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The research reported here begins from the premise that employment relations within the European subsidiaries of American multinationals are influenced critically by the US business system, generating preferences for non-unionism, individualized pay and performance management, and quality management, for example. Further, these can be traced through examination of control systems extended from corporate headquarters. The article complicates this general picture. Despite the case company's leading position within an American-dominated industry, engineering process contracting, we consistently found authority vested in local managers, and host-country orientations to the management of employment relations in the UK subsidiary. Explaining these findings takes us back repeatedly to sectoral characteristics. These directly affect employment systems and influence them indirectly through `first-order' strategic choices (about where to produce) and second-order ones (about the organizational form to be adopted). The analysis highlights how sectoral factors strengthened the hand of local engineering managers and created circumstances in which they could assert autonomy and extend their `charter'.
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