Page 190 - DMGT548_GLOBAL_HRM

Unit 10: International Industrial Relations

6. Characteristics of the Home Product Market: An important factor is the extent of the home Notes
product market. If domestic sales are large relative to overseas operations, it is more
likely that overseas operations will be regarded by the parent firm as an extension of
domestic operations. Lack of a large home market is a strong incentive to adapt to host-
country institutions and norms. Since the implementation of the Single European Market
in 1993, there has been growth in large European-scale companies that centralise
management organisation and strategic decision-making.
7. Management Attitudes towards Unions: Knowledge of management attitudes concerning
unions may provide a more complete explanation of multinational industrial relations
behaviour than could be obtained by relying solely on a rational economic model. Thus,
management attitudes should also be considered in any explanation of managerial
behaviour along with such factors as market forces and strategic choices. This is of particular
relevance to U.S. firms, since union avoidance appears to be deeply rooted in the value
systems of American managers.
Worldwide trade union membership has fallen over the past decade due to economic factors
such as reduced public sector employment, reduced employment in manufacturing industries as
a share in total employment, and increased competition. It is also associated with decentralisation
of industrial relations to business unit level, changes in governance, and legislative changes.

Example: The sharpest drop in union density (almost 36% over the past decade) has been
in central and eastern Europe, and may be explained by political and economic changes associated
with the dissolution of the Soviet bloc and the end of compulsory union membership. Union
membership decline is also linked to the introduction of new forms of work organisation,
globalisation of production, and changes in workforce structure.

Industrial disputes is the another key issue in international industrial relations. Strike-proneness
was measured via three variables – strike frequency, strike size, and strike duration. There was
no difference across the two groups of firms with regard to strike frequency, but multinational
subsidiaries did experience larger and longer strikes than local firms. This difference indicates
that foreign-owned firms may be under less financial pressure to settle a strike quickly than
local firms – possibly because they can switch production out of the country.
International industrial relations are influenced by a broad range of factors. General statements
cannot be applied to the organisation of the industrial relations function within MNCs. Rather,
different MNCs adopt different industrial relations strategies in relation to the environmental
factors peculiar to each firm.

Self Assessment

State whether the following statements are true or false:
8. Strikes are the major issues in the international IR.

9. International IR is almost similar everywhere in world without any significant differences.
10. A policy of decentralisation does not keep corporate headquarters from exercising some
coordination over Industrial relations strategy.

11. A high degree of integration was found to be the most important factor leading to the
centralisation of the Industrial relations function within the firms.
12. A geocentric firm has to bear less influence on host-country industrial relations systems.

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