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This book provides cutting edge research and knowledge and an academic study of the impact of globalisation in different areas affecting management and how management is responding. It gives a comprehensive analysis of what is actually happening and likely future trends. It is not just a focus on 'convergence' arguments, but integrates a broader view of still remaining regional and national differences in management and organisation. The book draws on new theoretical approaches in the field of international business, highlighting areas such as Anglo-German subsidiaries of MNCs, HRM practices and change management processes or employment relations in US-based MNCs in Europe and many other aspects.



Introduction: Challenges for European Management in a Global Context — Introduction, Approaches and Directions of Future Research

Introduction: Challenges for European Management in a Global Context — Introduction, Approaches and Directions of Future Research

Research into multinational organizations has been heavily characterized — if not flawed — by two major and mutually determining elements. Firstly, for a long time there has been a dominant bias on evolutionary concepts (Westney and Zaheer, 2001) and secondly, the North American perspective has been an overwhelming influence on the field. An example of this is the Oxford Handbook of International Business, in which nearly all the authors of this state-of-the-art work are based at, or completed the major part of their work in, American business faculties.
Mike Geppert, Dirk Matten, Karen Williams

Cross-national Organizations in Europe: Between Convergence and Divergence


1. For Boundedness in the Study of Comparative and International Business: The Case of the Diversified Multidivisional Corporation

The fate of national approaches to management in the global economy is contested (Whitley, 1999; Geppert et al. in this volume). As we shall see, the arguments are complex, the stakes high. Nevertheless, the key question may, initially at least, be put quite simply: arc previously diverse national forms of business organization and management practice converging on common patterns and processes? For a long line of commentators (Rostow, 1960; Ohmae, 1990, 1995; Yip, 1992; Reich, 1993) the answer is a clear yes. They believe that economic processes will ultimately lead to the erosion of any notable national distinctiveness, a ‘wilting away of the idea of a cohesive and sequestered national economy and society’ (Amin and Thrift, 1994: 1). For advocates of the convergence thesis there is, ultimately, one best way of organizing, one best way of managing, which firms must adopt if they wish to succeed In the global economy. Such views have been strongly opposed by those who suggest that national cultures and unique societal and institutional structures will continue to support different, yet sustainable, patterns of economic organization and management practice (Whitley, 1994; Zysman, 1994; Hollingsworth and Boyer, 1997; Thomas and Waring, 1999).
Michael Mayer, Richard Whittington

2. Global Change Management Approaches in MNCs and Distinct National Trajectories: Britain and Germany Compared

The discourse on globalization has been a field of research in international business for quite some time. Within the large body of literature there seems to be a rather strong, if not dominating, school of thought, which argues that globalization will ultimately result in the worldwide convergence of organizational patterns. There is talk of the ‘stateless’ enterprise (Parker, 1998) and the ‘transnational’ organization (Bartlett and Ghoshal, 1989), to name just two examples. The general argument is that the proliferation of worldwide, homogeneous economic and technological rationales is leading to a more or less worldwide standardization of organizational structures and processes. This view coincides with, and has been strongly encouraged by, a considerable bias on evolutionary concepts, which have clearly dominated theory building in the field of the multinational business organization over the last two decades. The most prominent example of this is the ‘transnational solution’ proposed by Bartlett and Ghoshal (1989: 66–71).
Mike Geppert, Dirk Matten, Karen Williams

3. Control Mechanisms and Patterns of Reorganization in MNCs

Current management and organizational research seems to agree in one respect: that management faces new challenges resulting mainly from globalization, whether it is real or perceived. Clearly, national corporations as much as MNCs feel the need to respond to new market conditions by reorganizing their businesses on a permanent basis. These changes concern structural configurations as much as flows of all kinds of resources including products, people and capital. However, in our empirical research we looked more closely at such reorganizations and found that even MNCs operating in the same industry were by no means responding to the challenges of globalization in a uniform or convergent way. Despite some similar trends, the types of reorganization, as well as the way the reorganization process developed, diverged from one company to the other. Searching for answers, we found that different dominant control mechanisms were key factors in explaining the divergent patterns of reorganization. Although our research topic is only indirectly linked to the general convergence—divergence debate in the context of globalization (see Ohmae, 1990; Maurice and Sorge, 2000; Morgan et al., 2001), we may nevertheless contribute to it. As will be outlined in our chapter, our findings on the connection between control mechanisms and patterns of reorganization indicate that there is as much convergence as divergence.
Florian Becker-Ritterspach, Knut Lange, Karin Lohr

4. Headquarters—subsidiary Relationships in Multinational Companies: A British—German Comparison

One of the recurrent themes in international organization studies is what happens to organizational practices as enterprises are increasingly exposed to internationalizing influences. Such influences can be divided into two main areas:
On the one hand, enterprise activities are internationalized through exposure to customers, suppliers or alliances outside a society or domestic economy of origin, regulated by common and relatively homogeneous institutions. This kind of internationalization culminates in the formation of a multinational company if and when non-marginal company functions are localized in subsidiaries outside the country of origin.
On the other hand, even enterprises which are not internationalized or multinational are subject to competitive pressures, regulatory norms and imitation influences, which emerge from an international search for good or best organizational practices.
This debate continues, partly under new auspices, along a well-established track, which focuses on the extent of and explanations for convergence and divergence. The literature has used these concepts in different ways. An authoritative definition by reputed scholars states that: ‘The subject of organizational convergence is concerned with how far organizations in different countries have traveled along a path to global convergence in operations and management and, conversely, how far the influence of specific cultural factors must be understood and planned for if the manager is to be effective in cross-cultural situations’ (Pugh and Hickson 1996: 3899; see also the overview in Geppert et al. this volume, based on Child, 2000).
Anne-Wil Harzing, Arndt Sorge, Jan Paauwe

5. Extending the Perspective: Small and Medium-sized Enterprises as Competitors and Network Partners of MNCs

Multinational corporations (MNCs) are in a division of labour with small and medium-sized enterprises (SMEs): on the one hand, globalizing SMEs are increasingly becoming competitors of the MNCs, and on the other hand, they are also network partners for MNCs. For a better understanding of the strategies of MNCs, a closer look on their relationship with globalizing SMEs is required; this is the focus of our paper. Our investigation pertains to the German national business system with its consensual style of capitalism, but some of the results might well serve as hypotheses for other varieties of capitalism as well.
Martin Brussig, Lutz Gerlach

Human Resource Management and Industrial Relations in Europe: The Pressures of Globalization


6. Multinational Companies, Institutional Environments and the Diffusion of Industrial Relations Practices

The process of globalization driven by the activities of multinational companies (MNCs) has led some commentators to argue that MNCs are footloose, sourcing, producing and marketing on a global scale, as dictated by their business strategy (Ohmae, 1990; 1993; Strange, 1997; The Economist, 1995) and that through these denationalized companies, a process of homogenization is at work.
Anne Tempel

7. Middle Managers: Differences between Britain and Germany

For a long time, proponents of a structuralist approach have assumed that the division of economic actors within firms into the groups of owners, managers and workers allows an explanation of their actions and behaviour. Roles, according to this approach, are, above all, contingent on economic categories such as ownership or the control of means of production, which are assumed not to differ between cultural settings (that is, the culture-free thesis). Members within each of these three groups are believed to act in a similar way, no matter where the firm is located. Interaction between members within each of these groups should therefore pose no obstacles for conducting business internationally: there would seem to be no need to think about peculiarities within specific countries.
Hans-Dieter Ganter, Peter Walgenbach

8. Resistance is Useless! The Problems of Trade Union Organization in the European Fast-food Industry: The Case of McDonald’s

This chapter is based on a comparative case study which examines the employee relations practices of the American multinational the McDonald’s Corporation in several European countries. It focuses on the problems of union organization in the European fast-food industry and the implications of these trends for employee rights to representation, pay and conditions of employment.
Tony Royle

9. Global Market Pressures in a Regional Context: Experiences from Field Research in the Industrial Region of South Wales, UK

In the globalized marketplace, it is generally acknowledged that manufacturing in developed economies is under severe pressure, and the UK Trade and Industry Secretary recently conceded that the sector in Britain as a whole is currently ‘in recession’ (Financial Times, 06.11.01: 4). All toofrequently, discussion of global industrial restructuring is conducted on the basis of corporate policy and its economic ramifications, in a reified debate that effectively ignores or devalues the existence and contribution of the human actors within workplaces, who are actually engaged in the task of creating corporate wealth. This chapter offers a less depersonalized view of the pressures on the actors involved in industrial relations in manufacturing workplaces, who are located within a particular region of a developed economy, namely the UK. It aims to illustrate how globalization has been used as a powerful managerial rationale for changes to working practice by focusing workplace trade union representatives’ minds on their members’ vulnerability in the global marketplace for labour and thereby enlisting their cooperation and negating any form of overt protest against change. (See also Tempel in this volume for the effect of globalization on collective bargaining relationships). The chapter will first describe the regional context of the research and the case study factories prior to discussing the use of globalization as a managerial rationale for change.
Jean J. Boggis

Globalization and the Institutional and Cultural Framework of Europe: An Outlook


10. The Effects of Globalization on State—Business Relationships: A Conceptual Framework

Do governments matter anymore? Given the rhetoric on the globalization of business practices, the apparently unstoppable growth of multinational enterprises following transnational mergers and acquisitions and claims by some that state power has been eroded so much as to make centralized decision-making, especially by smaller states, irrelevant, one might think not. When one examines the international spread of financial markets, the interpenetration of industries across borders, the spatial reorganization of production and the growth of supranational trade associations, it is perhaps easy to assume that globalization is ubiquitous and its impact has emasculated the state. Even amongst those who question the one-way causality implicit in many popularizers of global trends (Mittelman, 2000), there is a tendency to adduce a powerful logic to the dynamics of globalization. With technology given primacy in the almost instantaneous spread of information, the communications revolution has eroded many of the cultural barriers in societies and transformed many aspects of civil society (Hutton and Giddens, 2000). In doing so, states are assumed to have lost much of their potency as arbiters of change and defenders of last resort. Having domesticated the harsher aspects of the market economy (Kuttner, 2000), they have been relegated to the sidelines of a self-regulated global economy of the type that Adam Smith might easily have envisioned.
Ian M. Taplin

11. Globalization and the Effects of Diversity and National Identity — with Illustrations from Three British Companies

Both ‘globalization’ and ‘managing diversity’ have become central themes in academic and popular business discourses. Of the two, globalization is the older concept and is signified by such terms as ‘the global village’ (McCraken, 1988), ‘the global market place’ (Paliwoda, 1993) and ‘the global economy’ (Hirst and Thompson, 1994). It presents a view of the world and its people, whether as organizational managers, employees or customers, as being increasingly ‘connected’. More recently, globalization has been coupled with the younger concept of diversity management, which originated in the US and, as Litvin (1997) observes, has been quickly leapt upon by scholars and practitioners as an important tool in harnessing the energies of organizations in the global battle for economic success. While there are many different interpretations and understandings of diversity management (see Kirton and Greene, 2000; Lorbiecki and Jack, 1999 for overviews of the literature), it is underpinned by the central belief that organizations with highly diverse workforces — in terms of gender, age, ethnicity, able-bodiedness, religion, sexual orientation and other differences — perform better in today’s ‘global’ economy than corporations that are monocultural or homogeneous. It is argued by leading advocates, such as Thomas and Ely (1996) and Dass and Parker (1999), that it makes good business sense to increase the number of different affinity groups on corporate payrolls, because their members are more in tune with the varied needs and tastes of people within our increasingly diverse and multicultural societies.
Anna Lorbiecki

12. German Management Facing Globalization: The ‘German Model’ on Trial

This paper investigates the particular challenges facing German management as they seek to adjust to the global economy by increasingly internationalizing their business operations. Although globalization is a challenge to all national economies, the German economy, as an example of what Taplin describes in this volume as ‘consensual capitalism’ based on an activist state, is finding the adjustments especially difficult as they question the fundamental structure and characteristics of the national business system. In this paper, we focus on the ongoing debate about whether the ‘German model’, previously seen by many, not only in Germany, as a highly successful social welfare state, is now a liability in terms of Germany’s attractiveness as a location for business investment. We investigate German managers’ views on the issue, which are ambiguous since they want to retain what they see as the advantages of the model whilst introducing some Anglo-Saxon-style reforms. It is an open question whether they will be able to ‘have their cake and eat it’. No one knows as yet what the next phase of the German model will look like, although this paper makes some tentative suggestions about this. In conclusion, we question the longstanding attachment to national models as champions in management thinking.
Gert Schmidt, Karen Williams


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