1. American Multinationals
MN 7374 International HRM
Nik Hammer

2. Outline What is the role of/how influential are US American MNCs?
What are the determining influences that shape international HR practices?
US American business system
How can we compare business systems?
German business system
How dominant are US MNCs?

3. The ‘End of History’?

4. The US American business system I
Firm structure
Managerial capitalism (‘separation of ownership from control’); large vertically integrated firms; high centralised managerial discretion and controls of labour; against external influences
Work organisation
‘separation of control and execution of production’; deskilling, standardisation
Education
Weak system of vocational training and education; skill development through mix of formal and informal training; workers are fitted to jobs
Labour market
Very weak labour market regulation and employment protection; firm-level welfare
Industrial relations
Unitarist and pluralist approaches; firm-level bargaining, individual negotiation; low trust, adversarial approaches, anti-union campaigns
HR strategies
Origins of HRM: teamwork; profit sharing and share ownership; performance appraisals,employee rankings, performance-related pay

5. The US American business system II
What incentives does this system create?
For managers
For workers
For organised labour and capital
For the state
For shareholders

7. Ease of Doing Business Index (World Bank)
A nation's ranking on the index is based on the average of 10 subindices:
Starting a business – Procedures, time, cost and minimum capital to open a new business
Dealing with construction permits – Procedures, time and cost to build a warehouse
Getting electricity – procedures, time and cost required for a business to obtain a permanent electricity connection for a newly constructed warehouse
Registering property – Procedures, time and cost to register commercial real estate
Getting credit – Strength of legal rights index, depth of credit information index
Protecting investors – Indices on the extent of disclosure, extent of director liability and ease of shareholder suits
Paying taxes – Number of taxes paid, hours per year spent preparing tax returns and total tax payable as share of gross profit
Trading across borders – Number of documents, cost and time necessary to export and import
Enforcing contracts – Procedures, time and cost to enforce a debt contract
Resolving insolvency – The time, cost and recovery rate (%) under bankruptcy proceeding

9. How much variety is there within capitalism?

10. ‘Varieties of Capitalism’
Highlighting the differences and similarities between different country and region environments
Recognising that there is no ‘end of history’ (Fukuyama) and that the world is not tending towards one form of capitalism (US capitalism)
Different countries develop different forms of market economy
Higher or lower levels of state intervention
Not a uniform tendency towards deregulation and minimal state intervention as in the US (and the UK and other countries)

11. Institutions within societal capitalisms
Embedded
Inter-linked
Economic activities are coordinated across a range of dimensions:
Industrial relations
Training and education
Corporate governance
Inter-firm relations
Relations with employees
Responses in these five areas determine the variety of capitalism

12. Which ‘varieties’? Liberal market economies
Reliance on markets and hierarchies
US, UK, Canada, Australia, New Zealand, Ireland, etc.
Coordinated market economies
Non-market mechanisms as well as market mechanisms
Germany, Japan, Korea, etc.
BUT
Other groupings? e.g. mediterranean countries, emerging economies...
Need to pay attention to differences within groups as well as similarities across groups

13. The German business system I
Firm structure
Stakeholder model of governance; long-term bank loans and cross-investments; supporting long-term strategies
Work organisation
Investment in R&D, training, high productivity and innovation > relatively high wages, good working conditions
Education
Broad based occupational vocational training; dual system (formal class room & on-the-job training); jobs are fitted to workers
Labour market
Centralised negotiation and encompassing interest representation; social partnership in economic and social policy; relatively strong employment protection legislation
Industrial relations
Collective self-regulation within framework of law; industry level collective bargaining; dual structure of interest representation (union-sector/industry-CB-strikes <> works council-firm-application of CB-co-determination-cooperation); peace obligation
HR strategies
Productivity- and quality-based on the basis of minimum wage and working conditions; broad skills allow autonomy as opposed to close supervision; coordinated

14. The German business system II
What incentives does this system create?
For managers
For workers
For organised labour and capital
For the state
For shareholders

15. Conclusions ‘Best practice’ vs ‘best fit’
Can we distinguish different effects on HR practices?
System
Single set of best practices?; widespread diffusion of some specific practices; lean production
Society
Local embeddedness shapes actual practices
Dominance
Distinctive US practices related to control dimension of HR practices; Lean production
“MNCs configure their HRM practices in response to all three forces rather than to some uniform global best practices or to their national institutional contexts.” (Edwards et al 2013)

16. Essential reading:
Clark I. and T. Claydon (2014) ‘Comparative HRM and responses to global crises’, 531-­568, in Beardwell J. and A. Thompson (eds) Human Resource Management: A Contemporary Approach, 7th edn (London: Pearson Education)
Additional reading:
McCann L. (2013), ‘Economic and social context: Are there varieties of capitalism What difference does it make to employment relations?’, in Martinez Lucio (ed) International Human Resource Management. An Employment Relations Perspective. London: Sage, 161-­180.
Edwards P., R. Sanchez-­Mangas, O. Tregaskis and C. Levesque (2013), ‘Human resource management practices in the multinational company: a test of system, societal, and dominance effects’, ILR Review 66 (3): 588-­617
Almond P., T. Edwards, T. Colling, A. Ferner, P. Gunnigle, M. Müller-­Camen, J. Quintanilla and H. Wächter (2005), ‘Unraveling home and host country effects: An investigation of the HR policies of an American multinational in four European countries, Industrial Relations 44(2): 276-­306.