Management across borders - consequences of take-overs of Danish enterprises

Paper by Steen E. Navrbjerg

In a Danish context, the debate on outsourcing has had the outsourcing from Denmark to other countries as the pivotal point while buy-outs of Danish companies have attracted much less attention. The focus of this paper is on buy-outs of Danish companies and the possible consequences for cooperation on enterprise level.

The paper is based on a longitudinal study of five enterprises over a 10-years period. Four out of the five companies was domestically owned in 1996, while in 2006, four out of the five was bought-out by foreign companies. The study shows that all the companies taken over have lost between one third and half of their workplaces, while the domestically owned company has expanded with 80 per cent. This qualitative study cannot be taken into account for the general development, but it does question the wide-spread conception of foreign investments as only positive.

The study indicates that foreign ownership might affect relations on the enterprises. The meeting of different management traditions and different traditions for involvement and cooperation has consequences. First, the domestic management often becomes a kind of advanced middle-managers. Important strategic and economic decisions are taken by HQs, far away from the domestic management. Second, in several cases the foreign management restructures the work organisation, more often than not in a more hierarchical direction. This comes as a major surprise to local management as well as employees, since it is a wide-spread belief that the attraction to the foreign owners is exactly the Danish traditions for autonomously operating teamwork.

The study shows that the cooperation between management and employees are affected by foreign management. While foreign management does not try to influence the industrial relations as such, the ability to use the possibilities that the still more decentralized collective agreements are opening up for might be jeopardized. A prerequisite for using the possibilities in the collective agreement is cooperation and trust between management and employees, and 'hard' HRM might deteriorate cooperation and create distrust.

The question addressed in the paper is if the Scandinavian traditions for formal and informal cooperation are under pressure from foreign ownership, and if this is calling for a revision of the Danish collective bargaining system that takes other management styles into consideration.

Contact: Associate Professor Steen E. Navrbjerg, +45 35 32 32 79, sen@faos.dk