International Human Resource Management-MJ Version

either of the firm as a whole in relation to other firms, or of the unit in which
they work in relation to other units within the firm. There are thus traces here
of the rational approach. Moreover, actors can utilise the notion of dominance
to advance their own positions within a firm. For instance, managers in the
American operations of European MNCs may use their knowledge and famil-
iarity with the current dominant business system to develop an international
role within the firm. In other words, dominance effects also shape the politics
of transfer.
A part of the significance of the notion of ‘dominance effects’ is that it sug-
gests that the flow of practices will not only be from the home country to the
firm’s operations in other countries. As we saw in the previous subsection,
there certainly is evidence of the country-of-origin effect leading to transfer
occurring in this direction, and we might expect this to be most common in
MNCs from a dominant country since the two effects reinforce one another.
However, in the case of MNCs from a developing economy, or a developed
economy which has been performing poorly, dominance effects will challenge
the country-of-origin effect. The possible result is that practices that are trans-
ferred across a multinational may originate in the foreign subsidiaries. Indeed,
there is a growing body of evidence that such ‘reverse’ transfer does occur and
that it is shaped by the notion of dominance. The case study illustrates this
process, and demonstrates the dynamic and competing influence of the country-
of-origin effect and dominance effects.

Case study: Swedco

The issue of the direction in which practices are diffused across a multina-

tional’s operations is particularly interesting in the case of Swedish MNCs. The

small size of the domestic economy has meant that in order to grow, many

firms became multinational at a relatively early stage in their development

and subsequently became highly internationalised. Thus, compared to MNCs

of most other nationalities, the domestic operations of Swedish MNCs

comprise a small proportion of their total sales, assets and employment.

Moreover, the nature of the Swedish system of employment relations – the rel-

atively highly centralised system of bargaining; the strength of union organisa-

tion and high level of density; the structures promoting co-determination and

tradition of cooperation between management and labour – raises the issue

of how such a distinctive system influences a firm’s approach at the interna-

tional level where the structural supports for such practices are much weaker.

The issue was at the heart of a recent case study of a Swedish multi-

national. Swedco is a highly internationalised firm providing IT and commu-

nications services and equipment for other firms. It employs tens of

thousands of employees, approximately half of whom are outside Sweden,

while 95% of the firm’s sales are made abroad. The case study involved

research into the Swedish, Belgian and British parts of the firm and sought to

398 International Human Resource Management