Avoidance Strategies and the German System of Co-Determination

Abstract

This paper is based on a comparative study of the UK and German operations of the McDonald’s Corporation. The main focus of the paper is the interaction between multinational enterprises (MNEs) and the German system of co-determination. Commentators have suggested that industrial relations practices in host countries are particularly difficult for MNE’s to avoid because they are so deeply embedded in societal frameworks. However, there are also opposing global pressures for MNEs to impose their industrial relations practices across national borders in order to transmit ‘best practice’ to their subsidiaries. Ferner and Edwards (1995) suggest that Germany is something of a ‘test case’ for MNEs because of the strength of its legislative underpinning and institutional arrangements. Most analysis on the German system of co-determination has suggested that it is only small and medium-sized firms which avoid or undermine the German system (Lane, 1989). However, evidence brought together in this study suggests that along with other large companies and MNEs of different origins and across different industries, McDonald’s have been able to take advantage of weaknesses in regulation in the German system of co-determination. The paper puts forward a typology of possible ‘avoidance strategies’ within the German system.