Employee participation in multinational enterprises. The effects of globalisation on Dutch works councils
| DOI | https://doi.org/10.1108/01425450210416915 |
| Date | 01 February 2002 |
| Pages | 29-52 |
| Published date | 01 February 2002 |
| Author | Jan Kees Looise,Michiel Drucker |
| Subject Matter | HR & organizational behaviour |
Employee
participation
29
Employee Relations,
Vol. 24 No. 1, 2002, pp. 29-52.
#MCB UP Limited, 0142-5455
DOI 10.1108/01425450210416915
Received April 2001
Revised August 2001
Accepted August 2001
Employee participation in
multinational enterprises
The effects of globalisation on Dutch
works councils
Jan Kees Looise and Michiel Drucker
University of Twente, Enschede, The Netherlands
Keywords Employee participation, Works councils, Globalization,
Human resource management, Multinationals, The Netherlands
Abstract The internationalisation of enterprises is expected to undermine national systems of
employee representation. This paper assesses the extent to which this expectation can be
confirmed. Using a survey of Dutch works councils, we compare national, Dutch multinational
and foreign multinational firms. Using another survey, we then assess the role of European
works councils within Dutch MNEs. The results of the first survey show that the influence of
works councils in multinational firms, especially with respect to strategic policy, but also, to a
lesser extent, regarding organisational and personnel issues is decreasing. From the second
survey, we learn that European works councils have so far not compensated for this decrease in
influence. We conclude that the undermining of employee representation at the national level can
only be counteracted by a combination of further regulations at the European level, a change in
(top) management attitudes in European MNEs and the close co-operation of employee
representatives within the respective countries and at the different levels.
1. Introduction
Much of the literature on human resource management focuses on employee
influence or participation (see Beer et al., 1984). This follows from the idea
that employees have a ``stake'' in their companies, not only in an economic
sense (wages, benefits, pensions, etc.), but also psychologically (recognition,
satisfaction, development, etc.) and politically (obligations, rights, influence,
etc.). Although most HRM literature prescribes linking human resource
management practices to company strategy, in Western Europe, personnel
management in general and participation in particular have been largely
determined by the national system of industrial relations (Looise and Van
Riemsdijk, 2001). This means that multinational enterprises (MNEs) have had
to deal with different national systems. Broadly speaking, these fall under
two headings:
(1) systems based on (national) legal obligations, such as those found in
Western Europe and Japan; and
(2) voluntarist systems, in which employee influence arrangements are the
result of management decisions and/or negotiations with employees or
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This article is dedicated to the memory of our great colleague and friend Professor Harvie
Ramsay, from Strathclyde University, who was also active in this field and who died
unexpectedly on 24 April 2000.
Employee
Relations
24,1
30
unions. Such systems are mostly found in Anglo-Saxon countries such
as the USA and the UK.
MNEs with subsidiaries in more than one country have thus had to deal with
different systems for worker participation. Within their subsidiaries, most
MNEs have followed a ``polycentric'' approach, in other words, they have
adapted arrangements for their employees to local conditions. MNEs
originating from the Anglo-Saxon countries installed works councils or
comparable forms of employee participation in continental European countries
such as Germany, Belgium and The Netherlands. Conversely, MNEs
originating in continental European countries, did not install works councils
within their US or UK subsidiaries, but followed the local voluntarist tradition
instead. In the home country, where the headquarters are mostly situated, most
MNEs have followed an ``ethnocentric'' approach, taking the national system of
the home country as the point of departure.
Due to the growing need for more strategic and integrated human resource
management, MNEs are tending to develop their own approach towards
employee participation. For subsidiaries of MNEs within the Anglo-Saxon
countries, little will change, given the freedom that companies ± whether they
were multinational or not ± already have to form their own arrangements. For
MNEs within continental European countries, however, this development may
lead to ``social dumping'', or to a hollowing out of national social arrangements.
To prevent this happening, an EU directive on European works councils
(EWCs) has been issued. However, the question is whether the rather weak
EWC arrangement will be able to offset the effects of increasing
internationalisation on national systems of worker participation.
In this article, we discuss the effects of internationalisation on the Dutch
system of works councils. As in other continental European countries, such as
Belgium, Germany and Austria, the Dutch works council developed into a
relatively strong and mature institution for employee representation in the
second half of the twentieth century (Looise et al., 2001). However,
globalisation, and especially the growing number and influence of MNEs, is
generally seen as a contributory factor in the gradual undermining of the
position of the works council (Marginson and Sisson, 1994; Van der Heijden,
2000). We examine here the extent to which this fear is grounded.
Our data is taken from a recent representative survey on the position of the
works council in The Netherlands and from another survey about the role of
the European works council within Dutch MNEs. The survey on Dutch works
councils was an update of the last major survey of works councils in 1985
(Looise and De Lange, 1987), and, to a large extent, it had the same layout. The
survey consisted of separate questionnaires to both the works council and to
the managing director of a representative sample of all organisations with over
50 employees. The response rates were quite low: 12 percent (N= 407) for the
works council survey and 14 percent (N= 475) for the management survey. By
comparing the results of the 1985 and 1998 surveys, shifts in the position of the
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