What Follows Employment Relations Comparative Advantage: Within Country Variation of US-Subsidiaries’ Host-Country Fit and Staff Adjustment Practices

Abstract:     
In this paper it is tested in how far US-subsidiaries’ employment relations comparative advantage - subsidiaries’ host-country fit - coincides with a different use of host-country employment relations - staff adjustment practices. Characteristics of subsidiaries that should lead to the subsidiary profiting from using host-country employment relations are identified. An index is created to display subsidiaries’ host-country fit. Then the relationship between host-country fit and staff adjustment practices is analysed while recurring on a unique dataset on US-subsidiaries in Germany, Switzerland and the UK. As predicted, regarding the central measure there is a significant relationship between host-country fit in US-subsidiaries in Germany and the frequency of staff adjustments found and none for US-subsidiaries in the UK, each in reference to the US-subsidiaries in Switzerland. Differentiating US-subsidiaries according to employment relations comparative advantage capabilities needs to be taken into account for the analysed staff adjustment practices when there is a difference between home- and host-country employment relations practices to begin with. The main limitation is the modest sample size. Differentiating subsidiaries’ staff adjustment practices by their host-country fit contributes to explaining contradictory findings regarding US-companies’ uptake of host-country employment relations practices.

Number of Pages in PDF File: 27

Keywords: capitalism, varieties of, multinational companies, personnel management

JEL Classification: F23, M54, P16

working papers series