Nordic subsidiaries in the Baltic States: is model transfer possible?
| Pages | 356-374 |
| Published date | 28 June 2011 |
| DOI | https://doi.org/10.1108/01425451111140631 |
| Date | 28 June 2011 |
| Author | Markku Sippola |
| Subject Matter | HR & organizational behaviour |
Nordic subsidiaries in the
Baltic States: is model transfer
possible?
Markku Sippola
University of Jyva
¨skyla
¨, Joensuu, Finland
Abstract
Purpose – This research seeks to ask to what extent model transfer in employee relations (in terms of
employee representation, participation and workplace bargaining) occurs between Nordic and Baltic
countries from the principal firm to the subsidiary. It also looks into explanations as to why model
transfer occurs – or does not occur – from the perspective of the Nordic industrialist’s labour
management strategy.
Design/methodology/approach – This is a case study comprising three clothing manufacturers
and three engineering shops in different Baltic States: Estonia (population 1.4 million), Latvia (2.3
million) and Lithuania (3.4 million). These production sites have headquarters in three Nordic
countries: Denmark, Norway and Sweden. Semi-structured (thematic) interviews are carried out
among managers, shop stewards and employees of the subsidiaries.
Findings – There is little model transfer between the Nordic principal firm and the Baltic subsidiary,
whereas the Nordic employer prefers local forms of employee relations. Modest model transfer derives
from the desire for controlling the labour process, where the Nordic investor seeks to utilise differences
between the regimes.
Social implications – The Nordic industrialists’ search for the distinction between different regimes
and the Baltic drive at liberal market economy (LME) together may prove fatal for labour conditions.
Such production policy will not improve the position of the Baltic worker.
Originality/value – The findings question the very idea of model transfer: where any labour
management strategy existed, there was either an unambiguous assertion of indigenous solutions or
adoption of “best practices” not peculiar to the Nordic labour relations regime.
Keywords Employee relations, Model transfer,Garment industry, Engineering shops,Baltic States,
Nordic countries
Paper type Case study
1. Introduction
In the Nordic countries – Denmark, Finland, Norway and Sweden – employers have
learned to live with the strong rights of workers, an occurrence which Whitley (1999,
p. 69) relates to a skill-based labour management. In the time of economic globalisation,
it is expected that this type of management would diffuse from the Nordic parent
companies to their foreign units. Particularly interesting cases are the relocations to the
neighbouring countries, the Baltic States, since a half of the foreign direct investment
(FDI) stock in the beginning of the 2000s originated in the four Nordic countries
(Hunya, 2004, p. 98). However, previous research reveals a relatively modes t model
transfer from the West to the East of Europe as regards to employee relations. There
are a number of studies on the model transfer from German enterprises to Central and
East European (CEE) subsidiaries that support this observation (Do
¨rrenba
¨cher, 2001;
Bluhm, 2001; Fichter, 2003). Norwegian enterprises have not transferred their
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33,4
356
Employee Relations
Vol. 33 No. 4, 2011
pp. 356-374
qEmerald Group Publishing Limited
0142-5455
DOI 10.1108/01425451111140631
home-country model of employee relations to Polish subsidiaries (Kvinge and
Ulrichsen, 2008), either.
The present analysis of model transfer concerns employee relations. One can make a
case for an argument that employee voice – especially when it com es to co-determination
– is at the core of the Nordic industrial relations system. In comparative “varieties of
capitalism” (VoC) literature, wage bargaining and employee participation are
particularly featured as relevant elements of employee relations (e.g. Buchen, 2005,
p. 9). Analogously to Buchen (2005), I examine employee relations with respect to
employee representation (unions, works councils), employee participation and workp lace
bargaining. Employee relations embrace agency relationships, that is to say, the interests,
choices and actions of the different parties (Blyton and Turnbull, 1998, p. 34).
Along with defining employee relations as an essential dimension of human
resource management (HRM), I also consider them as relevant in terms of labour
management strategy. I maintain the fact that whether or not a model transfer of
employee relations practices occurs derives from strategic choices. This idea is based
on the argument that an investor deliberately pursues control of the value chain, and
the overseas subsidiaries are consequently subject to managerial control. By definition,
FDI decision-making itself aims at acquiring or maintaining control of productive
assets for the parent company (Moosa, 2002; Harzing, 2004). Therefore, the hypothesis
is that the Nordic manufacturer is seeking control over the entire production process
when making decisions on foreign direct investment.
Although some views of divergence between the Nordic economies exist in terms of
HRM (Lindeberg et al., 2004; Rogaczewska et al., 2004), the Nordic countries can be
regarded as acoher ent entity in terms of corporate culture (see, e.g. Geert Hofstede’s (1991)
Nordic cluster), industrial relations (the Northern model; see Winterton and Strandber g,
2004, pp. 37-39) and the welfare state model (e.g. Esping-Andersen’s Nordic welfare
regime). These accounts fit well into the features of Amable’s (2003) “social-democratic”
model as well as Coates’s (2000) “labour-led” capitalism characterised by the moderate
employment security, a high level of social welfare, wide-spread labour re-training
systems and co-ordinated wage bargaining (Lane, 2006, p. 18).
I have organised the paper as follows. In the first two chapters, Nordic and Baltic
economies are featured in light of the VoC paradigm. The third chapter discusses the
conditions of the occurrence of model transfer. The fourth chapter introduces the data
and methodology of the research. The following analysis chapters elaborate on
employee relations in the subsidiaries chosen for the study. Employee representation,
schemes of employee participation and workplace bargaining are considered in
relation to both the clothing manufactories and the engineering shops. The conclusion
chapter, besides summing up the findings, also suggests some explanations for the
occurrence (or the lack) of model transfer, drawing on the power relations and VoC
concepts.
2. The distinctive “Nordic model”
The VoC standpoint is important in the examination of national contexts and it is
valuable to this research as well. Central to the VoC paradigm is the distinction
between liberal market economies (LMEs) and coordinated market economies (CMEs).
In particular, Hall’s and Soskice’s (2001) account on them has gained much popularity.
LMEs occur in countries where the market and price signals are the main coordination
Nordic
subsidiaries in
the Baltic States
357
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