Does location matter? An empirical investigation of flexibility patterns in foreign and domestic companies in five European countries

Abstract

A major field of discussion about globalization is the role multinational enterprises play in an international economy. The essence of the debate lies in the distribution of power between the two centres of influence – multinational corporations, on the one hand, and the institutional setting of nation states, on the other. Is it the local environment (country-specific settings) that exerts the decisive influence on the organization of employment and production or is it the corporate environment (corporate settings) of the companies in question? The aim of this contribution is to analyze flexibility patterns of foreign owned companies compared with domestic owned companies in five European countries with respect to the aforementioned debate. The analysis uses the EUCOWE dataset which is based on an enterprise survey in six countries (France, Germany, the Netherlands, Portugal, Spain and the United Kingdom) in 2003. By comparing foreign owned with domestic owned companies, similarities and differences between companies and between countries were analysed. The results show a hierarchy of effects influencing the flexibility patterns of enterprises. The analysis gives strong support to the argument that the institutional framework of countries is still a key factor for the organization of labour even within multinational corporations.