Varieties of Americanness?: The
management of industrial relations in US
multinational subsidiaries
Paddy Gunnigle
University of Limerick
THE BIG PICTURE: WHY EXAMINE MNCs/US
MNCs
Key role as channels for the international spread of HR/IR
policies & practices
1. Influence: increasing impact of MNCs as actors in the
world economy
2. Incentive: competition in the in the global economy on
the basis of competitive advantages deriving from their
parent business system  incentive to transfer
practices
3. Capacity: increased ability to transfer because of
changes in technology and corporate structure
MNCs, A Profile
• Huge Economic (& Political) influence
 29 of the top 100 economic entities are MNCs not countries
 54m employed in foreign affiliates
 Top 10 employed 2m abroad (at least 150,000 each)
 World sales of foreign affiliates $18tn / 11% of world GDP
• Uneven distribution: top 30 hosts: 95% of inward FDI; top
30 homes – 99% of outward FDI
• US MNCs employ approx.7m worldwide and 2.5m in
Europe
• Key drivers in the internationalisation of business
• Europe a key region: W. Europe responsible for 1/3 - 1/2 all
FDI outflows & inflows in 80s & 90s
MNCs in Ireland
• Different phases
• Public Policy Change in late 50s
• Among most dependent on FDI in EU
% of Manufacturing Employment in Foreign Subsidiaries
Austria
27.9
Fra
22.7
Ger
16.5
Irl
36.8
Neth
24.1
UK
18.0
US
15.1
• Highly globalised economy: 55% of manuf. output, 70% of
indus. exports from MNCs
• Huge growth in FDI in 90s: U.S. the major source….85%
• 1990-98: In EU – Ireland got 25% of all US Manuf.
investment, 14% of all FDI
• Electronics, pharma/healthcare, software, ‘teleservices’
Absolute FDI Flows ($m) & as % of Gross Capital Formation
1999
2001
2002
Ireland
Inward FDI
% GCF
18,500
81%
15,681
66%
19,033
71%
Germany
Inward FDI
% GCF
55,797
12%
33,918
9%
38,033
10%
UK
Inward FDI
% GCF
84,238
34%
61,958
26%
24,945
10%
Table 2: FDI Inflows 1993-2002 ($ Million)
1993
Total Ireland
1069
1996 1999
2616 18500
2000
26452
2001
2002
15681
19033
Table 1: FDI by Sector 2001
No. of firms
Electronics & Engineering 341 (28%)
Pharma & Healthcare
130 (10.5%)
Misc. Industry
104 (8.5%)
Textile & Clothing
23 (2%)
Internat. & Fin Services
627 (51%)
Employment
62,987
20,854
7,363
2,690
44,115
Table 2: FDI by Ownership 2001
US
Germany
UK
Rest of Europe
Rest of World
518
164
162
274
107
(42.3%)
(13.4%)
(13.2%)
(22.4%)
(8.7%)
Table 3: US FDI Inflows to Ireland (IR£ Million)
1990 1991 1992 1993 1994 1995 1996 1997 1998
U.S. Inflow 65 113
135 192 153 184 300
323
324
1990*
100 174
*Base Year = 100
208
295
235
283
461
497 498
Research Issues
How far the influence of the US Business System
shapes HRM/IR in foreign subsidiaries…the
example of Ireland?
(cf. Ferner 1997, 2000, Edwards & Ferner 2002; Muller Camen et al 2001)
Embededdeness in home country business system?
… extent to which the HR/IR practices in subsids reflect the
distinctive characteristics of the American business system/form
of capitalism (cf. Whitley 1999, Hall & Soskice 2001 )
 Limited role of State in regulating business/employment matters
 Flexible labour market model
 Short termism/Financial Markets
 Conflictual IR evolution
 Anti-unionism & ‘welfare capitalism’ (Jacoby 1999, Ferner/Edwards)
Imposition V adaption? Factors encouraging transfer of
HR/IR practices
a. nationality effects
Innovate in areas of national competitive advantage..JIT
Behave differently…US MNCs more formalised, centralised – use use
international coordination / Japanese MNCs more likely to exert ‘personal
control’ through expatriate managers (Harzing 1999)
b. increasing production/marketing coordination/ integration:
Interdependence increases centralisation/imposition
c. regional integration: standardisation, common polices (SEM)…imposition
d. greenfield-brownfield: brownfield adapt, greenfield impose
e. HR/IR Issues: Adaption..local IR/employee repn/non managerial,
Imposition… strategic import/managerial/
 HQ influence more likely to be high in areas seen as critical for
international competitive advantage e.g. US MNCs may see individualised
relationship with employees + employee commitment in a ‘union-free’
environment, as key to competitive advantage
Why should US MNCs be innovators?
• early development of sophisticated ‘organisational capabilities’
• economic dominance…. of US model globally.. ‘legitimacy’
Areas of innovation (general)
• long history of innovation by US MNCs
• Taylorised mass production
• pay systems and performance management /coll bargaining
• workforce “diversity”: gender, ethnicity, disability, sexuality, etc.
• Employee representation: hostility to unions or strict codification of
collective bargaining
Methodology
 4 countries, 7 Univs, Detailed cases
 Ireland – 5 cases
 Pharmaco: V. High Fortune 500, Revenue $30bn +, 90,000 +
(1400 in Irl @ 7 sites), late 1960s.
 Healthco: High Fortune 500, Revenue $16bn, 71000 (1800 in
Ire @ 8 sites), Mid 1970s (manuf).
 Itco: V. High Fortune 500, Revenue $85bn, 300,000+ (3500+
in Ire @ 5 facilities), 1950s (Sales & Serv)
 Compuco: Fortune 500, Revenue $40bn, 50,000 (3000 in Ire
@ 4 sites), early 1990s.
 Logistico: Fortune 500, Revenue $30bn, 370,000 (1000 in Ire
@ 3 ‘operations’…more sites), early 1990s.
 Interviews: semi-structured, cross section, all top mgt team,
repeat visits.
Findings
Union Recognition and Collective Bargaining
• Pharmaco & Healthco – union recognition and plant level CB in
all sites initially, (departure/ conformist), all operator & craft
categories (codified)/procedures).
• ICT Firms (Itco & Compuco): non union ab initio…deep set
ideological opposition to unions but differing approaches…
welfare capitalism and union suppression.
• Logistico: tradition of unionisation in US but non union
initially….recently conceded limited union recognition
Pay Issues
• Pharmaco & Healthco – Above the norm local deals but recent
change of tack. Competitive pressures and HQ control
• ICT Firms (Itco & Compuco): Individualised, PBR
• Logistico: non union & ‘limited union sites’. Individual
representation only but national level accords (CB) influential.
Recent Developments
• …. ‘double-breasting’..Healthco & Pharmaco
• Also Logistico…international example but some union
success
• Local-corporate decision?
• Why - Confident of success, Flexibility in decision
making, Occupational categories
Conclusions
Case evidence demonstrates:
1. [specific] capacity of US MNCs to implement IR policies (s.a.
union avoidance) which align with corporate preference has
increased over time (unions squeezed out of MNC sector)
FDI & Trade Union Recognition, 1994-95, 2001-2003 (IRN).
New firms
Expanding firms
Yes
No
Yes
No
1994-1995
2 (6%) 30 (94%) 10 (56%)
8 (44%)
(n = 50)
2001-2003
1 (6%) 16 (94%) 4 (18%)
18 (82%)
(n = 39)
Greenfield avoidance well established by mid 90s but brownfield
only now taking hold (note change in FDI strategy)
2. [general] significant U.S. influence on Irish business sytem (public
policy, AmCham, IR practice)
…competition for FDI on basis of low tax, ‘pro-business’,
comparatively light labour regulation…Changed political and
economic context:
EI Comm of Inquiry 1969:
Incoming companies should recognise the industrial relations of this
country and the inevitability of union recognition
Minister for Ent & Employ 1996
The IDA ..is not there to press one particular way of dealing with
industrial relations. I don’t see that as part of the IDA agenda. Some
companies have an approach..which doesn’t involve unions…We
can’t set preconditions.
Country of origin effects have overiden country of
operation effects and changed the characteristics
of the ‘system’
..but….pluralism may bite back (2004 Right to Bargain
Changes). Logistico….Pragmatism of the MNC. ‘All
managers are unitarists’ and pluralism will only take
hold where pressures are brought to bear (Fox 1966,
68)
….Possibility of EU imposed formula to deal with
collective representation (TD?)