The Transfer of Labour Flexibility Practices in a Multinational Firm: The Pivotal Role of Subsidiaries’ Local Actors

Contrary to the functionalist, culturalist and, to a lesser extent, constructivist approaches, which all focus on the managers’ key role in bridging the gap between the parent company and its subsidiaries, this article takes a different perspective on the transnational transfer of organizational practices in a multinational firm (MNC). It argues that local actors engage in social negotiation of the transfer based on what they might gain. The article offers an analytical model of two factors that impact the transfer outcome. This allows us to better understand the reasons for the success (or failure) of the transfer of labour flexibility practices that a North-American MNC seeks to transfer to its Ghanaian subsidiary and which have already been implemented in its Canadian subsidiary. These factors are local governance mechanisms and micro-political agency.

The first factor highlights the economic purpose of the transfer and reflects institutional arrangements initiated by the subsidiaries’ managers, notably with the union executive in Canada and the local community in Ghana. This local governance produces a segmentation inside the labour market in Canada (permanent vs temporary workers) and outside in the community in Ghana (workers vs the community). The second factor concerns the actor’s political role, focusing on local issues in terms of plant survival in the Canadian case and the preservation of socio-ethnic traditions in the Ghanaian case. These local actors, who control the segmentation of labour flexibility practices in their respective subsidiaries, play a pivotal role in the transfer process and its success.

The article concludes that there is a required social negotiation of organizational practices a parent company seeks to transfer to its subsidiaries. The transfer success or failure depends on the scope of the negotiated agreement between actors affected by the issues and not just on the economic purpose that the MNC pursues through its hybridization policies.

Keywords: multinational, hybridity, negotiation, segmentation, Canada, Ghana.