The Diffusion of Employment Practices of US-Based Multinationals in Europe. A Case Study Comparison of British- and Italian-Based Subsidiaries

Abstract

A number of approaches to the diffusion of employment practices within American-based multinational companies (MNCs) can be discerned. In this paper, two theoretical approaches are contrasted: a ‘country-of-origin’ approach in which the influence of the home country is mediated by national features of host-country institutional environments; and a power resources or strategic choice approach that emphasizes the autonomy of local actors within MNCs and their capacity to shape the diffusion of employment practices. Using a case study comparison of three Italian and two British-based subsidiaries owned by an American MNC, the paper examines factors and patterns of diffusion of employment practices from the parent company to the local subsidiaries. The argument is put forward that company-specific features enhance the strategic power of the subsidiary firm within the wider corporation, thus complementing institutional host-country characteristics in shaping the diffusion of employment practices abroad. Hence, organizational as well as institutional effects contribute to creating the space that the various actors across host countries possess for protecting their interests and for exercising power on the terms and conditions of the diffusion.

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