made strenuous attempts to transfer the practices associated with ‘lean production’,
such as teamworking, functional flexibility and ‘single status’ (e.g. Oliver and
Wilkinson, 1992). American MNCs, on the other hand, appear to have trans-
ferred ‘human resource management’ practices, such as performance-related
pay and forms of direct communication, to their foreign subsidiaries (Muller,
1998). Overall, Ferner’s conclusion in his summary of the evidence was that
‘MNCs of different national origins behave in significantly different ways’
(1997: 33), reflecting the importance of institutions in the home country.
In terms of relations between different groups of organisational actors, the
logic of the strength of the country-of-origin effect is that it is actors in the
home country that are likely to be key players in the transfer of practices. Thus
transfer is characterised by a strong authority flow from the centre to the sub-
sidiaries in different countries. Actors in the subsidiaries may adopt a variety of
approaches in responding to this central influence: some may be very willing
to learn from the parent company and implement the practices enthusiasti-
cally; others may question the appropriateness of ‘foreign’ practices being
transferred but grudgingly accept that they should go along with the demands
of the HQ; while yet others may seek to resist the transfer altogether or insist
on practices being adapted. Thus the focus on the role of the country of origin
is also revealing in understanding the political nature of transfer.
The nature of the country-of-origin effect evolves over time. It tends to fall
in significance as a firm engages in international expansion, such as in the case
of a cross-border merger which significantly extends the global reach of a firm.
Moreover, many actors in MNCs, including some at the HQ, will not see a
strong influence from the home country as necessarily an advantage to the
firm and, consequently, may look outside the country of origin for ‘best prac-
tice’. In other words, MNCs do not possess a fixed and rigid national identity
which imposes a straitjacket on organisational actors; rather, national origin
shapes and constrains the actions of these actors but leaves scope for them to
draw on practices operating in other countries.
Dominance effectsGiven that actors have scope to observe and implement practices from coun-
tries other than the country of origin, what influences how they go about this
process? A key factor in this respect is their perceptions of the strengths and
weaknesses of economic performance across countries. Strong performance in
one country gives rise to interest in the ‘borrowing’ of elements of that busi-
ness system by firms in other countries. Smith and Meiskins (1995: 255–256)
argue that the hierarchy of economies within the international system gives
rise to ‘dominance effects’; at any one time, they argue, countries ‘in dominant
positions have frequently evolved methods of organising production or the
division of labour which have invited emulation and interest’. In terms of the
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