Master Thesis
Ambiguity Management in Headquarter-Subsidiary Relationships
based on International Relocation Cases– an Explorative
Research within a German MNC
Master of Science in International Business and Management (M.Sc.) Rijksuniversiteit Groningen
University of Groningen Faculty of Economics and Business
P.O. Box 800, 9700 AV Groningen, The Netherlands
Table of contents
1. Abstract... 1
2. Introduction ... 1
2.1. Topic indication and background ... 1
2.2. Problem statement and research question... 3
3. Literature Review ... 5
3.1. Ambiguities in headquarter-subsidiary relationships – the content of coopetition ... 5
3.2. Intra-firm competition as a major aspect of coopetition ... 6
3.3. Intra-firm competition drawing on a the extreme case of business-related relocation ... 8
3.4. Ambiguities in headquarter-subsidiary relationships – the content of dual organizational identification ... 12
3.5. Dual Organizational Identification at the peak of intra-firm competition aiming at internal relocation ... 15
4. Conceptual model and research methodology ... 18
5. Introduction of selected relocation cases within the chosen German MNC ... 22
5.1. Closure of production in location A, Germany ... 22
5.2. Acquisition of a former Joint Venture, location B, Slovakia – effects on activities in location A, Germany ... 28
6. Theoretical implications, triangulation, evaluation and conclusion ... 34
7. Limitations, reliability and validity ... 40
8. Recommendations for further research ... 41
1. Abstract
This empirical case study is a first approach of deeply exploring a defined ambiguity – Dual Organizational Identification (DOI) – in headquarter-subsidiary relationships based on practical cases within an elected German multinational corporation (MNC). The chosen cases involve an examination of a second identified ambiguity – coopetition, in particular the aspect of intra-firm competition – on its peak, namely when it comes to relocation cases within an MNC. This research is approached by conducting interviews with managers, whose degrees of DOI are examined by such interviews and who have recently been involved with the negative effects (rationalization) of actual relocation cases. Results show that the interviewed managers can be identified according to their specific degree of DOI and iteratively findings about their resulting attitude towards the individual relocation cases are illustrated within this explorative research.
2. Introduction
2.1. Topic indication and background
In the modern globalised, MNCs have found the space to grow more than ever. In order to be able to actually manage them most efficiently, it is essentially necessary to understand their diverse structures beforehand.
The structure of most MNCs is based on local headquarters. In most cases the headquarters are located in the originating country of the company. They furthermore employ various subsidiaries in different locations in order to represent the operational business in the local markets. However, scholars argue that nowadays MNCs can no longer be seen as “homogenous organizational units, centrally controlled by headquarters, […] [but] […] managerial decision making, autonomy and entrepreneurship of subsidiaries are seen as crucial to the competitive advantages […]” (Dörrenbächer & Geppert, 2008).
management of expatriates from an HR related point of view, as it was examined by Black and Gregersen in their studies about expatriate typologies (1992) where they find a way to cluster expatriate behaviour according to their alignment along a headquarters- and/or subsidiary-based identification. Other important topics related to organizational theory are the examination of control mechanisms from a headquarters point of view (Baliga & Jaeger, 1984) or even investigations of mechanisms for initiative taking by subsidiaries form a subsidiary’s perspective (Birkinshaw & Riddelstråle, 1999). Referring to this, Birkinshaw and Riddelstråle find that subsidiaries often have to make strong efforts in order to have their initiatives circumventing, what they call the “corporate immune system”, exercised by the headquarters.
When researching the subject of headquarter-subsidiary relationships, according to recent literature, another major field which occurs from multilateral inter-organizational relationships within an MNC arises – namely the existence of ambiguities in such relationships. The major focus of this paper will be laid on these ambiguities – one of which will be explained extensively in 3.4, and further on majorly considered within this research– since little research has been done in this field until today. The effects of such ambiguities and their influences on the organization as a whole, as well as most importantly the individual decision making, they are both to be examined more closely in order to deeply shed light into the content of such ambiguities.
2.2. Problem statement and research question
With respect to ambiguities occurring within MNCs, one has to consider, that subsidiaries within the complex contexts of MNCs are of different strategic importance (White & Poynter, 1984) and are furthermore based on various internal inter-dependencies so that a thorough identification of ambiguities is rather difficult and blurred. Recent research efforts have yet only begun to focus on the field of identifying and managing ambiguities in headquarter-subsidiary relationships.
In particular two major ambiguities that MNCs have to cope with have been objects of investigation until today. One of them concerns the complex topic of coopetition. Coopetition originates from the words cooperation and competition and signifies the simultaneous existence of these two polar pulls between headquarters and subsidiaries within the same MNC (Luo, 2005).
Another major ambiguity that has drawn the attention of researchers is the dual organisational identification (DOI). DOI concerns the organisational identification of managers with the subsidiary versus the headquarters and vice versa (Kostova & Vora, 2007).
There have been significant efforts to define and explain these ambiguities’ effects and causalities, as well as to assist in better understanding them. However, according to recent research literature both subjects have only been examined separately. This certainly evolves the question if there might be mutual influences (or even interdependencies/interferences) between those two ambiguities, and if so, in what way those do function.
With respect to the case of “coopetition” for instance, within an MNC: there will be different pulls imposed by the headquarters and/or other subsidiaries to compete or cooperate for a certain company goal. Moreover, the subsidiary managers, who will be the executing key-actors exposed to these organizationally ambiguous pulls, as well as their individual attitudes have to be taken into account Regarding this case on the basis of suspecting a possible influence between both ambiguities, it is evident, that subsidiary managers will have to be capable to deal with growing pressures. Hence, it is equally important to consider that their management style, decision making and leadership competencies might then be dependent or at least influenced by their personal degree of DOI. Thus, the way they will deal with cooperation and/or competition with respect to their specific management task within their subsidiary is expected to be influenced by the manager’s individual DOI.
While investigating these two ambiguities separately, researchers have also made efforts to establish logical frameworks and suggestions for MNCs’ management to deal with the existing ambiguities in a successful and beneficial manner.
However, the research field of ambiguities in headquarter-subsidiary relationships is still in its early phase, which becomes evident especially when studying the rarely existing research literature. There is a considerable lack of theoretical background information as well as rarely conducted empirical research in order to practically explore this research field, which can be regarded as the major research gap.
The aforementioned context of a possible interdependence between coopetition and an individual manager’s DOI will be taken to an extreme when managers have to deal with exclusively intra-firm competition (taken as an element of coopetition as to find a common situation for an extreme case) leading to relocation issues as those described pulls within an MNC. An explorative examination of such cases within a sample MNC will thus be most beneficial and revealing to investigate in the pulls of such ambiguities as to better understand how they function.
Exploring this specific context will be a basic step of adding value to the overall topic of ambiguities in headquarter-subsidiary relationships.
Another effort is made as to examine if the MNC under consideration applies any tools of “ambiguity management” as to assist managers to fulfil their task.
Hence, this paper is to approach the existing research gap and to systematically conduct explorative investigations within an MNC as to fill the identified research gap. In summary the resultant research question for the purpose of this paper will be:
To what extent does a manager’s individual degree of DOI (considered as an identified ambiguity in headquarter-subsidiary relationships) influence his decision-making process in intra-firm competition (considered as a major element of another identified ambiguity –
Coopetition) examined along the extreme case of relocation issues within an MNC? In order to systematically tackle this question, conducting scientific research, the idea is to first of all introduce and theoretically discuss the existing ambiguities in headquarter-subsidiary relationships, based on reviewing literature concerning headquarter-headquarter-subsidiary relationships and general literature on organizational theory.
As a second step, the applied methodology for this research will be introduced. Furthermore, selected relocation cases within the German MNC under consideration will be shortly presented. Interviews with subsidiary managers of the chosen MNC will be conducted. The results of these interviews are to be analysed according to each single case of relocation within the case study reports and an evaluation in cohesion will be presented in the results section. Such an analysis is to practically explore the field of ambiguities occurring due to intra-firm competition on the basis of relocation cases within an MNC and how managers of diverse degrees of DOI deal with them in the business world.
Finally, the result of this research is supposed to shed light into the field of ambiguities in headquarter-subsidiary relationships and serve to better understanding them.
3. Literature Review
3.1. Ambiguities in headquarter-subsidiary relationships – the content of coopetition
According to recent literature in the field of headquarter-subsidiary-relationships, two major ambiguities “coopetition” and “DOI” have been identified. The former rather concerns ambiguities occurring on an organizational basis, whereas the latter comprises ambiguities, which occur on an individual/personal basis.
This study is to explore the field of DOI, i.e. how the individual/personal dimension of ambiguities in headquarter-subsidiary relationships will affect ambiguities occurring on an organizational level, hence on the basis of coopetition. In order to tackle this research question, first of all the organizational ambiguity of coopetition will be briefly introduced.
In contribution to the topic of coopetition, a recent press release (Bartlett, 2007) states that the major focus seems to tend more to cooperation than to competition, as competition can obviously end up in a state of an unproductive run to outperform other units.
Tjosvold’s (1999) research efforts concentrate on the significance of cooperation and competition among key-performing employees, like product specialists in the respective case, in order to achieve a productive relationship based on common trust between headquarters and subsidiaries. The hypotheses in this research paper are based on the theory of cooperation and competition by Deutsch, in which he suggests, that key-performing people’s perceptions about how their individual goals are interdependent, will affect the outcome of their interactions. As a result of this study, it was found “that cooperative goals were positively related to relationship and productivity and to the development of trust” (Tjosold, 1999). Furthermore it is stressed that cross-cultural interaction, which is necessary to exploit the global marketplace, is crucial and can best be facilitated by management through fostering goal interdependence – hence achieve a basis for resulting strong trusting relationships among key-performing individuals.
Research literature contributes little to the discussion of the impact of coopetition in its balanced form as an ambiguity in headquarter-subsidiary relationships and yet researchers are inconsistent in giving proper evidence. So the elements of coopetition are rather discussed separately from one another. However, as for the purpose of this research, coopetition is to be considered rather with a major focus on the content and determinants of competition. In the following paragraphs especially intra-firm competition is to be introduced as to expose what impact this organizational mechanism can have on a manager’s individual organizational identification (degree of DOI) and possible effects vice versa.
3.2. Intra-firm competition as a major aspect of coopetition
As shown in 3.1. the ambiguity of coopetition has two main aspects; on the one hand competition and on the other hand cooperation. For the purpose of this study coopetition will not be considered in its balanced form, but rather the aspect of competition will be emphasized and taken into stronger, isolated consideration. Therefore the aspect of competition within an MNC, thus intra-firm competition is to be characterized in this section.
within the MNC, an aspired market position as well as subsidiary mandates or charters (Luo 2005 / Dörrenbächer & Ritterspach 2008). According to Dörrenbächer and Becker-Ritterspach (2008) there are three types of determinants for intra-firm competition: environmental, organizational and sub-organizational. Birkinshaw and Lingblad (2005) define two aspects determining the relationship of two units. First of all, the degree of their charter1 overlap and second the respective charter boundary state, which can be high (solid) or low (fluid) indicating how clearly a unit’s charter is defined.
The three types of determinants will be either directly or indirectly (charter overlap) addressed, which depends on the degree of decentralization of decision-making, maturity and heterogeneity of the industry as well as local responsiveness of a subsidiary within an MNC. When dealing with intra-firm competition, especially actors, their stake, their source of power and their strategy need to be considered. Generally the main actors engaging in intra-firm competition are of course headquarters and the respective subsidiaries. Within those entities, relevant actors can be defined as key-persons with the power to act or make a difference to the process of intra-firm competition, thus boundary spanning actors. Depending on the structural situation and governing rules within an MNC, actors have different strategic options of behaviour, which can be either defensive or offensive. Moreover, a key-actors’ strategy while engaging in intra-firm competition can be dependent on the importance of their career path and position (temporal, spatial & social perspective) within the organization as well as possible future career aspirations. However, given this background, little research has been conducted on different types of these actors, whether headquarter- or subsidiary manager (Dörrenbächer & Becker-Ritterspach 2008). Therefore one major attempt in this study will be to gain further insight on their behaviour, their attitude, their aspirations of the organization and their roles in the organization (see 3.4) – particularly under conditions of strong intra-firm competition.
Birkinshaw and Riddelstråle (1999) argue that headquarters basically influence or even prevent the occurrence of intra-firm competition by installing a “corporate immune system”, which deals with subsidiary initiatives in a generally repudiate manner. Consequently subsidiaries might react by exercising lobbyism performing “issue-selling” at headquarters.
Phelps and Fuller (2000) suggest in their study about parent-led vs. affiliate-led intra-firm competition, that there are different degrees of headquarters’ interference if subsidiaries exercise intra-firm competition. According to them the underlying conflict itself determines
1 Def. charter: “the business – or elements of the business – in which a division/unit actively participates and for
how it is to be managed by headquarters – openly – without headquarters’ intervention or – managed – with headquarters intervention.
Overall intra-firm competition can have positive and negative impacts on several units or even the entire organization (Birkinshaw & Lingblad, 2005 / Phelps & Fuller 2000 / Dörrenbächer & Becker-Ritterspach 2008). On the one hand it can facilitate efficiency and contribute to an increasing organizational quality on the other hand it can also contribute to have single units outperforming other units within the same MNC. Projecting this on headquarter-subsidiary relationships, i.e. with the impact of exaggerated competition between subsidiaries for instance is also described as “intra-enterprise cannibalism”, meaning that a strong focus on competition can lead to an internal consumption of subsidiary powers (Birkinshaw & Lingblad, 2005). Wortmann et. al. (1999) amplify this content in the context of production site competition by stating that “there are no win-win situations in production site competition and little room for loyalty let alone solidarity” (p.5). Production site competition can basically result in three different cases either an expansion of capacity or new site, i.e. green field investments, a relocation, i.e. a case that one site gains what another loses, or the reduction of capacity. As to further narrow down the relevant content of this research, the case of a relocation being an element at the peak of intra-firm competition will be explained in 3.3.
3.3. Intra-firm competition drawing on a the extreme case of business-related relocation
The expression of “relocation” is part of common habitual language use. However, in the field of international business and for the purpose of this paper, it needs to be defined and explained in more detail. Generally relocation within any company signifies the relocation of value adding activities from one location to another within the same corporation and under conditions of a constant total output volume (Wortmann, 2007). Moreover, scholars argue that “relocation involves the closing down of a manufacturing unit in the home country to replace it with a new unit in a foreign country. The most common type of relocation is followed by re-imports of goods previously manufactured in the home country” (Mucchielli & Saucier, 1997, p. 6).
From an economic point of view, generally the trends of globalization – or also “glocalization” (meaning the combined intentions to profit from global integration, whilst adapting local activities locally) – and the economic freedom within Europe on the basis of the EU are named as major reasons that foster an MNC’s engagement in relocating activities (Dunning, 1997). Ferner (1999) determines two major characteristics for the ‘re-emergence of the relocation debate’ First he points out the structural changes within MNCs in terms of international operations, as well as the increasing tendency of internationally integrated industries. Second Ferner stresses the ‘changing nature of world markets’ – previously simply named globalization – as a main force, driving MNCs’ relocation activities (Ferner, 1999).
Thus these factors can be identified as stimulating external influences on internal competition within an MNC. According to Wortmann et al. (1999) this “trend towards denationalizing group structures is […] intensifying in Europe in the context of fiercer international competition” (p. 28). Economically, this results in a competition between economies/countries in order to gather the workplaces, which are related to MNCs’ investments (Wortmann, 2007).
Relocation issues often also comprise foreign direct investments (FDI) which are defined as “a movement of capital (and other resources) from a parent corporation in the home country that creates a substantial equity interest in a host country corporation, […] subsidiary” (Pugel, 1981, p. 222). As possible motives for FDI Dunning (1979) identifies on the one hand ownership-specific advantages, aiming at the investor’s competitive advantages and on the other hand location-specific advantages meaning incentives, which the respective location inhibits.
As concrete reasons for an MNC’s engagement with relocations a study conducted by the bureau du plan, Brussels, concludes three major ideas: relocation due to staying competitive, the aspect of lower labour costs in other locations and finally internal restructuring processes and mergers, which in this study tended to have the major ratio of actual cases.
From a business administrational point of view the driving forces for MNCs relocation activities are market proximity, political influences (as subsidies for instance), advantageous cost favour, economies of scale and scope (Wortmann et. al., 1999) This can also be summed up and divided into “market-seeking”, i.e. “horizontal FDI” and “efficiency-seeking”, i.e. “vertical FDI” rationales (Rojec & Damijan, 2004 / Ferner, 1999).
for relocations, which are labour costs (taking into account productivity), working time, machine operating times, material costs, energy prices, transportation costs, costs for buying land and tax burdens as quantitative factors and the rigidity or flexibility of labour markets, the skill level of workers aiming at a certain productivity, the social environment, regions, technological environment, flexibility of production / opportunities for lean production, proximity to customer, political influences, environmental protection requirement and loss or gain of know-how as qualitative factors. An MNC’s relocation efforts can aim at different units such as single plants, entire divisions, individual facilities, machines, production contracts as well as individual facilities (Wortmann et. al., 1999 / Ferner, 1999 / Mucchielli & Saucier, 1997).
Rojec and Damijan (2004) prove in their study about MNC’s relocations from the former EU countries, to the newly merged EU member states that there is a tendency of particularly MNCs engaging in “efficiency-seeking (production cost advantages-seeking, vertical) FDI in the manufacturing sector” to build on the highest potential for relocations to the new EU member states (Rojec & Damijan, 2004, p.17).
Finally, relocations can be differentiated by the scope of the decision made, the respective manufacturing volume, and the number of jobs affected by such relocation (Wortmann et. al., 1999). As indicated earlier, the process of relocation is often associated with rationalization and job downsizing (Wortmann, 2007).
And fourth, international relocation can stimulate job creation related to international business (indirect effect).
Apart from its effects on unemployment, according to Ferner (1999) “companies use sophisticated management information to ‘reward’ or ‘punish’ individual sites by granting or withholding new investments” – such as “concession bargaining programmes” (Ferner 1999, p. 53), which consequently foster a strong sense of internal competition (see 3.2).
Van Liemt (1992) dealt with relocation cases specifically identified in core industries. In this context he characterized amongst other things relocations particularly in the automotive industry, which contributes to this study, as the MNC under consideration will be an automotive supplier (for further information see 5.). Specific findings for this ‘increasingly globally organized industry’, as van Liemt emphasises, automobile producers basically tend to follow the large multinational companies in terms of locating production – hence automobile producers are yet mainly located in the OECD area, which stems from the given technological environment, etc. However, the author points out that also investments in developing countries are increasing, above all depending on government support, low labour costs and passable infrastructure (Van Liemt, 1992).
Scholars have already extensively dealt with the aspect of how to best manage and realize relocations as well as the respective rationalization processes. As for instance Goshal and Bartlett (2000) suggest that “together with the changes in structure and systems, managers need to also change what we call the behavioural context of the company” (p. 201). However, examinations of the specific managerial behaviour, or rather, their individual personal and emotional state especially related to a manager’s degree of DOI and on the basis of intra-firm competition within headquarter-subsidiary relationships of an MNC, have not yet been investigated.
3.4. Ambiguities in headquarter-subsidiary relationships – the content of dual organizational identification
Apart from the aspect of coopetition, as has been introduced before (3.1), the second identified ambiguity, which concerns the organisational identity of managers from an individual/personal perspective, will be of superior importance for the purpose of this research and therefore closely regarded in this section.
Kostova and Vora (2007) mainly studied dual organizational identification (DOI), which refers to an individual’s sense of identification with two organizational entities. They suggest that this is one way to explain how managers can cope with complex organizational roles. The authors establish their theory about DOI on a complex underlying framework, drawing on elements from Social Identity Theory (SIT), Self-Categorizing Theory (SCT) and Organizational Identification (OI).
The Social Identity Theory was basically established by Tajfel and Turner. Its major idea deals with the fact that a single person does not depend on one personal self, but rather several identities, which one gathers while corresponding to diverse groups or by striving to achieve group membership (Tajfel & Turner, 1986). Social Identity, as Hogg and Vaughan (2002) define it, is the individual’s self-concept derived from perceived membership in social groups. Organizational Identification, stemming from the theory and research literature on Organizational Behaviour, can then be defined as “the degree to which a member defines him- or herself by the same attributes that he or she believes define the organization” (Dutton et al.,1994, p. 239). Further elaborating this idea, Pratt (1998, p. 172) states that “organizational identification occurs when an individual’s beliefs about his or her organization become self-referential or self-defining.” Apart from that Ashforth and Mael (1989) argue, that organizational identification critically affects on the one hand the individual’s satisfaction within an organization and on the other hand the effectiveness of an organization. Moreover, these theories have also implications on how people deal with social and organizational change (see 3.3).
Kostova and Vora (2007) build their argumentation on these ideas and findings and establish the connection to the context of a modern MNC – including the phenomenon of diverse individual identifications – on the one hand related to the social group of the headquarters and on the other hand related to the social group of the subsidiary.
organization’s structure, informal groups arise from the interaction and interrelations of people. In this context, the defined groups headquarters and subsidiary will be formal groups, while these can certainly be subdivided into smaller formal group arrangements and undefined informal groups are expected to exist within this context as well (Mullins, 2008).
According to Kostova and Vora’s reasoning two major influencing factors build the basis for the DOI theory, which they identify as ‘relative magnitude’ of DOI and ‘form’ of DOI. The relative magnitude of DOI accordingly is influenced by each individual’s needs for self-enhancement and uncertainty reduction within an organization and can occur on either disparate subsidiary-oriented/MNC-oriented levels or on comparable, i.e. balanced levels of DOI. The form of DOI signifies the overlap between an individuals diverse identifications (in this case two), which can range from distinct identification, separating between the two respective entities, compound identification and nested identification, identifying with one entity as integrated part of the other.
As to integrate DOI into a theoretical framework, contextual antecedents and possible consequences are identified. Contextual antecedents can either exist on an organizational level, relating the relative magnitude and form of DOI to the type of an MNC (multinational, international, global or transnational) or on a country level, relating the form of DOI to the imposed cultural and institutional distance. Finally, consequences generated by the occurrence of different forms at different magnitudes of DOI can result on an individual basis, concerning diverse perceptions of subsidiary manager roles or even role conflicts as well as on an organizational basis, influencing the subsidiary-parent cooperation and knowledge transfer within an MNC.
In order to understand the underlying theory of DOI it is helpful to further consider the most relevant findings within the research literature of organizational behaviour. Every individual’s DOI will be established on the basis of people’s intrinsic personality and their respective set of values. According to Robbins and Judge (2009) personality can be defined as “the sum total of ways in which an individual reacts to and interacts with others” (p. 139). Moreover, they come to the conclusion that an individual’s value system can help to explain his attitudes, behaviours and perceptions. Thus, as to investigate and understand a manager’s degree of DOI, it will be helpful to primarily gain some insight into her/his personality and value system.
adequate macro theory that purports to deal with behaviour unless one has an adequate micro theory” (p. 51). Furthermore he argues that psychoanalytic theory will even gain importance within the field of organizational behaviour in the future perspective, since managerial and interpersonal tasks will become increasingly complex and thus demanding for more sophisticated explanations to understand the complex theory of personality. With respect to the field of defining and analyzing DOI within an MNC, psychoanalytical theory might also be helpful for deepening the understanding of how DOI is established and what effects it has on managerial decision-making.
Berson et. al (2004) also provide an interesting insight on the context of DOI as they examine different dimensions of the subject of DOI and subsequently consider culture as an influential factor. It is important to have common values throughout the MNC so that employees all over the world can identify with – thus creating homogeneity across the company.
Kostova and Vora (2007) adopt in their research the Bartlett’s typology (1985) introducing the three subsidiary manager types, the ‘bi-cultural interpreter’ as a dualist between MNC and subsidiary, the ‘national advocate and defender’ as a rather subsidiary-oriented type of manager and the ‘front-line implementer of corporate strategy’ as a manager being strongly aligned to the corporate MNC.
3.5. Dual Organizational Identification at the peak of intra-firm competition aiming at internal relocation
Finally, for the purpose of this paper, the aforementioned contents about ambiguities, intra-firm competition and relocations are to be regarded in cohesion. The goal is to learn about a manager’s degree of DOI in the special situation when they are forced by intra-firm competition aiming at or even involving them into relocating subsidiary activities. Surely, tensions evolve as a result from specific identifications of single managers and therefore it will also be interesting to find out if and how manager’s degrees of DOI can impact their decision-making process as well as their attitude to deal with such situations. In order to thoroughly tackle this research gap, it will be helpful to identify an expected typology to classify a manager’s possible attitude. Research literature has been dealing with various classifications such as the aforementioned typology by Bartlett (1985) or a similarly applied classification by Bartlett and Ghoshal (1992) introducing the ‘business manager’, the ‘country manager’, the ‘functional manager’ and the ‘corporate manager’ as types of managers within transnational corporations. Black and Gregersen (1992) deal, specifically related to expatriate managers, with dual allegiance, which can be regarded comparably to Kostova and Vora’s (2007) definition of ‘magnitude of DOI’. In their study, they classify four types of managers according to their allegiance either to headquarters, subsidiaries or both: ‘free agents’, as career focussed and independent from both organizations, ‘going native’, as subsidiary-oriented types, ‘hearts at home’, as strongly headquarters-subsidiary-oriented managers and ‘dual citizens’ as showing the strongest specification of dual allegiance. Harzing (1999) sets up the commonly applied classification of ‘parent country nationals’ (PCN), ‘host country nationals’ (HCN) and ‘third country nationals’ (TCN). As to set up an own suitable cluster for manager’s different degrees of DOI and expected relations to dealing with intra-firm competition in relocation issues, I will further draw on these typologies from recent research literature. Assuming that generally a dual organizational identification in either direction exists, this results overall in a three-folded typology: ‘Home-HQ2-dependent’ managers, drawing on the rather headquarters-oriented view, ‘Host-S3-dependent’ managers, introducing the rather subsidiary-oriented manager’s attitude and ‘In-dependent’ managers, comprising managers at comparable levels of identification with both entities, as well as national, bi-culturally and bi-linguistically educated managers (Dörrenbächer & Geppert, 2008) (see
figure 1). As highlighted in figure 1, the different forms of DOI (distinct, compound and nested) are excluded at this stage of my research; however they should be borne in mind as background knowledge when dealing with the findings from the interviews.
Finally, this results in the following three assumptions:
1. HOME-HQ-dependent managers will have low degrees engaging in intra-firm competition and a moderate attitude of fighting negative relocation effects4.
2. HOST-S-dependent managers will have high degrees engaging in intra-firm competition and a strong attitude of fighting negative relocation effects.
3. IN-dependent managers will have balanced degrees engaging in intra-firm competition and balanced degrees of engagement fighting negative relocation effects.
By interviewing different subsidiary and mid-management headquarters managers on the basis of the certain relocation cases – briefly lined out in paragraph 5. – it will be possible to illustrate how different types of managers (with different degrees of DOI) deal with these tensions in practical relocation-cases (see also paragraph 4. – research methodology). As a second step efforts are made throughout the interviews to examine if the MNC under consideration already engages to support managers in such cases, if there is an attempt to create an ‘ambiguity management’ and if so how this is currently designed.
4. Conceptual model and research methodology
The efforts of this paper will contribute to the ‘Advanced International Business’-literature, particularly dealing with its sub-stream of headquarter-subsidiary-relationships. The idea is, to find out how managers facing the reality of business deal with specific recent relocation cases within the company on the basis of the existing ambiguities (occurring from DOI). This will be investigated by conducting an explorative case study, which – in terms of its research approach – will be designed as follows:
The conceptual model defines the respective research units, the selection of concepts applied in this research and the relationship that exists among these concepts.
In the particular case of this research, the conceptual model is established on the following basis:
As to adjust this typical basis for a conceptual model to this particular case consisting of the three above mentioned elements (considered research units, respective selection of
concepts and content of investigation i.e. relation between the concepts), the following graphic is to give an overview of the underlying research procedure and its structure on which this investigation is based further on.
After the theoretical background has been defined in the literature review (see 3.), figure 3 indicates the next steps to be taken as to furthermore tackle the major research question5.
Specific relocation cases within the elected MNC are detected and analysed as to prepare further steps of the research. An inductive approach using theory building research in order to iteratively generate theory from the case study is applied. This, according to Gill and Johnson (1991), involves an ideographic methodology, applying an emic approach of ‘explanation by understanding’ the actual case.
5 To what extent does a manager’s individual degree of DOI (considered as an identified ambiguity in
headquarter-subsidiary relationships) influence his decision-making process in intra-firm competition (considered as a major element of another identified ambiguity – Coopetition) examined along the extreme case of relocation issues within an MNC?
Typically for a case study, the ambiguity (DOI) is to be examined through a descriptive survey using combined data collection, hence conducting interviews with headquarters’ and subsidiary managers to discover the distinctness of the existing ambiguity (degree of DOI), and how it might be perceived and synthesised in the reality of an MNC’s environment.
In the existing research literature, conclusions are drawn about how the identified ambiguities can best be dealt with. Luo (2005) for instance suggests an extensive infrastructure to manage the occurring ambiguities based on coopetition within an organization. Kostova and Vora (2007) establish assumptions about the different types of DOI which consequently lead to better understanding a manager’s attitude. In this research however, the goal is to identify a manager’s degree of DOI and overall to explore and understand his resulting attitude (his decision-making, his personal/emotional state, his behaviour) in the respective relocation case. The example of a relocation case is to be considered as an example signifying the organizational ambiguity of intra-firm competition being a major element of coopetition.
The research purpose of this master thesis is based on an inductive procedure applying an explorative case study, conducted in a German MNC (Gill & Johnson, 1991).
Therefore, the respective interviews were held on the basis of an interview guideline with thoroughly selected questions and back-up questions (Yin, 2003).
The personal interviews have been conducted on June 9th, 2008 in the Research and Development (R&D) headquarters of the respective German MNC (see 5.).
additional questions occurred at a later time these have been addressed via e-Mail communication or telephone-based.
Thus, if it was necessary for deeper understanding, data has been collected on a repeated basis (Gill & Johnson, 1991).
Concerning the case study, it seems ideal to apply diverse sampling in order to enhance the generalizability – thus it is most desirable to detect as many relocation issues within the elected MNC as to be able to interview accordingly as many subsidiary managers (Eisenhard, 1989).
In order to increase this case study’s reliability, by not only illustrating the resultant case study report but also making the raw data collection available to the independent inspector, a case study data base including the case study notes (in this case: taped interviews and interview notes) will be made accessible upon request (Yin, 2003).
Finally, the reviewed theories from recent research literature (see 3.) are compared to the findings of the combined data collection (see 5.). Moreover, conclusions and recommendations for further research are generated from this study (Gill & Johnson, 1991).
5. Introduction of selected relocation cases within the chosen German MNC
The chosen research topic itself deals with highly sensitive information, yet data accessibility and contacts to subsidiary managers in the German MNC, which according to size, industry and employee numbers perfectly suits this research purpose, can be assured. This company is a leading supplier in the automotive industry; it currently employs approximately 150.000 employees in six different divisions, which are structured according to product scope.
One special feature about this particular MNC is that at the city of location for the headquarters (location A, Germany) it also uses another important site, which can be described as the parent plant for the production of three core products. Additionally, the Research and Development (R&D) centre as a centralized function for these core products is located at this site. This research will predominantly be concerned with relocation cases within the R&D centre with the two following case studies aiming at interviewing German managers of this R&D centre.
5.1. Closure of production in location A, Germany
The case
In November 2005 the MNC’s management announced the closure of parts of its production in their parent site, location A in Germany (as indicated above, this is a production site located at the same place as the MNC’s headquarters). However, this site is still in use, as its major capacity is used for the production of another product as well as for the centralized R&D activities of the two major divisions (containing both products). Yet, the partly closure of production affected 320 jobs, which were 10% less work places at the entire plant.
In this case study exceptionally the effects of the relocation of parts of the production to Eastern Europe on the R&D centre with major focus on the main department (testing facilities) will be examined. In this case round 48 work places were affected of the relocation. Findings form the interview
Interview with the German director of a main department (testing facilities) within the R&D centre, head of 240 employees, operating in location A, Germany:
Personal career related information about the interviewee
The current director of the respective main department in the R&D centre started his career within the MNC right after finishing his degree in engineering in 1984: “This MNC was my first and only serious employer.”6 He entered the company as a constructing engineer. In this function he was already located in the current R&D centre at location A, Germany. After developing in this position, in 1992 he became head of another business unit being part of the MNC’s headquarters functions, located in another place of business, yet within the same city. He stayed in this position for nine years until he became director for the considered main department in 2001, which he is still leading. Throughout his career, he was never directly related to the affected division; hence he was never involved in the direct reporting line. However, since he is providing cross-functional services – namely testing facilities, know-how and services – in his current position, he has established few contacts to the management level of the respective division. Reflecting on his own career path within the company, the director could clearly state that his most favourable period working with this MNC was in his leading position for the above mentioned business unit from 1992-2001. In this position he experienced the most pleasant working atmosphere, felt related to his work especially as it required a big deal of individual responsibility. For him this period included a more satisfactory function, as was himself engineering the product design for the entire product line: “I preferred my function in this area, because I realized my tasks more self-responsibly. I was not service staff, supplying others, but I was myself the initiator and promoter. In conclusion this was a more satisfactory task.”7
The interviewee’s personal estimation of his own degree of DOI
Dealing with the individual perception of his own dual organizational identification, as has been characterized in 3.4, it is most interesting to hear how this manager anticipates the special organizational structure – being located within a centralized R&D function, in the same city and linked to the headquarters, while working in a separate site. “Concerning my own identification within this organization and its value system, I can say that an R&D department even located in Malaysia is to my perception closer than an organizational entity, as for instance a purchasing department in this location [location A, Germany].”8 Thus, he himself perceives to belong rather to the R&D centre than being related to the headquarters functions.
Furthermore, he characterizes the R&D centre as rather being a subsidiary referred to the mutual relationship to the MNC’s headquarters. He describes the R&D centre in its centralized structure as being the R&D headquarters, referring to other locations in which smaller technological departments function as subsidiary-like development centres for local applications and specifications. He himself strongly feels more related and has more comprehension for any R&D topic even if they are occurring in a foreign location, than he would be related to another function in the same location. For him, “these other functions are an alien world. Thus I focus rather on the organizational and functional structure, than on the local affiliation.”9
However, he finds that the local aspect is important to him, when being confronted with rationalization at the same certain location, due to the fact that personal or professionally related relationships will be affected within this context.
He then showed a clearly structured justification for his perceptions. In the R&D centre clearly all products are born, approved and released. No products produced under the MNC’s name in the entire world come around this R&D functions. Even externally acquired product lines will be sent to the R&D centre to be tested and released only from here. Thus, the major responsibility for quality and to assure for the products to be qualitatively mature enough to be branded the company’s name is achieved here. According to him, “the R&D centre is hypothetically speaking the intellectual cradle for the MNC’s products and this essential source for our goods [meaning the R&D centre] is the maternity ward, which all our products have to go through. There are no products created in any other way. Even wholly bought product lines will be tested and evaluated in this R&D centre. The responsibility to assure
quality, so that the product deserves to carry the company’s name is a major function of the R&D centre. This signifies for me the value of this organizational entity.”10
The specific case of relocation and the interviewee’s perception
With respect to the respective case of relocation and rationalization at this location, the director only learned about the process through the local HR department very shortly before it was actually initiated. Until that time employees and the management at the respective site heard about the closure of parts of the production, yet they were not informed that according to the clauses of local commercial law and by the social compensation plan the entire location would be affected, including its other division’s/function’s staff. Until then, the director has “feared“ these events to affect his department, but he regrets that he only learned very late, that these “fears” were actually coming true: “I learned about it only very late. There were times that I thought the R&D centre would not be affected by the closure – I was afraid it would happen anyways, but I was told that the R&D centre would be excluded. However, my fears were confirmed and all of a sudden we, as an R&D centre, felt the consequences as well.”11 Consequently, he strongly disliked the conducted procedure of communication. “I did not appreciate this procedure and I found it extremely unprofessional, that we, as an R&D centre, did not realize early enough that we would be just as much affected as the rest of this location.”12 This, according to him, reduced the chance for him and his management team to actively engage within this relocation process on behalf and in favour of their employees. “We became active only too late, which limited our options for intervention and to influence this relocation process.”13
The procedure itself was that the director was informed by the local personnel department, which sent a list including all names of employees who would be affected by this relocation. At this stage, he had no influence in negotiating about employees on that list, despite one or two particular cases in which jobs had been evaluated falsely, so that he could intervene. After that the management team decided on a consensual basis about how these decisions were to be communicated. Out of the two considered scenarios – worst case scenario, to inform everybody who might be affected and best case scenario, to only inform employees who will definitely have to leave – they decided to communicate on the basis of the worst case scenario. Even though this was a consensual decision, he himself was strongly in favour
of this solution: “We cannot take the responsibility for our employees to feel secure in their current positions and for them to maybe even refuse external offers, while we cannot assure to be able to employ them in the future. Neither can we interfere that much in our employee’s conducts of life, that they might dismiss future professional chances. So we communicated the possible effects of the closure to everybody who might have been affected.”14 Thus, the director felt responsible for giving the employees the chance to be prepared, to develop and look for jobs outside the company as early as possible, even though this meant that the company on the one hand risked losing “good” employees to competitors and on the other hand risked to create great lacks of work motivation. From an ex-post perspective he stated that, “it was a very difficult process, communicating to everybody, but in terms of responsibility, it was definitely the right decision.”15
The communication process was conducted in that way, that the director informed his management team (leaders in the directors reporting line) about who of their departments will be affected. These sub-department leaders were trained by an external coach in order to be prepared for communicating these issues. The director himself was offered support, but he did not make use of it. At a set date with a complete set of instructions the decisions were finally communicated throughout the entire location. Due to the negative events of this day, shifts had been cancelled and employees were sent home earlier than usually. While the director himself was not concerned with the simple dialogues, he took the responsibility to personally deal with all extremely intensive cases, in terms of giving explanations and justifications for the actual decisions.
These extreme cases inhibited emotionally labile employees, one of which was as instable, that fears for him to commit suicide occurred by colleagues and supervisors. “This was really hard. We [himself and the responsible member of his management team] were afraid for this employee to commit suicide, as he was facing an extremely negative financial situation and did not see a perspective for him and his family. Luckily, in the end, we succeeded in stabilizing him and the employee learned to deal with his situation. However, at times, we were not sure. It was really difficult. (…) These intensive dialogues were extremely heavy and we were truly concerned about these employees.”16
In some of these cases it even seemed uncertain, if such employees were still able to conduct their work properly. These employees were approached by involving a professional, the company’s ‘addiction prevention expert’, in the case. He basically was involved to help
the employees deal with their new situation and also to further on communicate with their families and relatives.
“Personally, I felt really bad in these days, as such intensive cases indeed moved me; especially because I could literally see how much of a catastrophe all this meant for my poor employees.”17 Evidently, for the director personally, these events were extremely demanding. He pointed out that even colleagues from different departments, who were privately related to affected employees, came to talk to him in order to ask him for solutions not to lay these employees off. Thus he was facing extreme conflicts, yet he said he was not able to make exceptions for single cases, as this could simply not be justified towards all the other cases. For him an equal treatment in these situations was most important as he would otherwise risk losing a clear track of dealing with it. Moreover such a conduct of behaviour would not suit his personality and individual value system. “There is no ‘clean’ solution to conduct any exceptions for individuals in such difficult situations. The only way is to conduct this in the formal way, otherwise one will be lost. It is really difficult to decide weather to intervene [if requested by a third party on an informal basis] or not. However, I decided, I wanted to be able to watch myself in the mirror also in the future and thus did not intervene. In fact, I would always do this again, even though it really was not easy and it creates division with colleagues/employees.”18
He himself had no personal private relationships with the affected employees, yet on an official basis he was related to some of them.
Moreover he stated, how he perceived other colleagues and managers to be extremely “worldly innocent”, not understanding which existential fears employees were facing at these times. According to him, this was, because they, being engineers on the management level, had little contact to the industrial employees, who built the majority to be laid off. “They did not even realize the existential fears that their employees and colleagues were facing at these times.”19 Even though he might understand the decisions from a management point of view, he anticipated the employee’s situations, saw that some of them were in catastrophic situations. For him “these days of communicating the management decisions were clearly the darkest days in my career within this MNC”.
5.2. Acquisition of a former Joint Venture, location B, Slovakia – effects on activities in location A, Germany
The case
The MNC has been engaged in a Joint Venture with the Eastern European manufacturer since 1998 holding 24% of the Joint Venture and leaving the remaining 76% respectively under control of the other group. In June 2007 the German MNC took over the majority holding with 51% of this Joint Venture and aims to use this successful subsidiary as a production and operational basis for the East-European market as well as to expand their access to these markets, particularly to Russia and the Ukraine.
Practically this Joint Venture not only inhibits a shift of production capacity to the Slovakian site, but also a relocation of testing facilities as an important part of the R&D. As to narrow this case down, exceptionally the relocation activities of the testing facilities will be subject of investigation.
Interestingly, at the time of investigation this relocation was aspired to affect jobs being relocated from location A, Germany to location B, Slovakia. Nonetheless, at a later time this was not realized and positions were not relocated, but rather new capacities are to be created in location B, Slovakia in the future. Thus this case involves the two perspectives of an estimated relocation case and the actual situation of a not realized relocation but instead an aspired creation of capacity.
Findings form the interview
Interview with the German director of a main department within the R&D centre, head of 160 employees – in charge of the project, relocating and integrating testing facilities from Germany to Slovakian, operating from location A, Germany:
Personal career related information about the interviewee
today.”20 Evidently, he clearly stated that he perceived his work in the development department as most challenging and motivating, as he was given the chance to enforce progress and to work creatively, thus had more individual responsibility than in his current function – in which he delivers services (testing facilities and know-how) to the internal customers, being construction engineers. Moreover, he pointed out, that also the work environment, meaning work atmosphere, the entire team, colleagues and relations towards superiors – at the time in which he was active as developing engineer, was very appealing, whereas to his perception this seems to have changed by today.
The interviewee’s personal estimation of his own degree of DOI
When being asked about his anticipation about structural features of the MNC’s organization, he characterized the R&D centre as an integrated part of the headquarters, with multilateral relationships for example, to the marketing department. In his point of view the R&D centre is united with the headquarters not only according to functional but also local proximity.
“I myself would characterize me in first place as an employee of the R&D, but as such also an employee of the headquarters.”21 Consequently he identifies himself prior as a manager for the R&D centre; however this in return makes him a manager for the headquarters. Furthermore, he sees his main department as a strongly integrated function within the R&D centre since a high degree of interaction among developing and designing departments with the testing departments are necessary to deliver results most efficiently.
Regarding his personality and individual set of values, he strongly showed accordance to the corporate set of values22. He pointed out that appreciation and fairness in the relationship to stakeholders (including internal and external suppliers, employees, customers etc.) has an important meaning to him in his current function.
According to his point of view the R&D centre will also in future be the central function located in Germany, yet, he sees the acquired site and its testing and developing functions as an increasing second basis for R&D activities in Slovakia and for Eastern European markets. “I am convinced that this location (location A, Germany) will also in the future be the centre for R&D activities, however we will make use of and further expand the second main pillar for our R&D activities in location B, Slovakia.”23 With respect to other foreign markets, he
20 Interview II, 09.06.2008. 21 Interview II, 09.06.2008.
identified China and eventually a location in South America (which is still unknown), to establish local R&D functions – preliminary for local adaptations of centrally developed products.
Concerning the acquired plant in Slovakia, he pointed out, that the given existence of local R&D activities were simply beneficial for the central R&D function in Germany, since they currently suffer a lack of qualified engineers. Thus the acquired R&D department in Slovakia will be integrated and occupied with core competencies. In the case of increasing capacities in the future, the strategy is to increase work force, where additional core competencies are needed – not prior dependent on the actual location.
Until the time of the actual interview it was not clear how the relocation of functions within the R&D centre would be conducted. The idea for the project was to concentrate on core competencies, to make use of synergy effects and to avoid redundancies. At the time when the acquisition of the Slovakian site was announced, it was not clear, neither internally, nor to the public, how many work places would be affected of relocation. To date the relocation activities have turned out to be of a rather positive character for the MNC’s employees, as purely functions were shifted, but this did not affect any work place reduction in Germany: “The Slovakian R&D site in location B will be an offset for the German R&D centre in location A. On the background of the current lack of engineers at our German R&D centre this Joint Venture engagement turned out to be beneficial to our activities.”24
Yet at the time of the announcement this development could not be foreseen and the actual conducted strategy (concentrating core competencies, without relocating work force from Germany to Slovakia) was not fixed back at that time: “We should never say never, but at this point in time [today] our passed strategy is to create capacity if needed according to where the specific core competencies are located; a downsizing in this context is not foreseen.”25 Bearing this in mind, the interview continued on a two-folded basis – namely, the manager’s cognition of the perceived negative relocation effects due to the acquisition and the manager’s attitude towards the resulted positive relocation.
The specific case of relocation and the interviewee’s perception
The director of the main department was aware of the planned acquisition of the Slovakian plant before it was actively communicated. He knew about the MNC’s interest to increase the actual engagement within the Joint Venture and was already in his former
position, as an engineer for the other division, in contact with the Slovakian colleagues. He was also involved in the first attempts by being part of an integration project with responsibility for the research (testing) area. In this project, the Slovakian company was closely examined and evaluated according to its core functions.
“At first, I was not terribly afraid of a new wave of downsizing at this location A, Germany, even though this was the common fear when the topic first arose, yet, also to me it was unclear how this acquisition would practically look like for our German R&D centre – the situation was simply uncertain and unclear.”26 When he learned about the actual realization of the acquisition, he first feared a relocation process including work force rationalization; however, as he pointed out, due to his former experience with relocations and a certain routine to deal with laying off employees, he experienced no strong emotional pressures. Nevertheless, he reflected that he could also say this in such a relieved manner at this moment, because an actual rationalization in this context was never realized, as mentioned before. With respect to his emotional state, considering such communication to employees being laid off, he simply stated, that “it is certainly not pleasant for any manager, not even for the MNC’s CEO, to take such decisions and to communicate them to affected employees. Nonetheless, it is a manager’s job to take and follow such decisions to the sake of an effective organization”27.
It is important for him to communicate such decisions while giving precise explanations and justifications in order to create awareness and understanding with the affected employees. To him in a situation, in which such negative decisions have to be communicated to the employees it is most important to confront them with the pure facts, to include them in the actual planning process, to inform them and in any case to promote trust, as far as possible. At the time of the actual announcement, the director of the main department was not afraid anymore of a coming relocation wave. This, according to him, was due to the different levels of information: “From an ex-post analysis I can say, that we, as the communicating managers, were active on different informational levels, which in fact helped us to control our emotions towards change. We were already much further in the mental process than our employees could be according to the information they were given. Hence they were facing the fears of change much later, when we had already overcome them. This was something new for me, something I had never experienced before.”28
He himself was already more closely involved in the entire process than his staff. He communicated the status frequently to his management team, so they were – certainly on a different level of information – but yet involved. Nevertheless, when officially communicating the future plans within the German location, the director was facing an alert group of employees, in a time that he himself due to his information advantage had already overcome any fears for negative effects of the relocation. Apart from the fact that he was facing this informational advantage, he characterized his own emotional state at these times as follows: “I myself had experienced several periods of relocation involving rationalization and was not so strongly affected by this perspective. However, it is generally no fun to communicate such decisions. These are no nice moments. The fact of facing people who lose their job and have to live without an income is an extreme burden, which literally does not let you sleep properly. Certainly nobody, not even our CEO, likes to conduct these tasks, but sometimes it simply is necessary.”29 The fears he was facing with his staff were not only
concerning the relocation of jobs, but also concerning the up-coming change in their tasks and functions. In the time of communication, as long as the positive outcome of this relocation was not predictable, he also faced intensive discussions with employees to whom he was even personally related through their common work environment. Occurring difficulties for his staff were that some were unable to deal with the uncertain situation and with the resultant pressures also facing their own sub-departments: “For instance, one of my department leaders, who would have been primarily involved in executing employee communication, was strongly alert by this first uncertain situation and vociferously demanded clear instructions from our top management.”
The way he personally dealt with this case was to clarify that a manager’s position requires to also conduct such tasks, that this is common business for any manager; fortunately, when it became clear that this specific manager would not have to lay off employees, it became easier to support him and re-gain his trust: “Overall, as long as the entire procedure of this relocation and if it would involve rationalization was unclear I managed to deal with my employees simply by consequently repeating the facts, I knew, by communicating the future plans and by actively promoting trust in the top management’s communication and sharing of information.”30 Furthermore, when it became clear that no employees would have to be laid off, it was of course easier to deal with intensive cases and to re-achieve their trust in the
higher management. “Nevertheless, it was a very long process to reduce fears and establish trust amongst our employees.”31
Apart from that, the director of the main department, being a member of the acquisition project, had a high influence on calculating the possible scenarios for the realization and it was in his favour to actively safe jobs in the German location.
Practically, the acquisition was announced in a podium presentation, to which all employees of the German R&D centre had been invited in advance. The speakers did not get any external support to be prepared for this announcement. They only prepared themselves together in the internally involved management team.
Clearly, as previously quoted, it was a long process to decrease fears amongst employees and to create trust – especially considering the events from the relocation described under 5.1, which had just shortly before created mistrust and resentment for the staff at this German location.
Regarding relocation activities into the Eastern European markets, his opinion is on the one hand that, in cases which would affect himself on an individual basis, he would feel emotionally stressed and angry with his employer. “It is never enjoyable, for those who are directly affected by such relocations. If I was concerned myself, I would certainly be very incensed and probably quite angry with my employer.”32 On the other hand, from a management perspective, he clearly supports the idea, that especially in the business of the given MNC, which still includes a high degree of human manufacturing labour, moving East will be most efficient and best to keep costs low: “However, engagement in low labour cost countries inhibits a great opportunity to manage a company’s cost situation, consequently secure the bigger part of work places in total and to keep the entire business profitable; this is from a long term perspective the most important goal for any company. That is why I can understand our company’s strategy – plus, our strategy of a healthy mix of low labour cost and high labour cost countries has approved to lead our company in a positive way, throughout the last couple of years.”33 As he then explained it is most important for a company to be and stay compatible in the long term. Another solution for him would have been to early invest in automation, as the company – and in fact the entire industry – did not take this strategy, the move to low labour cost countries is the logical consequence.
