalities and local governments 5.2.3 Citizens, media and other local actors 5.3 Committed to being local? 5.4 Hard employment practices in local conditions: wages and collective bargaining 5.5 Hard employment practices in local conditions: employment flexibility 5.5.1 Numerical flexibility 5.5.2 External flexibility 5.5.3 Internal flexibility 5.5.4 Functional flexibility 5.5.5 Summary 5.6 Benefiting from local conditions: why variation in wages and flexibility? 5.7 Conclusions Chapter 6 Soft employment practices in Electra’s Western and Eastern European workplaces 6.1 Human resource management and employment practices across Europe 6.2 Organization and work systems in Electra factories 6.3 Management-worker interaction in Electra factories 6.3.1 Formal and informal relations 6.3.2 Workplace communication 6.4 Motivation, worker empowerment and participation in Electra’s decisionmaking 6.4.1 Evidence from the factories 6.4.2 Effects on productivity and performance 6.5 Social rewards and fringe benefits 6.6 Analyzing social interaction between Electra’s management and the local workforce 6.6.1 Forms of workplace interaction 6.6.2 Electra’s soft employment practices and local standards 6.7 Conclusions Chapter 7 From bargaining to dancing: Workplace industrial relations and involvement of trade unions and works councils in Electra’s employment practices 7.1 Organization and current trends in industrial relations: Electra and industrial relations systems in Western and Eastern Europe 7.1.1 Electra and country-level industrial relations systems 7.1.2 Workplace interaction between Electra, trade unions and works councils 7.2 Negotiating employment flexibility practices with local trade unions 7.3 Analyzing social interaction between Electra and workplace employee representatives 7.4 Conclusions Chapter 8 Two faces of international trade union interaction and the European Works Council 8.1 International trade union cooperation within and beyond European Works Councils: overview of evidence 8.2 East-West trade union interaction in Europe: a country-level perspective 8.3 East-West trade union interaction in Electra: a company-level perspective 8.4 Institutionalized international interaction: Electra’s European Works Council 8.4.1 Formal functioning: the management’s extended hand? 8.4.2 Informal functioning: between friendships and antagonism 8.4.3 The European Works Council of Electra versus trade unions 8.5 Analysis: two faces of international interaction of trade unions 8.6 Conclusions Chapter 9 Understanding the role of multinational companies and social interaction in variation in workplace employment practices 9.1 Dissertation theme and approach 9.2 Summary of research findings 9.3 Revisiting research questions 9.3.1 Where is the variation in employment practices? 9.3.2 Why does variation exist? 9.4 Unfolding social interaction in a multinational company: the case of Electra 9.4.1 Interaction forms 9.4.2 Complementarities in interaction forms and their sustainability for variation in employment practices 9.4.3 Externalities of the multinational company’s behavior 9.5 Additional reflections on theory 9.6 Future research agenda Appendix: List of interviews Bibliography Samenvatting (Summary in Dutch

One Company, Diverse Workplaces: The Social Construction of Employment Practices in Western and Eastern Europe

In the complex world of corporate and host-country influences, social interaction between multinational and local actors, including employees, trade unions and the local society, is the underlying social mechanism through which employment practices are constructed. This focus is a conceptual amendment to the comparative institutionalist perspective on multinationals, integrating actors' values, interests, behaviour, and social interaction within the broader framework of the comparative institutional approach. This book provides an inquiry into the process through which multinational companies establish and reinforce their position in host-country labour markets. A particular focus is on the construction of employment practices in multinationals' subsidiaries across Western European and post-socialist Central and Eastern European host countries; and the assessment of their diversity across the subsidiaries of the same company. Presenting original empirical evidence gathered in five countries, it is a direct response to recent literature's call for systematic comparative analyses of processes and outcomes of politics inside multinational firms and the relationship between management and employees in a cross-national perspective.List of Tables List of Figures List of Abbreviations Preface and Acknowledgements Introduction: Multinationals and Employment Practices across Europe Multinationals' approaches to the construction of employment practices The empirical case The argument Outline of chapters 1 Constructing Employment Practices in Multinationals: A Framework for Analysis Understanding employment practices Organizational approaches to company behaviour Institutionalist approaches to company behaviour Micro-foundations of constructing employment practices Assumptions on behaviour and social interaction Actors and their attributes Social interaction Forms of social interaction Social interaction as means of constructing employment practices Conclusions 2 One Multinational, Four Host Countries: On Diversity in Subsidiary Employment Practices Electra as case study Electra's subsidiaries Hard employment practices Wage policy and wages Employment flexibility Numerical flexibility External flexibility Internal flexibility Functional flexibility Summary Soft employment practices Work organization Motivation, performance pay and employee participation Social rewards and fringe benefits Subsidiary employment practices and local standards Conclusions 3 Channelling Corporate Values and Interests: Social Interaction within the Multinational Electra's past legacy for current challenges Administrative heritage - the formation of corporate values The formation of corporate interests, organization and strategy Internal and external forces shaping Electra's organization and behaviour Interaction between headquarters and subsidiaries Production issues Employment issues Interaction between Electra's sister subsidiaries Analysis of social interaction within Electra Conclusions 4 Building a Local Corporate Presence: Social Interaction between the Multinational and Local Societies Beyond the subsidiaries' gates: Electra and the local industry structure Electra's social interaction with the local society Labour market actors Municipalities and local governments Citizens, media and other local actors Committed to being local? Conclusions 5 From Bargaining to Dancing: Social Interaction between the Multinational, Local Workers and Trade Unions Management-worker interaction in Electra subsidiaries Electra and national industrial relations in Western and Eastern Europe Industrial relations in Electra's subsidiaries Negotiating employment flexibility practices with subsidiary trade unions Analysis of social interaction between Electra and subsidiary employee representatives Conclusions 6 Social Foundations of Trade Union Influence: Cross-Border Interaction of Unions and Employee Representatives Cooperation and competition in cross-border trade unionism Cross-border trade union interaction: a national and sectoral perspective Cross-border trade union interaction: a company-level perspective Institutionalized cross-border interaction: the European Works Council The EWC in Electra Informal functioning of the Euroforum: between friendships and antagonism Euroforum versus trade unions Two faces of cross-border interaction Conclusions 7 Accounting for Diversity: The Social Construction of Employment Practices Uncovering diversity in employment practices Accounting for diversity Unfolding social interaction in Electra Interaction channels and forms Electra's corporate headquarters and subsidiary managements Interaction among Electra's sister factories Electra's interaction with local actors Interaction between trade unions and the European Works Council Complementarities in interaction forms Sustainability of social interaction for diversity in employment practices Conclusions 8 Multinationals, Employment Practices and Institutional Change from below Implications of MNC behaviour and the social construction of employment practices Preconditions for social interaction: compatibility of actors' interests with host-country institutions Embedding as institution building from below Reflections on the social construction of employment practices Appendix Notes Bibliography Inde

Corporate Values in Local Contexts: Work Systems and Workers' Welfare in Western and Eastern Europe

Increased international competition poses challenges to companies’ organizational practices, including human resource management. For multinational companies operating simultaneously in diverse local conditions this challenge implies a decision between either opting for universal best practices or adapting their employment strategy to differing local standards in host countries. What influences whether work practices are similar or differ when deployed in differing conditions? Why are some companies committed to their workers’ welfare while others are not? This paper attempts to answer these questions by studying work practices, namely work systems and fringe benefits, in a Dutch multinational company (MNC) and its manufacturing subsidiaries in Western and Eastern Europe. Evidence suggests that the observed patterns are best explained by the interplay of three factors. Rational economic interest, company values, and local institutions yield subsidiary work practices that are embedded in, but not adapted to, local standards. The MNC’s value system accounts for the fact that generous benefits are offered without a direct relation to the company’s profit maximization and without external societal and institutional pressures to provide such benefits.Der zunehmende internationale Wettbewerb stellt die Unternehmen speziell im Personalmanagement vor große Herausforderungen hinsichtlich ihrer organisatorischen Praktiken. Multinationale Konzerne, die zur gleichen Zeit unter unterschiedlichen lokalen Bedingungen arbeiten, müssen sich für universelle „best practices“ oder dafür entscheiden, ihre Personalpolitik an die verschiedenen lokalen Gegebenheiten anzupassen. Was sind die Einflussfaktoren, die bei diesen Entscheidungen eine Rolle spielen? Warum zeigen einige Unternehmen eine hohe soziale Verantwortung für ihr Personal und andere nicht? Diese Fragen sollen auf der Basis von Analysen der Produktions- und Arbeitsbedingungen und der vom Unternehmen gewährten freiwilligen Zusatzleistungen in einem niederländischen multinationalen Unternehmen mit Niederlassungen in West- und Osteuropa beantwortet werden. Die Ergebnisse zeigen, dass die beobachteten Muster sich am besten durch ein Zusammenspiel von drei Faktoren erklären lassen: das rationale wirtschaftliche Interesse des Unternehmens, sein Wertesystem und die lokalen Institutionen. Diese Faktoren fließen in die Produktions- und Arbeitsbedingungen der Niederlassungen ein, die zwar in lokale Standards eingebettet, aber nicht an sie angepasst sind. Das Wertesystem des multinationalen Unternehmens ist ausschlaggebend dafür, dass großzügige Sonderleistungen gewährt werden. Es besteht weder ein direkter Zusammenhang mit dem Gewinnmaximierungsziel des Unternehmens, noch sind es externe gesellschaftliche oder institutionelle Zwänge, die dieses Verhalten bewirken.Introduction Conceptualizing work systems, worker welfare and their determinants Work systems and fringe benefits in Western and Eastern Europe How different are Electra’s factories from each other and from local standards in work practices? Accounting for observed patterns Conclusions Reference

Coordination, Employment Flexibility, and Industrial Relations in Western European Multinationals: Evidence from Poland

Despite the significant investment of multinational companies (MNCs) in Central and Eastern Europe, we have limited information about the diffusion of employment practices in this region. This paper aims to fill this gap by conceptualizing and exploring coordination, employment flexibility and industrial relations in a Polish factory of a Western European industrial company. We argue that the MNCs’ corporate intention to utilize local conditions and an underdeveloped international coordination of trade unions within MNCs are the main factors explaining the local embeddedness of factorylevel employment practices and industrial relations