considered in more depth by Arndt Sorge in Chapter 5, the organization of
production and work within the enterprise is shaped by the interlocking influ-
ences of the institutional forms, specific to each society, governing education
and training, the conduct, control and coordination of work and the regulation
of conflict. Alternatively, the concept of nationally distinct business systems
advanced by Whitley (1992) relates the fundamental differences in enterprises
across countries to two sets of institutional features which are elaborated below.
Yet national economies across Europe are far from homogeneous: they continue
to support a diversity of forms of organization, some of which transcend national
borders (Mayer and Whittington, 1996). Moreover, ‘organizationeffects’ (Mueller,
1994) involving processes of cross-national diffusion within multinational com-
panies are resulting in convergence of management and production practice
across countries. The concept of the Eurocompany amounts to more than an
umbrella for a set of nationally differentiated companies: MNCs within Europe
also cohere around axes which transcend national borders.
The influence of national business systems on the strategies and behaviour of
enterprises is well established (Whitley; 1992; 1996). The first set of features iden-
tified by Whitley is the nature and extent of the activities coordinated through
authority structures or through external networks and institutions. Considerable
national variation within Europe is evident according to this set of factors. Large
Anglophone enterprises organized along multi-divisional lines display a strong
tendency to internalize activities but to develop new competencies through acqui-
sition; the diversified variant has also shown considerable industrial mobility.
Large German enterprises equally display a strong tendency towards internaliza-
tion within an industrial combine, but a greater tendency to develop new com-
petencies internally and to remain committed to particular products and sectors.
The second is the nature of corporate governance structures, where
Whitley (1996) underlines the contrast between the ‘insider’ systems found in
continental European countries and the ‘outsider’ system characteristic of
Anglophone countries. Insider systems, of which the French and German are
two main variants, are distinguished by interlinked networks of corporate,
institutional or family shareholdings, a financial system based on long-term
bank credit, less developed stock markets and constraints on hostile take-over.
Enterprises are embedded in networks of relationships in which the ability to
act independently is restricted by ties of mutual obligation to and dependence
on various stakeholder groups, including employees. In contrast, outsider sys-
tems are characterized by dispersed networks of shareholdings, greater reliance
on internal sources of finance, highly developed stock markets and an active
market for corporate control. Enterprises are largely discrete economic actors
primarily accountable to a single stakeholder, the shareholder.
In terms of behaviour, enterprises embedded in insider systems are likely
to emphasize longer-run performance, and to pursue investment strategies
which involve longer-term commitments to product and process innovation
and associated skill development. In contrast, enterprises embedded in outsider
The Eurocompany and European Works Councils 463