Host country and country of origin effects have a major bearing on the consistency of industrial relations policies of multinationals. In the case of American based MNCs there is a strong welfare capitalist preference for the avoidance of unions (Almond P. , et al. , 2005). For example in the case of Wal-Mart in Germany, the company regularly clashes with the Ver. di union and flagrantly ignores Germany's well established co-determination laws (Ewing).
However this is not always true as in the case study by Almond where the code named ITco. Left its sectoral agreement in favour of a firm level agreement and continued to comply with the work councils system (Almond P. , et al. , 2005). This goes to show that the level of anti-unionist activity depends on what degree an MNC uphold the American ideal of welfare capitalism. Hence the degree to which a MNC can "get away" with avoiding legislation or local agreement will also have a bearing on how much they are willing to comply.
This could explain the inconsistency of MNCs in various countries, for example the high level of juridification in Germany would force MNCs to comply whereas in France US MNCs could forgo unions recognition due the sheer lack of union's membership and therefore influence (Bamber, Lansbury, & Wailes, 2004). Also the desire of the parent to create an internationally standardised industrial relations policy would be strongly influenced by American norms (Almond P. , et al. , 2005).
Corporate strategy would also have a bearing on this as there could be a push to reduce costs and therefore this would lead to MNC management declining local union's recognition as the costs associated with this would be considered to be too high (Almond P. , et al. , 2005). The US has a strong antipathy towards collectivism which is retained by most of the MNCs based there (Almond P. , et al. , 2005). This could manifest itself more aggressively as blatant anti-union activity or simply as the implementation of so called sophisticated HRM which focuses heavily individualism.
This could be in the form of individual reward or simply as performance related pay (Kirkbride, 1994). Host country effects also play an important part in determining the industrial relations policies of MNCs and vary considerably as each country has a unique industrial relations climate. In countries such as Germany, historic means of conflict resolution or reduction such as co-determination are so established that it would be hard to avoid them especially as a high profile foreign firm entering a local market.
Other historical factors such as paying above the market price of for labour and a desirable working environment would have a strong bearing as workers would be accustomed to this treatment (Almond P. , et al. , 2005). This would be predominant within countries such as Sweden where this is commonplace and welfare style system of industrial relations is the norm (Bamber, Lansbury, & Wailes, 2004).
Another host country factor would be the relative dependence on MNC investment and therefore the willingness of the host country to modify its legislation, an example of this would be the opt out clause which is present in Germany which allows employees to waive their employment rights in order to gain a higher wage (Bamber, Lansbury, & Wailes, 2004). In order to expand many MNCs simply take over its client organisation i. e. vertical integration which could therefore weaken a MNCs non union ethos (Almond P. , et al. , 2005).
An MNC might take over a firm which already has high union density such as in the case of ITco. Another factor which could have a bearing on the consistency of MNC industrial relations policies would be the relative importance of a particular subsidiary. For example if a subsidiary is of high strategic value then the parent company might simply allow the subsidiary in question to modify its policies in order to quell the dispute. This could also be due to high levels of undesirable publicity that a subsidiary might have.
An example of this was with Michelin in France when it announced simultaneously a 17% profit increase and 7500 redundancies in order to maximise its shareholder value (Almond, Edwards, & Clark, 2003). The type of economy is another major host country effect regarding the choice of industrial relations policies. This can be further related to the 'shareholder value' model that is commonplace in the determination of many US MNCs policies (Almond, Edwards, & Clark, 2003). Due to incompatibility of US MNCs and particular European host countries, a consistent industrial relations policy is impossible.
For example in the case of co-ordinated market economies such as Germany and Sweden US MNCs might find it more difficult to implement industrial relations policies that are more in keeping with its country of origin (Almond, Edwards, & Clark, 2003). This could be due to the 'welfare capitalist' approach of many US MNCs. Another indication of the lack of coherence of MNCs industrial relations policies is that lack of transnational bargaining. This is due to the anti-union stance adopted by many MNCs simply because the costs of avoiding unions are far outweighed by the benefits associated with avoidance (Bean, 1985).
MNC managers simply see transnational bargaining as another layer of bargaining on top of national bargaining (Bean, 1985). It can be said then that MNCs do not have consistent IR policies due to the lack of consistent transnational collective bargaining systems. However this statement must be considered with caution as trade unions in countries such as France have a very limited membership base might not be considered to be much of a threat (Almond, Edwards, & Clark, 2003). Due to the unique nature of Europe as a single market one would assume that its IR policies would be homogenous however this is not the case.
Although there is European legislation which is present in many member states each state has its own set of IR legislation on top of European policies. For example the working time directive implemented by the European parliament in 1993 states that workers cannot work more than 48 hours per week unless they sign an opt out clause (Bamber, Lansbury, & Wailes, 2004). This has been implemented in all 25 member states of the EU however many member states allow the free usage of the opt out clause (Bamber, Lansbury, & Wailes, 2004).
Although all member states have implemented countries such as in France when the Auroux laws were introduced (Bamber, Lansbury, & Wailes, 2004). This put employers under an obligation to bargain created the right for employees to discuss their views about work in expression groups (Bamber, Lansbury, & Wailes, 2004). In the case of Germany a more far reaching version of this legislation was present in the form of works councils which were implemented under the Workplace Labour Relations Act of 1972 (Bamber, Lansbury, & Wailes, 2004).
This means that MNCs must operate in varied industrial relations climates and must adopt a Geocentric view of management (Perlmutter, 1969). Hence consistency would be very hard to achieve. MNCs are the most diverse organisations that operate in the most diverse of environments. It is the nature of their business to operate in regions which are not familiar to their management in order to exploit resources and markets which have yet to be tapped into.
Due to this operation within various countries the implementation of blanket industrial relations policies is extremely hard. The main factor that would determine this would be the presence of national legislation. Ergo, IR policies implemented in Germany would be useless in countries such as Sweden or France. This is due to the sheer difference in legislation present. One would think that being member states of the European Union would create uniform IR legislation however total integration would be difficult to implement.
Cultural differences, tradition and basic differences in the dynamics of the workforce would further hinder this uniformity. Therefore it can be said that the reason why MNCs often fail to achieve consistent IR policies cannot be attributed to one single factor. Culture and workforce dynamics effect legislation which in turn effects how the economy is planned and so on and so forth. Each factor is not mutually exclusive therefore MNCs will find it extremely difficult to create an IR policy that can apply to each and every one of its subsidiaries.