OEMs strategies for labor relations in international subsidiaries: Could transborder labor arrangements and standards outweigh national idiosyncrasies?

Type de publication:

Conference Paper


Gerpisa colloquium, Bordeaux (2024)


This study raises the question of whether do remain national origin differences in the way OEMs conduct their labor relations strategies in countries where they relocate and operate subsidiaries. As is well known, this is part of a classic questioning and analysis in the literature of international human resource management, business strategies, and national cultures.

The EPRG model - about the ethnocentric, polycentric, regio-centric and geocentric strategies - of multinational corporations (MNCs) to expand globally, was originally developed by Perlmutter (1969) and Wind et al. (1973). The essence of the EPRG model refers to the different strategies that firms follow to relate to and in the jurisdictions (nations and/or localities) in which they expand. Half a century after corporate evolution and academic studies, the greatest learning is that the coordinates are conditioned by a set of tensions. Of these tensions, the most important is the need of firms to deploy a global strategy, on the one hand, versus the need for firms to design strategies that ensure their ability to respond to the local/national environmental demands of each border they are getting in.

It is what specialized literature describes as the relationship/tension between the degree of cohesion or international congruence of the business strategy (internal fit) and the flexibility or capacity to respond to local environments, starting with what is related to human resources and labor relations (external fit or adaptive flexibility) (Milliman et al., 1991). An abundant literature on international human resource management & labor relations (IHRM&LR), organizational strategies and national cultures (Hofstede, 1984, 2010-2020; Paik & Teagarden, 1995, Milliman, 2010; Norris & Inglehart, 2019; Inglehart, 2018 ; among others) proposes that business and human resource management strategies are culturally and contextually conditioned.

In the end, the traditional-classical way in which MNCs resolved these tensions is under the premise that while the business strategy is global, human resources and labor relations strategies are resolved at the local levels – adhering to laws, institutions and instituted employment and labor practices.

The question is how automotive OEMs are going to resolve – or are resolving – this tension today when a new wave of international labor standards and arrangements are underway coupled with a new wave of labor upsurge (Bensusán, 2024).  For instance, US and European OEMS must now act considering the labor mechanisms and arrangements incorporated in the USMCA and the European due diligence process, respectively. Mexico and its automotive industry offer a unique geography to study these evolutions since the operation of both mechanisms and labor arrangements are taking place there.

In this paper we focus on the labor relations that have been established in the last five years in five OEMs from both continents. I.e., Ford, GM, Stellantis, VW and Audi. In order to extend the comparative focus, Toyota, Nissan and Hyundai are also studied. Labor relations are analyzed through three dimensions: Freedom of association and collective bargaining, wages, and working conditions.

The working hypothesis is that the IHRM&LR coordinates are moving towards a new axis. This is the axe made up of the transboundary of human-labor and environmental arrangements. Eventually, this could transform the rules of the game in the relationships between capital and labor established between OEMs and subsidiaries.

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