The employee relations arrangement at multinational SMEs [PhD Johan de Jong, 22 May]

Introduction and transfer of employee-oriented CSR in multinational SMEs

This thesis contains a case study research in seven multinational SMEs on the influence of the owner-manager’s value system on the design and execution of the company’s employee relations arrangement. The owner-manager’s other-regarding values affect the extent to which she/he considers the firm’s employees to be legitimate stakeholders whose interests should be taken care of, since employees’ wellbeing is influenced by the firm’s actions and behaviour. The owner-manager’s self-regarding values determine the extent to which employees, based on their power, are able to affect financial firm performance and, thus, the degree to which employees’ interest need to be safeguarded to improve financial firm performance.

The owner-managers consider a well-functioning employee relations arrangement to be characterised by an informal and flexible organisational climate in which the company’s responsibility for employees’ working lives is expressed and through which their competitive advantage is guaranteed. Since in the Netherlands companies have relatively little freedom to design their HR policies and practices at will because of government regulations and collective labour agreements, they think a formal and transparent arrangement of these policies and practices to be of secondary importance. For that reason they want to transfer the Dutch organisational climate to their foreign subsidiaries while they adapt their HR policies and practices to the host country’s institutional environment. However, they are only partially successful, since the basic conditions – mutual trust and effective external protection of employees’ interests – are lacking.

Domestic and foreign employees are found to appreciate an informal, trust-based organisational climate but to consider a formal and transparent design of HR policies and practices more important. That is why employee-oriented CSR is characterised by a combination of a formal, transparent HR armamentarium and a trust-based informal and flexible organisational climate.