Transnational Firms and their Corporate Labor Policy Case Studies on Philips and ING in the Netherlands and the United States, 1980–2010 Transnationale ondernemingen en hun arbeidsbeleid Case studies over Philips en ING in Nederland en de Verenigde Staten, 1980–2010 Proefschrift ter verkrijging van de graad van doctor aan de Erasmus Universiteit Rotterdam op gezag van de rector magnificus prof.dr. H.G. Schmidt en volgens besluit van het College voor Promoties. De openbare verdediging zal plaatsvinden op donderdag 28 juni 2012 om 13.30 uur Arie Sander Quak geboren te Vlaardingen Promotiecommissie Promotores: Prof.dr. W.J. Heilbron Prof.dr. R.J. van der Veen Overige leden: Prof.dr. J.J.B.M. van Hoof Prof.dr. H.W. Volberda Prof.dr. N.A. Wilterdink Transnational firms and their corporate labor policy Case Studies on Philips and ING in the Netherlands and the United States, 1980–2010 Sander Quak Copyright © Sander Quak 2012 All rights reserved. No part of this book may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior permission of the author. Isbn: Acknowledgements In early March 2006, I received a text message from my parents on my return from a two-day camel trip in the Rajasthan desert, India. I was invited to an interview for a PhD position and they asked me whether I would be back in time. Even though this was the case, returning from a four-month stay in India meant that I had to readjust to life at home and did not have time to properly prepare myself for the interview. Unsurprisingly, the interview did not go well; I had not convinced the entire application committee. Fortunately, though, I was invited to a second interview with two of its members. I thoroughly prepared myself and one month later I started the research that resulted in this dissertation. As at the start of this project, in the years following I have been fortunate enough to receive help and support from various people without whom I would not have been able to complete this project and whom I would like to thank sincerely. First of all, I would like to thank the two members of the application committee mentioned above, my supervisors Johan Heilbron and Romke van der Veen. I have profited greatly from their sharp analytical minds, their wide theoretical knowledge, their expertise in making abstract theoretical notions empirically researchable, and their abilities in guiding PhD research. Johan and Romke, thank you both for giving me this opportunity and guiding me these past few years. I also would like to thank my colleagues in the Sociology Department of Erasmus University Rotterdam. They have not only given me advice at various stages of the research and made important comments on work in progress, but also made the department a very pleasant place to work. I especially would like to mention Judith Raven, Fabian Dekker, Peter Mascini, Jaap Hassoldt, and Yannis Bacharias. Thank you for your friendship and all the light relief. The case studies that I conducted in the Netherlands and the United States would not have been possible without the cooperation of the interviewees. Because they were promised anonymity I cannot mention them by name, but I would like to thank them for their willingness to discuss the case studies and their assistance in finding various sources of information. Also, I would like to thank the Netherlands Economic History Archive I (NEHA) and Paul Moors of Radboud University Nijmegen for the information they provided. I would like to thank Gerarda Westerhuis of Utrecht University, Marta Kahancová of Central European University, and Bas Koene of Erasmus University Rotterdam for their comments and suggestions. Finally, I would like to thank the GAK Foundation (Stichting Instituut GAK) for their financial support. Working on a PhD can be overwhelming and is definitely a time-consuming affair. Therefore, it is good to have people around you with whom you can have a laugh and who will support you when needed. I would like to thank my family and friends for this, especially my parents and my two paranimfen, Pascal Dérogée and Jelmer van der Meer. Mom and dad, thank you very much for giving me the chance and stimulating me to explore my (academic) interests. It is very comforting to know I always have your support. Pascal, I would like to thank you not only for commenting on my work, but especially for your friendship in the past few years and all the laughs in M6-02. And Jelmer, thanks for being a good friend and for all the good times at the Puntegaal. Finally, I would like to thank Wendy Heesbeen. Writing a dissertation is not only an intellectual challenge; it also demands an ability to overcome setbacks and remain confident that, eventually, you will be able to finish it. For this, I have primarily one person to thank. Wendy, in the past few years you have helped me put setbacks into perspective, you repeatedly confirmed that you were confident that I would be able to successfully finish this dissertation, you have, on more than one occasion, gotten me back on my feet when necessary, and you have, very often, put a smile on my face. Your influence on this dissertation might not be very clear to the average reader, but I know I would not have been able to finish it without you. I am immensely grateful for everything you have done and will never forget this. If you do not find yourself in these acknowledgements, although you believe a gesture of gratitude would have been appropriate, please do not think I am ungrateful. Maybe you have just discovered a flaw in this dissertation; and even though I have just explained that many others have contributed to this dissertation, the responsibility for this flaw, as also for the rest of this dissertation, rests with me and me alone. Rotterdam, April 2012 II Table of contents ACKNOWLEDGEMENTS ...................................................................................................... I TABLE OF CONTENTS ....................................................................................................... III LIST OF TABLES AND FIGURES .......................................................................................... V PART I: A SOCIOLOGICAL APPROACH TO TRANSNATIONAL FIRMS ..... - 1 - CHAPTER 1: INTRODUCTION ......................................................................................... - 3 - 1.1 The restructuring of Western capitalist economies… ....................................... - 6 - 1.2 …and its consequences for labor ...................................................................... - 8 - 1.3 Objectives of this study ................................................................................... - 11 - CHAPTER 2: TOWARDS A SOCIOLOGY OF TRANSNATIONAL FIRMS .............................. - 13 - 2.1 Economic and political approaches to transnational firms ............................ - 13 - 2.2 Building blocks of a sociology of transnational firms .................................... - 17 - 2.3 Dual embeddedness of transnational firms… ................................................. - 25 - 2.4 …and the resulting differentiation and centralization .................................... - 32 - 2.5 The corporate labor policy concept explained ............................................... - 35 - 2.6 Conclusion ...................................................................................................... - 43 - CHAPTER 3: HOW DO THE NATIONAL AND TRANSNATIONAL ECONOMIC FIELDS CONSTRAIN AND PROVIDE OPPORTUNITIES? ............................................................... - 45 - 3.1 Development of the national and transnational economic fields.................... - 45 - 3.2 Work organization .......................................................................................... - 52 - 3.3 Rewards........................................................................................................... - 54 - 3.4 Employee voice ............................................................................................... - 56 - 3.5 Employee flow ................................................................................................. - 58 - 3.6 Conclusion: constraints and opportunities ..................................................... - 60 - CHAPTER 4: HOW TO STUDY THE DEVELOPMENT OF THE CORPORATE LABOR POLICY OF A TRANSNATIONAL FIRM? ............................................................................................. - 63 - 4.1 Research questions.......................................................................................... - 63 - 4.2 Expectations .................................................................................................... - 64 - 4.3 Research method ............................................................................................. - 70 - PART II: A SOCIOLOGICAL ANALYSIS OF TRANSNATIONAL FIRMS AND THEIR CORPORATE LABOR POLICY ........................................................... - 79 - CHAPTER 5: THE DYNAMIC HISTORY OF AN INDUSTRIAL CONGLOMERATE: ROYAL PHILIPS ELECTRONICS ................................................................................................ - 81 - 5.1 Locally embedded, but competing across the globe ....................................... - 82 - 5.2 A Dutch company controlling an organization spanning the globe ............... - 84 - 5.3 Transnational restructuring ...........................................................................