Competence development and learning in British and German subsidiaries of MNCs. Why and how national institutions still matter
| Date | 01 April 2005 |
| Published date | 01 April 2005 |
| DOI | https://doi.org/10.1108/00483480510579402 |
| Pages | 155-177 |
| Author | Mike Geppert |
| Subject Matter | HR & organizational behaviour |
Competence development and
learning in British and German
subsidiaries of MNCs
Why and how national institutions still matter
Mike Geppert
Queen Mary University of London, London, UK
Abstract
Purpose – This paper develops a deeper understanding of the origin, development and
implementation of overall change management strategies in multinationals and their implications
for competence development and learning practices in UK and German subsidiaries.
Design/methodology/approach – The cross-national research project applies mainly qualitative
research methods.
Findings – Despite increased integrative attempts by headquarters, especially in two out of three
cases, significant differences were found between German and UK subsidiaries in key capabilities and
strategic competences as well as in knowledge sharing and learning.
Research limitations/implications – Future research should focus more on micro-political issues
of learning and knowledge sharing, a topic hardly addressed in international management research.
Originality/value – This study shows the enduring influence of national institutional diversity on
the management of the MNC.
Keywords Multinationalcompanies, Competences, Strategicobjectives, Learning organizations,
Subsidiaries,National cultures
Paper type Research paper
Introduction
There is an increased interest in learning in MNCs in international management
research, which is shaped by contingency theory-based approaches, such as the
“evolutionary model” of the MNC. Accordingly, globalisation is understood as a
process that increases environmental complexity thr ough, for example, rapid
technological change, increasing global competition in the established markets and
the emergence of new competitors and opportunities through the opening of new
markets. These factors affect not only the organisational structure, but also the
coordination and control processes of companies operating globally. It is assumed
further that traditional hierarchical forms of coordination and control are outdated, and
increased communication and new ways of learning across functional and national
The Emerald Research Register for this journal is available at The current issue and full text archive of this journal is available at
www.emeraldinsight.com/researchregister www.emeraldinsight.com/0048-3486.htm
Earlier versions of this paper were presented at the 2nd Annual EURAM conference, May 2002,
in Stockholm, at the Research Seminar Series of the Manchester Business School in June 2002 and
to the 27th Conference of the “Commission Organisation” of the Association of Business
Administration in Germany in Augsburg, February 2003. The author would especially like to
thank Elena Antonacopoulou, Cornelia Hegele-Raih and the two anonymous reviewers for their
thoughtful comments on earlier drafts of this paper.
Competence
development and
learning
155
Received May 2003
Revised November 2003
Accepted January 2004
Personnel Review
Vol. 34 No. 2, 2005
pp. 155-177
qEmerald Group Publishing Limited
0048-3486
DOI 10.1108/00483480510579402
borders is recommended. Accordingly, a literature review about the transformation of
headquarters-subsidiary relations by Ferlie and Pettigrew (1996 p. 496) emphasises
that “the ever-swinging pendulum thus seems currently to be moving from
centralisation to decentralisation”. In this sense, functional, geographical or divisional
organisational forms, controlled and steered by powerful managers within the
headquarters, are seen as pure preconditions to stimulate organisational learning, but
network-like “transnational corporations” with a coexisting considerable autonomy of
regional headquarters and subsidiaries are seen as vital to develop “worldwide
learning” (Bartlett and Ghoshal, 1989). Recent studies of Birkinshaw and Hood (1998),
Birkinshaw and Fry (1998), and Birkinshaw (2000) have underlined this aspect and
shown that significant multinational change management and learning initiatives in
MNCs are not just developed and implemented by the headquarters, but, increasingly,
by the subsidiary level. However, only a few of these studies in international
management take into consideration that learning and subsidiary development are
influenced by the societal institutions of the host countries in which they are operating.
In this stream of research there seems to be less reflection on the cross-national variety
of organisational practices and learning which is unrelated to task environment
features and performance (for exceptions see, e.g. Birkinshaw and Hood, 1998; Rugman
and Hodgetts, 2001). In this respect I see the main contribution of the study outlined
here as aiding the understanding of why and how national societal institutions
influence competence development and learning practices in British and German host
subsidiaries of multinationals in the same industrial sector.
This study is based on an Anglo-German comparative research project on the
broader topic of change management strategies and processes in MNCs. Parts of the
research results have been published elsewhere (see, e.g. Geppert et al.; 2002a,b; 2003).
However, in this paper I will concentrate a comparative discussion on how different
change management approaches in MNCs based in three different home countries are
related to competence development and le arning in its British and German
subsidiaries. While contingency approaches concentrate their analysis on the
development of organisation-specific competences and learning approaches
according to specific task environmental features, in this study I ask how the
development of overall change management strategies and subsidiary competences
and learning are linked to societal institutions. Applying a European institutionalist
approach[1], I will focus on differences in competence development and learning at the
host subsidiary level. The key question of the paper is not just whether, but also how,
national institutions matter in order to understand approaches to change and learning
in British and German subsidiaries. I devote attention to two levels of national effects
in terms of how institutional environments may influence subsidiary competences and
learning: the country of origin or home country institutions of the MNC itself and the
host country embeddedness of the subsidiaries.
In this paper, I first discuss the key issues covered by international management
research on learning in MNCs. Secondly, I outline some conceptual ideas to understand
why and how national institutions are seen as important in understanding the
diversity of competence development and learning in MNCs. After that, I briefly
introduce the methodology and present comparative case illustrations. Here I refer to
both integrative change management strategies in MNCs and host country
embeddedness and their effects on competence development and learning in the
PR
34,2
156
To continue reading
Request your trial