Multinational companies (MNCs) have more opportunities than ever to forum shop and choose between different market systems - including different industrial relations (IR) systems. When an MNC choose to engage in a certain country, it also becomes an actor in the country's labor market system. MNCs are often quite large companies, and hence they can become significant players, potentially affecting the existing balances between the social partners. The question is whether MNCs adapt to the host country's labor market system (host country effect) - or if they seek in various ways to change the host country’s institutions to suit the MNC’s needs (country-of-origin effect).
This question is discussed by Steen E. Navrbjerg from FAOS and Paul Marginson from Warwick in the article MNCs in Denmark and the UK - accommodating to or transforming national industrial relations? The article is based on a survey of 301 MNCs in the UK and 110 MNC’s in Denmark. In the article home owned MNCs is compared with overseas MNCs in Denmark and the UK respectively; furthermore, MNCs in a liberal market economy (UK) is compared with MNCs in a coordinated market economy (Denmark).
The analysis shows that the MNCs in Denmark much more often recognize unions than is the case with MNCs in the UK. This indicates that strong relations between the social partners and a strong institutionalised IR-system in Denmark are defining the relations between employer and employee, and are also inhibiting the MNCs opportunities to determine the employment relations. Quite the opposite to the UK, where trade unions are weak and where collective bargaining is far less widespread. Further analyses show that MNCs originating from liberal market economies (especially the US) acts differently in the two countries; in the UK they tend to a lesser extent to recognize trade unions than US-based MNCs do in Denmark. In other areas, such as information to employees about staffing, and information on future investments, the differences are marginal. This indicates that regarding issues at the core of the national labor market systems – union recognition and collective of the academic system – the host country effect prevails while regarding issues at the core of the company's competitive parameters - financial matters, including staffing - the country-of-origin effect becomes obvious.