Managing from Afar: International Transfer of Employment Relations Policies and Practices in US Multinational Corporations

Abstract

With their operations spanning numerous countries multinational corporations are capable of transferring across international borders not only goods and services, but also employment relations policies and practices. Multinational corporations maintain a significant presence in the world economy and particularly in the Australian economy, accounting for a large proportion of global, and Australian, gross domestic product, exports and employment. Multinationals headquartered in the United States of America account for the largest proportion of foreign direct investment in Australia. Transfer of employment relations policies and practices within multinational corporations has been the subject of considerable academic research. Dominant in the literature are institutional and strategic management theories ascribing development of employment relations practices in foreign subsidiaries of multinationals to the powerful influences of national patterns of business and of the rational will of firms’ headquarters management. More recently, transfer of policies and practices has been characterised as a power struggle between various individual actors within multinationals. Yet each approach has limitations for explaining transfer. Drawing on current theories, this research develops and empirically tests a modified political economy theoretical framework with which to better examine the issue of transfer of employment relations policies and practices. This framework integrates institutional, market-based strategic and political theoretical perspectives. The study also makes an empirical contribution to knowledge in this important area, particularly as it relates to the Australian economy that has so far received relatively little academic attention. This thesis answers two research questions intrinsic to understanding the nature and impact of multinational corporations, and of significance to researchers, practitioners and policy makers: To what extent do multinational corporations transfer employment relations policies and practices from headquarters to foreign subsidiaries? What factors account for transfer and non-transfer? To answer these questions, comparative case study research was undertaken in two United States-based multinational corporations and their Australian subsidiaries: the Ford Motor Company and the General Motors Company. The study examines development, transfer and non-transfer of policies and practices in three core areas of employment relations: work organisation and staffing; remuneration; and management-union relations and bargaining. The research was undertaken from 2008 to 2011, during the depths of the global economic downturn, in circumstances that provided dynamic context for a rich study. This thesis makes a number of significant findings relating to the factors influencing transfer of employment relations policies and practices. Key findings are: First, product, financial and labour markets provide the context in which businesses operate, shaping firm strategy and transfer outcomes. Second, national institutions provide dynamic influence over transfer outcomes. They do not determine outcomes, but are more in the nature of resources upon which actors draw in to achieve their desired outcomes. Third, policies and practices are developed and transferred through the agency of individuals. Politics is not limited to within the firm. Rather, agency impacting transfer outcomes is exercised by multinational headquarters management, subsidiary management as well as by the companies’ workers, their union representatives and the state. The central conclusion of this thesis is that employment relations policies and practices are developed, transferred and implemented within institutional and market contexts, influenced by a variety of actors utilising a range of powers. None of those factors is, by itself, determinative of outcomes. Rather, interactions among factors in particular circumstances are the primary determinants. Such complex influences naturally result in highly context-specific outcomes. The modified theoretical framework developed in this research allows an appropriate place for actors operating at various levels, both endogenous and exogenous to the firm, as well as taking into account both institutional and market forces which help shape the way in which employment relations policies and practices are developed, transferred and adapted by multinational corporations from their home country headquarters to foreign subsidiaries.