Does location matter? An empirical investigation of flexibility patterns in foreign and domestic companies in five European countries

Abstract

A major field of discussion about globalization is the role multinational enterprises play in an international economy. The essence of the debate lies in the distribution of power between the two centres of influence – multinational corporations, on the one hand, and the institutional setting of nation states, on the other. Is it the local environment (country-specific settings) that exerts the decisive influence on the organization of employment and production or is it the corporate environment (corporate settings) of the companies in question? The aim of this contribution is to analyze flexibility patterns of foreign owned companies compared with domestic owned companies in five European countries with respect to the aforementioned debate. The analysis uses the EUCOWE dataset which is based on an enterprise survey in six countries (France, Germany, the Netherlands, Portugal, Spain and the United Kingdom) in 2003. By comparing foreign owned with domestic owned companies, similarities and differences between companies and between countries were analysed. The results show a hierarchy of effects influencing the flexibility patterns of enterprises. The analysis gives strong support to the argument that the institutional framework of countries is still a key factor for the organization of labour even within multinational corporations.

Keywords:

• comparative research
• flexibilization
• governance
• multinational corporations
• work organization

Acknowledgements

The author is grateful to the support of this research by the Hans–Boeckler–Stiftung and the European Commission. Moreover, he would like to thank Steffen Lehndorff and two anonymous reviewers of the initial article for helpful comments and suggestions.

Notes

1. It has to be mentioned that there are international regulations that gain more importance (ILO, EU regulation, etc.), but up to this point the regulations are rather weak.

2. Given the wide-ranging nature of the local environment vs. company question, simply to investigate the ‘flexibility model’ aspect may appear to be narrowing the focus too much. However, if general statements are to be examined empirically, there is no option but to concentrate on specific issues in order to permit operationalization. This does not of course preclude the investigation of other questions.

3. This project, entitled ‘A Comparative Study of Operating Hours, Working Time and Employment in France, Germany, the Netherlands, Portugal, Spain and the United Kingdom’ (EUCOWE), was funded by the European Commission.

4. For a detailed description of the study see Delsen, Bosworth, Groß and Munoz de Bustillo y Llorente (2007).

5. A distinction will be made between wholly domestic-owned companies and companies that have at least one foreign part owner. Of course domestically owned companies can also be transnational, but we regard this lack of clarity as tolerable, since we are dealing with companies operating in their own national environment. On the other hand, the transnational effect makes itself felt primarily outside of the country of origin.

6. Regrettably, because of the relatively small number of companies in our sample, we are unable to analyse companies from individual countries operating in individual host countries, in order to control for the effect of different host countries.

7. In contrast to the R² of linear regressions, pseudo-R² is only an approximate measure of the explained variance.