IDEAS home Printed from https://ideas.repec.org/a/sae/ecoind/v24y2003i3p349-377.html

Deregulation of the German Industrial Relations System via Foreign Direct Investment: Are the Subsidiaries of Anglo-Saxon MNCs a Threat for the Institutions of Industrial Democracy in Germany?

Author

Listed:
  • Matthias Schmitt

Abstract

This article asks whether the subsidiaries of American and British MNCs operating in Germany act as forces that endanger the traditional German system of industrial democracy by `importing' typical Anglo-Saxon style industrial relations practices into their host nation. In a mail survey based on responses from 297 foreign-owned and local German firms, little evidence was found that Anglo-Saxon-owned subsidiaries act as a threat to the central pillars of Germany's IR system, i.e. codetermination and collective bargaining. This finding contradicts a widely held belief of the erosion of the German IR system and suggests that this system is still strong: foreign companies adapt to local standards so as to retain legitimacy within their host nation's environment.

Suggested Citation

  • Matthias Schmitt, 2003. "Deregulation of the German Industrial Relations System via Foreign Direct Investment: Are the Subsidiaries of Anglo-Saxon MNCs a Threat for the Institutions of Industrial Democracy in Germany?," Economic and Industrial Democracy, Department of Economic History, Uppsala University, Sweden, vol. 24(3), pages 349-377, August.
    • Handle: RePEc:sae:ecoind:v:24:y:2003:i:3:p:349-377
    DOI: 10.1177/0143831X030243003
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/0143831X030243003
    Download Restriction: no
    File URL: https://libkey.io/10.1177/0143831X030243003?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Dieter Sadowski & Uschi Backes-Gellner & Bernd Frick, 1995. "Works Councils: Barriers or Boosts for the Competitiveness of German Firms?," British Journal of Industrial Relations, London School of Economics, vol. 33(3), pages 493-513, September.
    2. Jorg Flecker & Thorsten Schulten, 1999. "The End of Institutional Stability: What Future for the 'German Model'?," Economic and Industrial Democracy, Department of Economic History, Uppsala University, Sweden, vol. 20(1), pages 81-115, February.
    3. Tzu-Shian Han & Su-fen Chiu, 2000. "Industrial Democracy and Institutional Environments: A Comparison of Germany and Taiwan," Economic and Industrial Democracy, Department of Economic History, Uppsala University, Sweden, vol. 21(2), pages 147-182, May.
    4. Zaida L Martinez & David A Ricks, 1989. "Multinational Parent Companies' Influence over Human Resource Decisions of Affiliates: U.S. Firms in Mexico," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 20(3), pages 465-487, September.
    5. Addison, John T. & Schnabel, Claus & Wagner, Joachim, 2000. "Die mitbestimmungsfreie Zone - ein Problemfeld?," Wirtschaftsdienst – Zeitschrift für Wirtschaftspolitik (1949 - 2007), ZBW - Leibniz Information Centre for Economics, vol. 80(6), pages 361-365.
    6. Diane Perrons, 2000. "Living with Risk: Labour Market Transformation, Employment Policies and Social Reproduction in the UK," Economic and Industrial Democracy, Department of Economic History, Uppsala University, Sweden, vol. 21(3), pages 283-310, August.
    7. Erik Poutsma & Fred Huijgen, 1999. "European Diversity in the Use of Participation Schemes," Economic and Industrial Democracy, Department of Economic History, Uppsala University, Sweden, vol. 20(2), pages 197-223, May.
    8. Douglas L. Kruse, 1996. "Why Do Firms Adopt Profit-Sharing and Employee Ownership Plans?," British Journal of Industrial Relations, London School of Economics, vol. 34(4), pages 515-538, December.
    9. Peppard, Joe & Fitzgerald, Daniel, 1997. "The transfer of culturally-grounded management techniques: The case of business reengineering in Germany," European Management Journal, Elsevier, vol. 15(4), pages 446-460, August.
    10. Randall S Schuler & Nikolai Rogovsky, 1998. "Understanding Compensation Practice Variations Across Firms: The Impact of National Culture," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 29(1), pages 159-177, March.
    11. Erik Poutsma & Willem de Nijs & Hans Doorewaard, 1999. "Promotion of Employee Ownership and Profit Sharing in Europe," Economic and Industrial Democracy, Department of Economic History, Uppsala University, Sweden, vol. 20(2), pages 171-196, May.
    12. Carola M. Frege, 1998. "Institutional Transfer and Effectiveness of Employee Representation: Comparing Works Councils in East and West Germany," Economic and Industrial Democracy, Department of Economic History, Uppsala University, Sweden, vol. 19(3), pages 475-504, August.
    13. Anthony Ferner & Matthias Varul, 2000. "‘Vanguard’ Subsidiaries and the Diffusion of New Practices: A Case Study of German Multinationals," British Journal of Industrial Relations, London School of Economics, vol. 38(1), pages 115-140, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Verena Dill & Uwe Jirjahn, 2017. "Foreign owners and the quality of industrial relations in Germany," Economic and Industrial Democracy, Department of Economic History, Uppsala University, Sweden, vol. 38(1), pages 5-25, February.
    2. Uwe Jirjahn, 2021. "Foreign ownership and intra-firm union density in Germany," Economic and Industrial Democracy, Department of Economic History, Uppsala University, Sweden, vol. 42(4), pages 1052-1079, November.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Olaf Hübler, 2003. "Fördern oder behindern Betriebsräte die Unternehmensentwicklung?," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 4(4), pages 379-397, November.
    2. Hsiang-Lin Cheng & C.-M. J. Yu, 2012. "Adoption of Practices by Subsidiaries and Institutional Interaction within Internationalised Small- and Medium-Sized Enterprises," Management International Review, Springer, vol. 52(1), pages 81-105, February.
    3. Kyoung Yong Kim & Pankaj C. Patel, 2020. "Broad‐Based Employee Ownership and Labour Productivity During the 2008 Recession: Evidence from Public Firms in Europe," British Journal of Industrial Relations, London School of Economics, vol. 58(2), pages 396-423, June.
    4. Simon S Torp, 2016. "The prevalence and antecedents of employee stock ownership in Denmark," Economic and Industrial Democracy, Department of Economic History, Uppsala University, Sweden, vol. 37(1), pages 119-144, February.
    5. repec:bla:jomstd:v:40:y:2003:i:3:p:609-616 is not listed on IDEAS
    6. Derek Jones & Panu Kalmi & Niels Mygind, 2005. "Choice of Ownership Structure and Firm Performance: Evidence from Estonia," Post-Communist Economies, Taylor & Francis Journals, vol. 17(1), pages 83-107.
    7. Zhang, Hongjuan & Young, Michael N. & Tan, Justin & Sun, Weizheng, 2018. "How Chinese companies deal with a legitimacy imbalance when acquiring firms from developed economies," Journal of World Business, Elsevier, vol. 53(5), pages 752-767.
    8. James Richards & Kate Sang, 2019. "The intersection of disability and in-work poverty in an advanced industrial nation: The lived experience of multiple disadvantage in a post-financial crisis UK," Economic and Industrial Democracy, Department of Economic History, Uppsala University, Sweden, vol. 40(3), pages 636-659, August.
    9. Anthony McDonnell & Jonathan Lavelle & Patrick Gunnigle, 2014. "Human Resource Management in Multinational Enterprises: Evidence From a Late Industrializing Economy," Management International Review, Springer, vol. 54(3), pages 361-380, June.
    10. Kim, Kyoung Yong & Patel, Pankaj C. & Devaraj, Srikant, 2025. "Sorting, incentive, and investment effects of employee stock ownership," Journal of Business Research, Elsevier, vol. 191(C).
    11. Victor Oltra & Jaime Bonache & Chris Brewster, 2013. "A New Framework for Understanding Inequalities Between Expatriates and Host Country Nationals," Journal of Business Ethics, Springer, vol. 115(2), pages 291-310, June.
    12. Leila Baghdadi & Rihab Bellakhal & Marc-Arthur Diaye, 2016. "Financial Participation: Does the Risk Transfer Story Hold in France?," British Journal of Industrial Relations, London School of Economics, vol. 54(1), pages 3-29, March.
    13. Biljana Bogićević Milikić & Nebojša Janićijević, 2009. "Cultural Divergence And Performance Evaluation Systems: A Comparative Study Of Three Serbian Companies," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 54(180), pages 40-56, January –.
    14. Edwards, Tony & Tempel, Anne, 2010. "Explaining variation in reverse diffusion of HR practices: Evidence from the German and British subsidiaries of American multinationals," Journal of World Business, Elsevier, vol. 45(1), pages 19-28, January.
    15. Goerke, Laszlo & Pannenberg, Markus, 2011. "Trade union membership and dismissals," Labour Economics, Elsevier, vol. 18(6), pages 810-821.
    16. Patel, Parth & Bhanugopan, Ramudu & Sinha, Paresha & Prikshat, Verma & Boyle, Brendan, 2024. "Home country and firm-specific advantage influences on HRM replication versus adaptation in EMNEs operating in advanced economies: A qualitative comparative analysis," Journal of Business Research, Elsevier, vol. 170(C).
    17. Puck, Jonas F & Mohr, Alexander T & Holtbrügge, Dirk, 2006. "Cultural convergence through web-based management techniques? The case of corporate web site recruiting," Journal of International Management, Elsevier, vol. 12(2), pages 181-195, June.
    18. Robert Konopaske & Chet Robie & John M. Ivancevich, 2009. "Managerial Willingness to Assume Traveling, Short-term and Long-term Global Assignments," Management International Review, Springer, vol. 49(3), pages 359-387, June.
    19. Bol, Jasmijn C. & Moers, Frank, 2010. "The dynamics of incentive contracting: The role of learning in the diffusion process," Accounting, Organizations and Society, Elsevier, vol. 35(8), pages 721-736, November.
    20. John S. Heywood & Uwe Jirjahn, 2014. "Variable Pay, Industrial Relations and Foreign Ownership: Evidence from Germany," British Journal of Industrial Relations, London School of Economics, vol. 52(3), pages 521-552, September.
    21. Fortwengel, Johann & Gutierrez Huerter O, Gabriela & Kostova, Tatiana, 2023. "Three decades of research on practice transfer in multinational firms: Past contributions and future opportunities," Journal of World Business, Elsevier, vol. 58(3).

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:ecoind:v:24:y:2003:i:3:p:349-377. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: http://www.ekhist.uu.se/english.htm .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.