The two faces of Nordic management? Nordic firms and their employee relations in the Baltic States

Abstract

This study examines Nordic management styles in union and non-union industrial enterprises in the Baltic States (Estonia, Latvia, Lithuania) through case studies of nine Nordic subsidiary companies, based on on-site interviews with management and employees.1 This analysis construes the ‘Nordic model’ of management style as ‘bargained constitutional’ or ‘sophisticated consultative’, following Purcell and Ahlstrand's (1994) matrix of management styles in the highly unionized countries of origin, characterized as coordinated market economies. The case studies reveal that in the Baltic liberal-market environment, Nordic employers exhibit a variety of management styles, ranging from sophisticated human relations or paternalistic relations styles in non-union contexts, to an adversarial bargained style or modern paternalistic style in unionized subsidiary firms. The Nordic model's ‘bargained constitutionalism’ only occurs in those cases in the sample in which Soviet-era trade union structures survive, or where an in-firm union has fought for recognition and collective bargaining.

Keywords:

• Baltic States
• industrial enterprises
• industrial relations
• management style
• model transfer
• Nordic countries

Acknowledgements

I am grateful to Miguel Martinez Lucio and Charles Woolfson for their comments on an earlier draft, and especially indebted to Nathan Lillie for giving me valuable advice and comments in the writing and analysis. In addition, I thank the Finnish Work Environment Fund and Finnish People's Education Foundation for their financial support for my research.

Notes

1. Here, I refer to ‘Nordic’ countries denoting Denmark, Finland and Sweden, for the companies chosen for research are from these three countries and for the sake of common social and economic characteristics among these three countries, basing on the varieties of capitalism (VoC) literature. That is why Norway, a country seen usually in the composition of the Nordic countries, is left out of this investigation. The entity ‘Baltic States’ or ‘Baltic countries’ refers here to the three countries on the eastern shore of the Baltic Sea: Estonia (population 1.4 million), Latvia (2.3 million) and Lithuania (3.4 million).

2. According to this source, the percentage of average unemployment benefit of average wage (2002QII) was the lowest in Estonia (6.8%) – which is in fact the lowest figure among the CEEs. A corresponding figure for Latvia is 21.3% (comparable with those of Czech Republic 22%, Hungary 25.5%, Poland 21.4%, Romania 22.6% and Slovakia 25.5%) and for Lithuania 15.8% (comparable with those of Albania 16.4% and Croatia 16.6%). The corresponding figure in Slovenia, a country regarded as the closest among CEEs to CME, is 38.09%.

3. The size of MNC may be one contingent factor that has to be taken into account with respect to management styles, although I do not regard this factor determinant in employee relations. In this research, the two ‘bargained constitutionalist’ cases occurred at subsidiaries of large multinational companies, Water Vehicle being a part of a corporation with more than 70,000 employees in 125 countries, Ingredient belongs to a group with 10,000 employees in 40 countries. The next biggest corporations with about 8000 employees were mother companies for Prefab and Profile Maker, the former having a traditional management style changing into ‘bargained constitutionalism’ and the latter having a quite strong human relations orientation (which can be regarded to as ‘Nordic’ if it is characterized by collaborative HRM).