Human resource and industrial relations practices of UK and US multinationals in Germany

TLDR

Research on HRM and IR practices of multinational subsidiaries has largely focused on deregulated host countries, where weak institutions ease the transfer of home‑country practices, whereas strong institutional systems such as Germany impose greater pressures for adaptation. The study aims to assess how German labour and industrial relations institutions shape the HRM and IR practices of nine U.S. and four U.K. subsidiaries, how these practices differ from those of indigenous firms, and the extent to which home‑country practices can still be introduced.

Abstract

Most of the research about HRM and IR practices of MNCs in their host country has been conducted in deregulated countries such as the UK and the US. Host countries with relatively weak institutional arrangements facilitate the transfer of home-country practices. In contrast, those with institutionally strong systems, such as Germany, impose stronger pressures for adaptation. This paper reports research about nine US and four UK subsidiaries operating in Germany. It examines how their HRM and IR practices are shaped by German labour and IR institutions, how they differ from a control group of indigenous firms and what room for manoeuvre is left for the introduction of home-country practices. The main conclusions are that small and medium-sized subsidiaries in particular can to some extent avoid the pressures exerted by German labour and IR institutions. This facilitates the transfer of home-country practices. However, even larger affiliates that comply with the German institutions can transfer practices from their parent company. The highly regulated German system leaves some room for flexibility. Nevertheless, the institutional environment prevents large companies from following a unitarist HRM and IR approach.