impact on the transfer of employment practices, the logic of the ‘dominance
effects’ argument is that such transfer is not solely created by the legacy and
force of institutions, but is also shaped by competitive pressures at the inter-
national level.
For much of the post-war period it was the American economy which
appeared to be the most influential. In a context of political hegemony and
industry in the USA, which had emerged from the war relatively unscathed
compared with its counterparts elsewhere, the American business system
exerted a significant, albeit contested, influence over the form of restructuring
in Europe and Japan. During the 1980s and early 1990s, however, the Japanese
economy was widely perceived to be the dominant power, and writers and
practitioners alike referred to the Japanese model in general, and lean produc-
tion in particular, as providing the solutions to common organisational prob-
lems. Towards the end of the twentieth century, however, the prolonged
stagnation in Japan and the resurgence of the US economy arguably led to a
renewal of the influence of the American business system.
In its simplest form the use of the concept of dominance is open to a num-
ber of lines of criticism. First, it rests on an assumption that there exist marked
differences in rates of economic growth between the major developed
economies; in fact, these differences are not as great as is often assumed. For
instance, while the 1970s and 1980s were seen as a period of economic decline
by many in the US, the growth rate of the American economy was actually
higher than that in Germany, Sweden and the UK. Only compared with the
Japanese economy was there a marked difference and even this was less signifi-
cant than is often supposed (see, for example, Hall and Soskice, 2001). Second,
even where there are significant differences in economic performance between
countries, only a part of this can be explained by divergences in forms of eco-
nomic organisation. Some of the explanation lies in the process of ‘convergence
and catch-up’. That is, particularly rapid economic growth in an economy is
often due in large part to a recovery from an adverse shock or the more inten-
sive use of existing resources rather than the result of key features of the
national business system. It is widely accepted that this factor explains part of
the rapid levels of economic growth found in the so-called ‘Asian Tiger’
economies prior to 1997. Third, the notion of dominance might imply that a
national business system is characterised by a homogeneous set of structures
and practices that operate across firms, and that companies in other countries
can identify and seek to emulate these. This is, of course, not the case; all
national business systems are characterised by a degree of intra-national variety.
Despite these criticisms, the concept of dominance retains some utility.
When thought of as a rough measure of management ideology and the way
that the perceptions of actors creates a dynamic for change and diffusion, it
adds to the understanding of the process of transfer. Specifically, actors within
MNCs can perceive the diversity of employment practices that they experience
across national systems as an opportunity to advance the competitive position
Transfer of Employment Practices Across Borders in MNCs 397