A cost-minimization approach to the international transfer of HRM/IR practices: Anglo-Saxon multinationals in the Federal Republic of Germany

Abstract

The existence of host-country and country-of-origin effects is analysed by using the concept of fiscal federalism as a theoretical analogy. It is argued that multinationals try to minimize the costs of centralization and decentralization associated with cross-national personnel policy. The higher the costs of decentralization, the more likely is the existence of country-of-origin effects. The opposite holds true for increasing costs of centralization. This is tested empirically by comparing the human resource management and industrial relations (HRM/IR) practices of US and British subsidiaries operating in Germany with those of native German firms. Based on 297 valid cases, it is shown that the existence of decentralization costs is associated with country-of-origin effects in various areas of personnel management, such as the use of variable compensation, employee ownership and initial vocational training. In contrast, in the field of industrial relations (co-determination, compliance with collective bargaining), there are strong pressures to adapt to local norms, leading to host-country effects. These results indicate that a rationalistic cost-minimization approach is well suited to explaining the patterns of host-and home-country effects in regard to the HRM/IR practices of multinational enterprises.

Subsidiary control in Japanese, German and US multinational corporations: Direct control from headquarters versus indirect control through expatriation

“…It should be noted that the response rate for Japan is above similar earlier surveys there, as reported by Kato and Morishima (2003). The response rate for Germany is also higher than comparable postal questionnaire research (Schmitt and Sadowski, 2003).…”

“…In order to test for this, responding and non-responding firms were compared on size and industry, with no indication of response bias being found. Given that we avoided sensitive questions, which are considered a main source of response bias (Schmitt and Sadowski, 2003), and focused instead on factual information, we are reasonably confident that non-response bias does not constitute a major problem in this study.…”

Vive les différences? Voice in French MNCs' overseas workplaces: a comparative study of voice in French, German and US subsidiaries in the UK

“…presence or absence), binary logistic regression models are appropriate to test for nationality differences. Following previous studies the models included a set of control variables, such as establishment size, industry, and a range of other factors (Lavelle et al, 2010;Marginson et al, 2010;Schmitt and Sadowski, 2003). Checks for multicollinearity indicated no problems.…”

Multinationals and regional economies: embedding the regime shoppers?

“…Muller 1998; Schmitt and Sadowski 2003). These might impede or prevent the transfer into particular host countries of country-of-origin, or global 'best practice' inspired labour management policies.…”