Challenges for European Management in a Global Context: Experiences from Britain and Germany

Abstract

Mike Geppert, Dirk Matten, Karen Williams: Challenges for European Management in Global Context: Experiences from Britain and Germany Palgrave, Basingstoke 2002, 320 pp., $ 75,00, euro 64,50 This volume provides an umbrella beneath which European scholars who have conducted, largely case-based research over an extended period of time into the organizational challenges faced by MNCs in Europe can synthesize their findings in relation to two core notions contained in Bartlett and Ghoshal's (1989) evolutionary framework. The first of these is structural, that is that MNCs are evolving into transnationals that are characterized by high levels of global integration and local adaptation. The second notion concerns the primary control mechanism required by such structure. Bartlett and Ghoshal argue that in order to achieve global integration and synergies from their localized operations, MNCs are and will increasingly use socio-integrative control mechanisms that engender a common understanding of, identification with, and commitment to the corporation's objectives, priorities and values (Bartlett/Ghoshal 1987: 78) so that the relative importance of other control mechanisms such as output control is decreasing. The first of these concerns is addressed in essays by among others the editors themselves, Anne Tempel, Tony Royle and Gert Schmidt. Arguably the major difference between the approach of these scholars and that of Bartlett and Ghoshal is that while the latter tend to view local adaptation in MNCs from the locus of the firm and its strategic intentions, the former emphasize the imposition of local adaptation by nationally derived institutional conditions. In particular the volume focuses on Germany and Britain because their business systems have traditionally been represented as polar opposites in the European context. While German firms are institutionally highly embedded, British firms are much less so. Geppert, Matten and Williams find that German subsidiaries of MNCs through negotiations with HQ are able to adapt and skew HQ strategy in ways that reflect core features of the German business system, not least the high level of local manufacturing skills. UK subsidiaries are similarly influenced by the British business system, including weak institutional barriers to redundancies and the well-developed Anglo-Saxon service culture, in their interaction with HQ global strategy. The result is different patterns of work system design in British and German subsidiaries. Likewise Tempel observes that subsidiaries of British MNCs in the highly regulated German setting have responded to the more constraining environment by adopting host country practices, including industry-level collective agreements and works councils. One immediate source of institutional pressure is the determination of German subsidiary HRM managers to utilize German labor law and therefore to resist country-of-origin practices such as performance-related pay. However, the volume also contains dissenting voices that argue that local adaptation is becoming less institutionally driven. Royle documents how McDonald's has consistently and largely successfully struggled against unionization across Europe very often in the face of hostile press coverage and has developed its managers in common corporate mold. In other words he rejects any simplistic notion of institutional determinism. Schmidt examines new management orientations in Germany and their impact on the German model of regulation and consensus culture. He observes that change is being generated by foreign MNCs such as IBM whose strategy he refers to as strategy of aggressive remodelling and by McDonald's which is trying to avoid the German institutional framework altogether. He concludes that: US-based (and UK) companies appear to be attacking national institutional frameworks in Germany, and in Europe as whole, at both ends of the spectrum - in the low-skill, service-based sectors as well as in the high-skill, knowledge-based sector (p. …