American multi-national corporations in the UK oil industry: sectoral differentiation in diffusion and adaptation

Abstract

There is a significant literature around the idea that American multi-national corporations (MNCs) diffuse a ‘country of origin’ effect which claims the export from America of an individualistic ideology comprising distinctive employment practices based on the national business system. This literature usually conflates the sector of the firms, but recently several critiques have emerged which limit the discussion to discrete sectors (generically in the engineering industries) and which digress from the previous literature's dichotomous nature, where home versus host country influences are evaluated. This article adds to that recent literature by offering evidence of structural factors within the MNCs, as well as of institutional norms and societal influences. This evidence is taken from extensive longitudinal data on American MNCs in two sectors of the UK oil industry. These comprise the exploration and production activities on the UK continental shelf (part of the North Sea), known as the ‘upstream’ sector, and the related activities of refining of oil and manufacturing chemicals, known as the ‘downstream’ sector. The findings provide a theoretical addendum to the literature: in this study we are able, unlike other studies, to explain the adaptation of the industry to local institutional, cultural and labor market contexts through the different structures of the industry's two sectors. Even within the same MNC, the divisions prove to be differentially adapted to the UK context. Such evidence casts doubt on the broad conclusions drawn from a large part of the existing literature. We therefore show that structure and sector are far stronger forces explaining MNC actions than the diffusion of a country of origin effect.