The MNE as the “crown of creation”?: a commentary on mainstream theories of multinational enterprises

Purpose The purpose of this paper is to explore the scope for action of local human resource managers, who are employed in foreign subsidiaries of multinational companies (MNCs), for implementing training activities. These managers are situated in relationships to headquarters and the local environment. Related to this is the question whether MNCs contribute to the local skill base by implementing training activities or whether they exploit the existing skill formation system. Design/methodology/approach This study focusses on German subsidiaries of MNCs with headquarters in the USA and the UK, France, China and Japan. The study is based on 107 expert interviews with subsidiary managers and representatives of local stakeholder organisations, such as educational organisations, chambers, economic promotion agencies and governmental bodies in Germany. Findings The study reveals that headquarters introduce general schemes for training. In addition to these MNC-internal trainings, local managers use their information advantage over headquarters to implement dual training activities. Research limitations/implications The training activities of subsidiaries are dependent on the institutional settings of the host country. Practical implications Albeit dual training activities are laborious and tie the local managers down for the medium and long term, the future need of the subsidiary for adequately skilled workforce prompts local managers’ engagement in implementing dual training activities. Social implications Subsidiaries contribute to the local skill base and do not act in a free-rider position, at least in the German variety of capitalism. Originality/value The study deepens insights on distanced relations within and how subsidiaries generate scope for action by using this kind of relationships.

Section: Subsidiary Situated Between Headquarters and Local Contextsmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Situated between headquarters and local environment: local managers’ scope for action in training activities

Fuchs,

Westermeyer

2023

“…Similar underlying assumptions are apparent in the conceptualisation of the global factory (Buckley, 2011). Control of and in the GVC is skewed towards the MNE, where the behaviour of all GVC participants is constrained by the direction of the orchestrating MNE which has far reaching and “hierarchy like” control and ensures that social and environmental compliance instructions are cascaded down the GVC (Asmussen and Foss, 2022; Forsgren and Yamin, 2022).…”

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confidence: 99%

Persistence of wicked problems in opaque global value chains

Dindial,

Voss

2024

Purpose This paper engages with the important work of Raškovic (2023). The authors agree with Raškovic’s (2023) argument that international business (IB) policy is well positioned to inform and address many of society’s wicked problems, including modern slavery. Beyond supporting this position, the purpose of this paper is to highlight IB’s internal and ongoing debate regarding multinational ownership and control, and how this unresolved theoretical issue can hinder the contribution of IB policy in addressing wicked problems. Design/methodology/approach By leveraging prior literature, this paper synthesises opposing views on the extent of control that multinational enterprises (MNEs) exert across global value chains (GVCs). The authors then demonstrate why these conflicting perspectives should be resolved to fully realise the task that Raškovic (2023) has laid out for IB policy. Findings This study argues that IB is steeped in a tradition where ownership has been a proxy for meaningful control. Rising GVCs have complicated this relationship, and while IB recognises this, the field remains short of explicating a set of robust conditions that can detect control in the absence of ownership. Given that responsibility is often based on an assumption of who has control, this ongoing and unresolved debate limits IB’s utility in advancing appropriate policy interventions to tame wicked problems. Originality/value This paper makes a contribution by bringing together diverse perspectives on the ongoing debate regarding MNE control in GVC. It demonstrates how this seemingly abstract debate can have significant implications for IB’s role in addressing society’s grand challenges. The authors further suggest that embracing interdisciplinarity and novel analytical tools can assist in demystifying the opaqueness of GVCs and resolving the control “fuzziness” that confuses responsibility boundaries across the GVC.

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confidence: 99%

The importance of being … transnational

Ietto‐Gillies

2023

Purpose The paper takes the lead from Forsgren and Yamin (2022), “The MNE as the ‘crown of creation’?: A commentary on mainstream theories of multi-national enterprises”, and accepts that the MNE can, indeed, be seen as the “crown of creation” in the world of business. The purpose of the paper is to show that this is due to advantages of multi/transnationality that must be sought outside rather than within the firm itself. Design/methodology/approach The paper argues that the advantages of multi-nationality derive from the differences in regulatory regimes between nation-states and, specifically, from laws and regulations regarding the following: labour and social security, industrial policy, taxation and environmental regulations. Some examples are given. Findings It is claimed that the transnational company (TNC) has the ability to operate as a unified centre of strategic decision-making, and this gives it an advantage compared to operators it bargains with who do not possess such ability. Three such operators are discussed: labour, governments of nation-states and suppliers. In TNCs’ operations with foreign countries, a distinction is made between the spatial dimension and the regulatory regimes dimension. The interaction between these two dimensions leads to discussions on: regions within nation-states and their regulatory regimes, global value chains (GVCs) and free/investment zones (F/IZs). The conclusions draw policy implications and research agenda implications touching also on issues of TNCs as creator/destructors of social values. Research limitations/implications The paper refers to other published work by the author – solo or as co-author – where the arguments are further developed, including the finding of a detailed case study. There are policy implications regarding labour and its trade unions (TUs) as well governments and their taxation and industrial policies. Details of such policies need further development. Practical implications There are implications for theory development, policies and for research agendas. Social implications Governments of nation-states and institutions within them – such as TUs – should try to co-ordinate rather than compete with each other in their bargaining with transnational companies. The breakaway of regions within nation-states further increases the power of TNCs. Originality/value In the development of theories of the TNC, this work shifts the focus from internal characteristics within the firm and its markets to external ones: to the nation-states as jurisdictional loci. The distinction between spatial and regulatory regimes dimensions in dealing with transnational activities allows a novel viewpoint on: regions, GVCs and IZs. A novel viewpoint is also given in relation to the role of TNCs in social value.