Regional Embeddedness of Multinational Companies: Case Study Evidence from Belgium (tentative)
Author: Dekocker, Vickie , email@example.com
Department: Centre for Sociological Research
University: Catholic University Leuven, Belgium
Supervisor: Prof. Dr. Valeria Pulignano
Year of completion: In progress
Language of dissertation: English
, Sub national level
, Employment relations
, Case studies
Areas of Research:
, Economy and Society
Multinationals are important actors in the current global economy. They are able to act across countries, not only transferring products or services but also employment practices. Studies in industrial relations and management mainly focus on national specific configurations to explain the extent of (de)centralization of employment practices such as pay, performance management, and training policies. Based on the business system approach, the home and host country are considered the relevant variables that explain this transfer. It is assumed that the national business system of the parent company has a direct influence on the transfer of employment practices but that this effect is mediated by the host country.
A problem with this approach, however, is its focus on the national level as a single governance structure and its neglect of the institutional variations within one country like federal states, web of inter firm relations or sectors (Almond, 2011; Heidenreich, 2012). Few empirical studies have tackled within-country variation by taking into account sub-national governance structures which can arise as a consequence of the way countries are organized. According to Heiderneich (2012) it is specific to MNCs to exploit the advantages of being involved in different types of networks and operational in different environments. Given this, sub-national institutional levels like regional governments are very relevant to the study of multinational companies.
The dissertation directly deals with this gap by investigating the sub-national dimension in the transfer of employment practices in MNCs in Belgium. In order to investigate this, four MNCs with different home countries (UK, Germany, Sweden and Belgium) were selected. The four MNCs had subsidiaries located in different regions in Belgium and each was active in a different industry. The cases were limited to the MNCs with headquarters located in European countries so as to keep the supranational constant.
The results of the research revealed the importance of the sub-national dimension in understanding the transfer of employment practices within MNCs' subsidiaries. More specifically, MNCs tend to decentralize decision-making for employment practices within MNCs' subsidiaries in Belgium because of two mechanisms. The first mechanism refers to the sub-national dimension and specifically, the regulation and initiatives foreseen at the level of regional governments. Training institutes vary across public and private industries, and across regions. The more elaborate the regional offer of training facilities, the higher is the tendency to decentralize. In addition, different regulations cause global HR manager to consult Belgian or local HR manager in order to benefit from all the initiatives. This effect was further reinforced by the second mechanism at the sectoral level. If the sector has its own training institute and freely offers training, it is far more beneficial for the MNC to decentralize training policy and to take advantage of sectoral initiatives. In this way, governance structures arise which are different from the national ones.