The Social Construction of Contextual Rationalities in MNCs: An Anglo-German Comparison of Subsidiary Choice

Abstract

This paper seeks to examine empirically the extent to which actors in subsidiaries of multinational companies (MNCs) are able to exercise some choice in the face of global pressures from the MNC headquarters (HQ). We argue that managerial practices in MNCs are not the result of a simple imposition of a global or a MNC organizational rationality but are subject to an interactive process, where differing contextual rationalities come into play. Using data from MNC subsidiaries in Britain and Germany, the paper compares the power resources and strategic choices of subsidiary level actors and shows the ways in which they seek to influence global strategy implementation as it affects local work systems. We investigate the different abilities of German and British managers to shape global restructuring processes in their local organizational contexts and conclude that national contexts impact on both the formulation of parent company strategies via a home country rationality and on the implementation of global strategies via a host country rationality. There are greater national barriers to a MNC policy of convergence based on standardized products and processes in Germany than in the UK.