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Online publication date: 26 March 2009. Abstract. Do headquarters influence the subsidiaries' arrangements of vocational training in foreign countries?
Journal of International Business Studies (2009) 40, 1374–1395

& 2009 Academy of International Business All rights reserved 0047-2506 www.jibs.net

The cultural dependence of vocational training Nikolaus Beck1, Ru¨diger Kabst2 and Peter Walgenbach3 1

University of Lugano, Lugano, Switzerland; University of Gießen, Gießen, Germany; 3 Friedrich Schiller University of Jena, Jena 2

Correspondence: N Beck, University of Lugano, Via Giuseppe Buffi 13, 6904 Lugano, Switzerland. Tel: þ 41 58 666 44 68; Fax: þ 41 58 666 46 47; E-mail: [email protected]

Received: 7 February 2007 Revised: 8 June 2008 Accepted: 20 June 2008 Online publication date: 26 March 2009

Abstract Do headquarters influence the subsidiaries’ arrangements of vocational training in foreign countries? Our analyses of the amount of training offered to employees by organizations in 14 countries in which different training systems prevail (either continuing vocational training or initial vocational training) show that the cultural models of training diffuse between training systems in both directions. Independent from their own location, headquarters have the power to export their expectations concerning the training of employees to their subsidiaries that are located in countries with training systems different from those of the headquarters. This result is in accordance with the country-of-origin effect. Journal of International Business Studies (2009) 40,1374–1395. doi:10.1057/jibs.2008.112 Keywords: training and development; business systems; institutionalism; cross-cultural research/measurement issues; cross-cultural diffusion

INTRODUCTION The relationship between the headquarters of multinational enterprises (MNEs) and their subsidiaries in foreign countries is a topic that has gained increasing attention in recent years. One particular area of interest is the way in which differences between the markets and cultures of the home country of the company and the host country of the subsidiary lead to difficulties both in task coordination and in the design of power relations, and how they affect important managerial decisions (Geppert, Matten, & Walgenbach, 2006). A major question in this stream of research is whether the headquarters have a dominant influence on the subsidiaries’ managerial arrangements in foreign cultures, or whether subsidiaries in the host country have the power, owing to their own managerial competence and/or the host country’s cultural necessities, to control their own managerial issues independently (Bartlett & Ghoshal, 1989; Ferner, Almond, & Colling, 2005; Kostova & Roth, 2002). In general, three theoretical approaches exist, which provide different answers to this question. The first can be summarized as the globalization approach. This stems from new institutionalism in organizational analysis, which asserts that institutional pressure on organizations towards the adoption of managerial practices that are considered legitimate in the organizational environment leads to a homogenization of structures in different organizations. Thus it is argued that, over time, organizations become increasingly similar (DiMaggio & Powell, 1983; Meyer & Rowan, 1977). Although new institutionalism in empirical research was initially concerned with organizational change and isomorphism in the US, the globalization branch

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within this theoretical approach has recently shifted attention towards worldwide tendencies to organizational isomorphism (Drori, Meyer, & Hwang, 2006; Tempel & Walgenbach, 2007). Thus it is argued that an irresistible diffusion process of managerial practices exists, in which the AngloAmerican model of individualistic arrangements is exported to all other countries (e.g., Djelic, 1998). A contrary perspective is offered by the business systems approach (Whitley, 1999). This maintains that organizations must adapt to the peculiarities of national business systems. It is assumed that local markets, as well as local institutional conditions, are distinctive and unique. The existence of these specific conditions should prevent worldwide homogenization of managerial practices. According to this approach, the standardizing influence of the headquarters on the managerial arrangements of the subsidiaries has to be limited, if the subsidiaries’ existence is not to be put at risk (see also Bartlett & Ghoshal, 1989). Finally, an ecological imprinting approach exists that brings forward the idea of a country-of-origin effect (e.g., Ferner, Quintanilla, & Varul, 2001). This approach emphasizes that, after all, ‘‘the home country remains the primary source of ownership ¨ selmann, McDonald, & Heise, 2002). and control’’ (Tu This means that headquarters do, to a large extent, influence the managerial arrangements in subsidiaries. Therefore managerial decisions in subsidiaries of MNEs are always imprinted by the cultural norms and values that prevail in the home country of the MNE. In this study, we should like to test these different theoretical approaches by focusing on a specific but important organizational human resource management (HRM) practice, namely the training of employees. We deviate from prior studies in three ways:  Many of the earlier studies on the relationship between headquarters and subsidiaries of MNEs addressed issues of employment and industrial relations as well as HRM practices, thereby studying a great variety of aspects that are connected to this area of management. In this study we focus on one particular element of HRM that is of utmost importance, the training of employees in MNEs, which, despite its relevance, has not received much attention in studies on MNEs. In particular, we focus on the amount of training provided to employees at different hierarchical levels. Organizations must determine the appropriate amount of training to provide to employees in different positions in

order to ensure that they are qualified in the best possible manner for their respective jobs. Therefore the question of who has a substantial impact on decisions on the provision of training is anything but trivial.  Previous studies have concentrated on national differences in management practices between host and home countries of MNEs. We, however, focus on differences in the institutional and legal arrangements concerning the provision of training that is needed to execute certain jobs. These institutional and legal arrangements form different systems of vocational education and training (VET) that are described in greater detail below. Generally speaking, two different forms of VET exist: vocational training preceding entry into the labor market, which is often based on apprenticeship training (initial VET); and vocational training during one’s career, which is based primarily on training on the job (continuing VET). In each country that we have included in the analysis of the present study, either initial or continuing VET prevails. We therefore consider headquarters and subsidiaries as belonging to one of these training systems rather than focusing on the effect of being located in a certain country. We examine the effects of differences between the training systems prevailing in the home and host countries of MNEs.  We look at the transfer of practices from home to host country in both directions, that is, from initial to continuing training systems and from continuing to initial training systems. Whereas many previous studies selected only one particular home country of MNEs, and investigated only the effects of a transfer of practices from the headquarters located in this country to subsidiaries located in other countries (e.g., Ferner et al., 2001), we examine the possible effects of a transfer of training practices from each of the two training systems to the other. In other words, we investigate whether or not evidence exists to support the assumption that headquarters located in either of the two training cultures have the power to influence the decisions on training investments of subsidiaries located in another training system. With this approach, we aim to contribute to the ongoing discussion on the power and influence relationships between the headquarters and subsidiaries of MNEs. This paper proceeds as follows. In the next section, we illustrate the importance of training. We then

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briefly describe the two different forms of vocational training that make up the different training systems. In a subsequent step, we introduce the dependent variable of this study: the difference in the amount of training between employees at higher and lower hierarchical levels of the organization. We explain why this difference can be expected to be stronger in initial VET systems than in continuing VET systems. We then develop hypotheses according to the three theoretical approaches mentioned above. These hypotheses consider how the difference just mentioned alters if the headquarters of a company is located in a country in which a training system prevails that is different from the training system in the country in which the subsidiary is located. As a consequence, in the empirical part of our paper, we shall first analyze the difference in the amount of training provided to employees at different hierarchical levels of organizations in the two training systems. Then we shall test the hypotheses with data from the CRANET1 panel on organizational HRM practices in various countries (Brewster, Mayrhofer, & Morley, 2004). Finally, we shall discuss the findings of our study.

THE IMPORTANCE OF TRAINING The success of organizations depends to a large extent on their human capital, that is, the qualifications and skills of their employees. Therefore employers are eager to fill positions in the organization with employees who are best suited to carry out the tasks that these positions entail. Employers must ensure that employees have – or will acquire as soon as possible – those skills that are needed to fulfill the tasks in a satisfactory manner. In other words, in most cases employers must offer training to their employees.2 The training of employees incurs considerable costs. The instructors, materials and facilities that are necessary to train employees must be paid for by the employer. Above all, training generates opportunity costs. Employees cannot contribute to the company’s added value while they are being trained (Lazear, 1998). The more time employees spend in training, the higher the opportunity costs. Therefore decisions on the amount of training that employees should receive are of crucial importance. The amount of training that an employee receives is dependent on his or her current knowledge of the task that he or she has to fulfill. However, it is not the case that all of the knowledge needed to execute a certain job is taught in the firm. When

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employees enter the labor market they possess general knowledge (acquired in schools and other educational institutions) that is almost always of some relevance for carrying out a specific job. Moreover, in many countries employees already possess job-specific knowledge when they are hired by a firm for the first time. Therefore they have less need for additional training. The amount of jobspecific knowledge that an employee possesses when he or she enters the labor market depends on the training system that prevails in a particular country. Investment in training of employees is determined not only by discrete managerial decisions but also, to a large extent, by the specifics of the training system that prevails in a country. We therefore describe the specifics of different training systems in the next section, in order to show how firms are influenced by these systems in their decisions on the provision of training.

TWO DIFFERENT SYSTEMS OF VOCATIONAL TRAINING Labor market theorists point out that the form of vocational training is a prominent example of differences in national institutional frameworks (e.g., Allmendinger, 1989; Franz & Soskice, 1995; Marsden, 1990; Maurice, Sellier, & Silvestre, 1979; ¨ ller & Shavit, 1998; Thelen, 2004). As menMu tioned above, the institutional frameworks that control the way in which training is provided in a country – the VET systems – can be divided into two categories: continuing and initial VET systems. In continuing VET systems, the necessary qualifications are acquired during an employee’s working career. Job entrants leave the general educational system, that is, schools, and begin their working career at a company with hardly any specific occupational knowledge. Almost all the necessary skills are provided by the employing firm, in such a way that each employee receives the exact knowledge he or she needs in order to perform his or her current job. Training can take place at any time within the working career of an employee, that is, whenever he or she is promoted to another position (e.g., Marsden, 1990; Maurice et al., 1979; ¨ ller & Shavit, 1998). Mu In initial VET systems, most of the vocational skills are acquired before the actual working career of an employee begins. Standardized skills are acquired in vocational schools that focus on theoretical training, and in internships or apprenticeships with firms at which practical training takes place. As a consequence, former trainees

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(particularly manual workers and clerks) in initial VET systems already possess most of the necessary occupational skills when they begin their careers. Employers do not need to offer much additional training to former apprentices and trainees. Vocational knowledge is therefore considered occupation-specific. Training may, however, become necessary if traditional jobs face new technical developments that must be integrated into the relevant working procedures. In continuing VET systems, on the other hand, employers cannot rely on standardized qualifications of job applicants. The amount of training provided during the occupational career of an employee can be expected to be much higher in continuing VET systems than in initial VET systems. This fact also has implications for career patterns and the content of jobs in the respective training systems, as has been illustrated in a comparative study of middle managers in Britain and Germany (Stewart, Kieser, Barsoux, Ganter, & Walgenbach, 1994). In initial VET systems, training typically has the character of ‘‘updating’’ vocational knowledge. Sometimes this kind of training is also used as a form of reward. It is often offered through seminars for which employees can take some time off, and its importance for the execution of certain jobs is in general lower than that of the training received in an apprenticeship, for example. However, initial training does not qualify employees for every position in an organization. The relevant field of initial VET is at the clerical and skilled manual level of organizations. Positions at the professional or managerial level are predominantly held by employees with tertiary education, that is, in most cases employees with a degree from a polytechnic or university, regardless of the training system in which the employing company is located. In neither VET systems do university programs represent complete vocational studies. The primary role of academic education is to provide students with the intellectual capabilities that enable them to fulfill complex and demanding tasks, and to endow them with a comprehensive knowledge base applicable in a variety of operations (Becker, 1975). The limited applicability of tertiary training is due to the fact that jobs for highly qualified persons are not very standardized. The specific content of jobs for highly qualified employees in comparable occupational positions can differ considerably between organizations. Moreover, the relevant technical and/or managerial developments proceed at a very fast rate. Therefore

it is impossible for universities to offer students such a standardized type of education as is typical in apprenticeship training, for example. Nonetheless, to a certain extent, tertiary education is regarded as more standardized and thus more similar to vocational training in initial VET cultures than in continuing VET cultures. For example, universities in Austria, Germany, the Netherlands and Switzerland are considered to generate a more standardized educational output within subjects than universities in France, Great Britain, Italy or Spain (Allmendinger, 1989; De ¨ ller, Steinmann, & Ell, Graaf & Ultee, 1998; Mu 1998). In addition, some fields of study are at least partially conceptualized as preparation for a certain occupation, for example, business administration or engineering. Therefore it seems likely that employees in higher organizational positions in these training systems will receive more occupational knowledge during their studies than university graduates in cultures in which training on the job prevails. However, in initial VET systems as well, graduates are far from being fully prepared for a specific job. They also must acquire many of the required skills through training during their working career. Moreover, according to Thurow (1975), employers are interested primarily in investing in the training of those employees who, they believe, will incur only low training costs (by acquiring new knowledge quickly) and thus have high chances of successfully capitalizing the company’s investments (see also Ott & Rinne, 1994). These employees are found predominantly in higher positions of the organization. They have entered these positions because of their high formal qualifications, mostly university degrees, which have signaled to the employer at the stage of job entry that they possess a high learning ability (Spence, 1973). Therefore it can be assumed that, in both training systems, employees at higher organizational levels receive more training by firms than employees at lower levels. Moreover, if the training of highly qualified employees is generally tantamount to investments with especially high capitalization rates, employers in both systems can be assumed to offer as much training as is possible, that is, affordable, to these employees. Thus employers can be expected to profit from increased capabilities and additional knowledge of their employees at the managerial or professional level, no matter how much occupational knowledge these employees have already received from the general educational system.

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Summing up the considerations that stem from prior research, it becomes evident that employees in continuing VET systems are offered more training by firms during their working careers than employees in initial VET systems. However, these differences exist only for employees at the lower organizational levels. In both initial VET systems and continuing VET systems, employees at higher organizational levels receive more training than employees in lower organizational positions. These considerations are illustrated in Figure 1. As a consequence, the difference in the amount of training between employees in higher positions and employees in lower positions (hereafter referred to as the degree of inequality in the provision of training) is stronger in initial VET systems than in continuing VET systems. We take this statement, which is depicted in Figure 1, as a baseline for our empirical investigation. We assume that the degree of inequality is not fixed, but rather is dependent on the possible transfer of practices between headquarters and subsidiaries located in different VET systems. In the remainder of this paper we shall develop and test hypotheses that describe how the degree of inequality in the provision of training may or may not be altered if a subsidiary is located in a VET system that is different from the VET system in which the headquarters is located.

Figure 1 The relationship between the amount of training for employees, the hierarchical position of the employee and the training system.

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HYPOTHESES: IMPACT OF HEADQUARTERS’ AND SUBSIDIARIES’ LOCATIONS ON INEQUALITY IN PROVISION OF TRAINING As stated above, in the discussion on headquarters’ influence on the provision of training in a subsidiary that is located in a different VET system, three theoretical perspectives appear to be of relevance: the globalization approach, the national business systems approach and the country-oforigin effect. The Globalization Approach Proponents of the cultural globalization approach argue that the structures and practices of organizations are subject to global processes of standardization (Drori et al., 2006; Meyer, 2005; Meyer & Scott, 1992; Scott & Meyer, 1991). These processes imply not only the harmonization of organizational structures and practices, but very often also the exportation of the Anglo-American model to other countries (Djelic, 1998). In fact, as proponents of the globalization approach have shown, these processes have led to a worldwide adjustment of different educational and training systems (Meyer & Ramirez, 2005) – at least on the surface, for example, in terms of standardized formal curricula or in terms of educational titles. The spread of Bachelor and Masters degrees in Europe (especially the spread of the MBA) – degrees that stem from the Anglo-American model of education – is a striking example of this process (see the empirical study by Moon, 2002, but also Meyer, 2002; Kieser, 2004). Since continuing vocational training prevails in ¨ ller & Shavit, 1998), this the USA and in the UK (Mu kind of training can also be viewed as belonging to the Anglo-American model of education and training. Nevertheless, there are still considerable differences between vocational training systems, as we have shown above. However, if the globalization approach is correct, we should also be able to observe the tendency of a worldwide shift towards continuing VET, that is, an increasing provision of training on the job in those countries in which initial VET prevails. Headquarters located in countries with continuing VET systems can be considered triggers of this process. These headquarters should be in a powerful position to export elements of continuing VET to host countries in which initial VET is the prevailing form of training. Since a global development towards training on the job supposedly exists, which in turn creates strong institutional pressure to strengthen this type of vocational training, claims of subsidiaries that this

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type of training is not very necessary should not have any considerable impact. Since training for employees in higher positions is expected not to differ between continuing and initial VET systems, parental organizations in continuing VET countries should persuade their subsidiaries in initial VET countries to offer more training to employees in lower positions than organizations that originate from initial VET systems. This should subsequently lead to a reduction in the degree of inequality in the provision of training. Thus, based on the globalization approach, it can be argued that, owing to the exportation of the dominant model of continuous vocational training typically applied in the US and the UK, the degree of inequality in the provision of training should be lower in initial VET countries if the headquarters of the firm is located in a continuing VET country. Contrary to this, again based on the arguments of the globalization approach, one would not expect headquarters of MNEs located in initial VET countries to export their model of training to their subsidiaries in continuing VET countries, since this local model runs counter to the dominant globalization process. Therefore the power of headquarters in initial VET countries to persuade subsidiaries in continuing VET countries to adopt elements of the home country’s model of vocational training should be greatly reduced. Consequently, if the arguments of the globalization approach hold true, one would not expect any differences in the degree of inequality in the provision of training if the headquarters of a subsidiary are located in an initial VET country. Based on the globalization approach, we hypothesize: Hypothesis 1: In initial VET countries, the degree of inequality in the provision of training for employees is lower for subsidiaries whose headquarters are located in a continuing VET country than for other organizations. However, in continuing VET countries, there is no difference in the degree of inequality in the provision of training between subsidiaries whose headquarters are located in an initial VET country and other organizations.

The Business Systems Approach The globalization approach is not uncontested, however. There is still debate on whether a single, dominant institutional logic is spreading throughout the world, leading to a homogeneous world polity, as is assumed by Meyer and his colleagues

(Meyer, 2005), or whether different and sometimes competing institutionalized models still exist (Tempel & Walgenbach, 2007). In fact, the international business literature maintains that considerable differences between countries persist with regard to conditions for management (Whitley, 1999). These particular conditions call for local adaptations of the strategies and policies of MNEs (Bartlett & Ghoshal, 1986, 1989), and lead to strong differences in the managerial arrangements between different institutional contexts for subsidiaries, as Ghoshal and Nohria (1989) have empirically shown. Since subsidiaries in host countries have to adapt to local conditions, they are often not only considered to be executing agencies of centralized corporate strategies. They are also regarded as valuable and relatively autonomous strategic entities. This becomes evident in the description of MNEs as interorganizational networks (Ghoshal & Bartlett, 1990), which underscores the autonomy of subsidiaries. In recent years, subsidiaries are supposed to have gained increasing independence from headquarters control (Mudambi & Navarra, 2004).3 These studies focus mainly on differences in market conditions between countries. However, as we have shown, differences exist not only with respect to national markets, but also with respect to the form of vocational and educational training offered to employees in national business systems (Whitley, 1992, 1999). Thus one could also argue that MNEs must invariably adapt the HRM policies of their foreign subsidiaries to the specifics of the national business systems in which their subsidiaries are located. This implies that the provision of training in the foreign subsidiaries of MNEs must be adjusted to the VET system of the country in which the subsidiary is situated, and that headquarters will have no influence on the amount of training that is offered in the host countries’ subsidiaries. Based on these arguments, we hypothesize: Hypothesis 2: Neither in initial nor in continuing VET countries is there a difference in the degree of inequality in the provision of training between subsidiaries whose headquarters are located in a country in which the prevailing VET system is different from that in the subsidiary’s country and other organizations.

The Country-of-Origin Effect A third line of our theoretical argument is based on the idea of national imprinting of organizations.

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Corporations are embedded in and imprinted by the national institutional context from which they originate. They are shaped by their founding conditions through their development in time (Stinchcombe, 1965, see also Johnson, 2007; Marquis, 2003) and space. Therefore subsidiaries are likely to show a kind of ‘‘cultural heritage’’, that is, an imprint of a national business system in which the headquarters resides. In national comparative studies of organizations, this effect is often called the country-of-origin effect (Ferner, 1997, 2000; Ferner et al., 2001; Ferner, Quintanilla, & Sanchez-Runde, 2006; Tregaskis & Brewster, 2006). Such a country-of-origin effect must not be considered as a completely uncontrollable process that lies beyond managerial discretion. MNEs can rather be expected to deliberately economize by leveraging the managerial practices they are used to across their foreign subsidiaries. The transfer of familiar organizational practices can thus help to compensate for the liability of foreignness, that is, the costs of doing business abroad (Kostova & Roth, 2002; Schmitt & Sadowski, 2003; Zaheer, 1995). Of course, if managers in host-country subsidiaries have been expatriated from the corporation’s home country and business system, they can be expected to take with them the views and attitudes on management that they take for granted. A transfer of managerial practices that comes about in such a way resembles, to a certain extent, an ‘‘automatic’’ process of cross-cultural imprinting. However, if subsidiary managers have internalized the host country’s cultural and institutional norms of management, the country-of-origin effect can be expected to work through a different mechanism: Headquarters must exert influence on foreign subsidiaries towards the adoption of practices that are prevalent in the home country’s business system. Subsequently, if these corporations internationalize their activities, their foreign subsidiaries are often compelled by the headquarters to adopt practices that prevail in the home country of the MNE (DiMaggio & Powell, 1983). Gooderham, Nordhaug, and Ringdal (1998, 2006) as well as Ferner, Almond, and Colling (2005) have empirically shown that US MNEs have the power to transfer their cultural models of HRM to their subsidiaries located in countries in which different cultural norms of HRM are prevalent. Thus the core argument is that MNEs from different national contexts remain – at least to some extent – entities shaped by the institutional context from which they originate.

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This argument should also hold true with respect to the system of training and the amount of training employees receive. Thus one could argue that parental organizations in both initial VET systems and continuing VET systems should be interested in transferring their respective cultural model of training and the expectations concerning the qualification of employees prevailing in their home country to their subsidiaries located in countries with a different training system. In accordance with this view, one can argue that headquarters in continuing VET countries should reinforce the provision of training on the job in subsidiaries located in initial VET countries, since in continuing VET countries vocational knowledge is considered firm-specific and not occupationspecific. The possibility of hiring fully trained employees should therefore not be recognized as a realistic option by the headquarters in continuing VET countries. These headquarters can be expected to persuade subsidiaries in initial VET countries to offer more training on the job, so that the amount of training becomes similar to the amount that is offered in the home country. Again, the request for more training should be relevant only for employees in lower positions, since there should be no differences in the amount of training for employees in higher positions between training systems. This should lead to a reduction in the inequality of the provision of training, as is hypothesized in Hypothesis 1. On the other hand, according to the country-oforigin effect and contrary to the globalization approach, headquarters in initial VET countries should also be able to pass elements of their local model of vocational training on to subsidiaries located in continuing VET countries. In fact, as Ferner, Quintanilla, and Varul (2001) have shown, headquarters in Germany, where initial VET prevails, were able to control the form and amount of training that is offered in subsidiaries in the UK and Spain, where continuing VET prevails. Now, the question remains: how can headquarters in initial VET countries influence the degree of inequality in the provision of training? These headquarters cannot force their subsidiaries in continuing VET systems to reduce the amount of training of workers and clerks, since these subsidiaries cannot fall back on readily trained apprentices. Therefore they must offer the necessary amount of training for employees at lower levels. Further, owing to the stronger occupational orientation of certain academic disciplines, such

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as business administration or engineering, employees in higher positions in initial VET systems can be expected to have accumulated more occupational knowledge than their counterparts in training-onthe-job countries. Headquarters in initial VET countries might therefore push for intensified training of managers and professionals in their subsidiaries in continuing VET countries in order to enable their employees to keep up with their colleagues in the company’s country of origin. This should lead to a higher degree of inequality in the provision of training than in organizations that originate from continuing VET countries. Overall, these arguments suggest that not a single model but rather different models will diffuse globally. One can thus hypothesize: Hypothesis 3: In initial VET countries, the degree of inequality in the provision of training for employees is lower for subsidiaries whose headquarters are located in a continuing VET country than for other organizations. In continuing VET countries, the degree of inequality in the provision of training for employees is higher for subsidiaries whose headquarters are located in an initial VET country than for other organizations.

DATA AND METHODS Data The dataset that we use to test the hypotheses is provided by the Cranet project, which began in 1989 (Brewster et al., 2004). In this project, a panel survey was launched in which organizations in a variety of countries worldwide are asked about their HRM policies on the basis of a standardized questionnaire. The panel encompasses information of single-site firms, headquarters (central units) and subsidiaries of corporations. All information that we use in our study was collected for the respective units or ‘‘organizations’’ in which the interviewees were located. The questionnaires were sent by mail to the HRM managers of the respective companies. To date, 39 universities have collaborated in this project. The first panel wave was conducted in 1990, and followed by waves in 1991, 1992, 1995, 2000 and 2004. However, for our empirical analysis, only the 2000 wave provided sufficient information. Thus we could not undertake a longitudinal study, which would certainly allow us to answer more elaborate and complex research questions. However, the testing of our hypotheses does not require a longitudinal design.

Moreover, although the Cranet Panel provides the most comprehensive international dataset on HRM practices, one shortcoming is the high number of missing values. As a consequence, the more elaborate a statistical model is with respect to the number of covariates, the lower the number of observations that could be used in the analysis. Nonetheless, we were able to draw on sufficient observations for our analyses. We used the data on organizations located in 14 European countries: the initial VET countries Austria, Belgium, Denmark, Germany, the Netherlands, Norway and Switzerland on the one hand, and the continuing VET countries Great Britain, France, Ireland, Italy, Portugal, Spain and Sweden on the other. According to the literature on comparative labor market analysis (e.g., Allmendinger, 1989; Eyraud, Marsden, & Silvestre, 1990; ¨ ller, 1998), the Maurice et al., 1979; Shavit & Mu literature provided by CEDEFOP,4 and the appraisal of local experts (from these countries) who take part in the Cranet project, the first seven countries were classified as countries in which initial VET systems prevail. In the remainder of the countries, continuing VET systems are considered to be the dominant form of training. A total of 5154 organizations located in these countries took part in the survey in the year 2000. In the following section, we shall describe in greater detail the types of training system in two countries (Germany and France) as examples of each system. Descriptions of the national training systems for the remainder of the countries can be found in the Appendix. In Germany, the form of the apprenticeship system is most pronounced (Carroll & Mayer, ¨ ller et al., 1998). Here, apprentices are 1986; Mu trained in the so-called dual system of vocational training. This means that as well as vocational training within a firm, apprentices are also taught more general knowledge at vocational schools. This happens more or less at the same time. Thus short periods of practical training in firms are followed by periods of schooling, which are followed by practical training, and so on. This form of vocational training goes back to regulations of the old craft guild system in Germany, which was never ¨ ller et al., 1998). Even today, fully abolished (Mu one sees journeymen (former apprentices) wandering around the country wearing their traditional costumes and seeking employment with any employer (a master) who is currently in need of an additional qualified employee. These journeys

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(Walz) illustrate the high level of standardization of vocational skills transferred through apprenticeships in Germany. Otherwise, the immediate hiring of a journeyman by any employer would not be possible. Training in France is strongly influenced by national legislation, which requires companies with more than ten employees to devote a minimum of 1.5% of their total wage bill to an ongoing system of training. Legislation also organizes the training system in two directions: (1) training as specified in the company’s training plan, and (2) training initiated by employees exercising their individual right to pursue further training and development (Buyens, Dany, Dewettnick, & Quinodon, 2004). However, although the training system recognizes an individual’s right to training and development, training issues are still understood more as a corporate interest than as a means for employees to develop their employability (ANPE, 2001). Thus the French system is a very characteristic example of a training-on-the-job system.

Measures Amount of training. In the dataset, the amount of training is captured by four variables. The organizations were asked how many days of training an employee receives, on average,    

at at at at

the the the the

managerial level, professional level, clerical level, and manual level.

These categories reflect – in a reduced manner – common hierarchical classification schemes that are based on professional categories (e.g., Goldthorpe, 1980). As we have already mentioned, many organizations did not answer all questions. Consequently, we have many missing values. However, 2212 organizations provided full information for each of these four variables: 1012 located in initial VET countries and 1200 located in continuing VET countries. In a first step, we used this information to build variables, which we then used to test, in a more descriptive (bivariate) manner, whether the assumptions depicted in Figure 1 are supported by our data. We summed up the values of these different variables and divided the sum by 4 (the number of hierarchical layers). This resulted in the variable ‘‘average number of training days per year for all

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employees’’. Then we summed up the average number of training days per year for employees at the managerial and professional level and divided this sum by 2. In doing so, we constructed the ‘‘average amount of training for employees at higher levels of the organization’’ (Trhigh). We undertook the parallel procedure for the clerical and manual levels of employees in order to obtain the ‘‘average amount of training for employees at lower levels of the organization’’ (Trlow). We then conducted a multivariate analysis of the differences in the provision of training between employees at different hierarchical levels. We estimated linear regression models, thereby conceptualizing the dependent variable as   Trhigh ð1Þ ¼ lnðTrhigh Þ  lnðTrlow Þ y ¼ ln Trlow Thus the dependent variable is the log of the ratio of the average amount of training offered to employees at higher levels and the average amount of training for employees at lower levels (which is tantamount to the difference in the log of average training amounts). We also estimated models with other specifications of the dependent variables. However, the results were best with this formulation, probably because in this case the distribution of the dependent variable most resembled a normal distribution. Moreover, this is a common way to construct differences as dependent variables in regression models, for example, in models of ¨ derl, & Woywode, 2005). growth (Beck, Bru We first calculated a regression model with the full sample to check the considerations that are depicted in Figure 1. This ‘‘baseline’’ model has the form y ¼ a0 þ oxIVET þ b0 X þ e

ð2Þ

where xIVET denotes a dummy variable that is 1 for organizations that are located in a country with an initial VET system and 0 otherwise. X describes the vector of all additional covariates, and e is the error term. According to the assumptions that led to Figure 1, we expect that o40. To test our hypotheses, we split the dataset. We are thus able to estimate one regression model for organizations located in initial VET countries and another model for organizations located in continuing VET countries. These models can be formulated as yIVET ¼ a0 þ nxHCVET þ b0 X1 þ e

ð3Þ

yCVET ¼ a0 þ mxHIVET þ b0 X2 þ e

ð4Þ

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where yIVET denotes the dependent variable for the subsample of organizations located in an initial VET country, xHCVET is a dummy variable that is 1 for organizations with headquarters in continuing VET countries and 0 otherwise, and X1 is a vector of all other covariates in this subsample; yCVET denotes the dependent variable for the dataset of organizations located in continuing VET countries, xHIVET is a dummy variable that is 1 for organizations with headquarters in initial VET countries and 0 otherwise, and X2 is a vector of all other covariates in this subsample. The three hypotheses that we put forward can then be formulated in the following manner: Hypothesis 1: Hypothesis 2: Hypothesis 3:

theoretical standpoint such a distinction is not relevant. The headquarters location dummy in Eq. (4) was coded 1 if an organization’s headquarters is located in a country in which initial VET prevails. No organization’s headquarters was identified as being located in a country based on an initial VET system besides Austria, Belgium, Denmark, Germany, the Netherlands, Norway and Switzerland. Again, single-site firms, central units and subsidiaries with headquarters in the same country or in another initial VET country were coded 0.

Control variables. Organizations were asked about the number of employees who were currently working for the organization (size). We used the natural logarithm of this variable as a covariate. Organizations were also asked about the percentage of employees who were union members (degree of unionization). This was done in a categorical manner. The data provided six different categories of unionization: no union members; 1–10% unionized; 11–25% unionized; 26–50% unionized; 51–75% unionized and 76–100% unionized. Using this information, we constructed five dummy variables. ‘‘No union members’’ was used as reference category. To capture the effect of the industry in which an organization is located (industrial sector), we constructed eight dummy variables: (1) mechanical engineering, metal work, electro-technology and computing; (2) energy industry; (3) chemical industry; (4) construction; (5) banking and insurance; (6) trade, transport, logistics, hotels and catering; (7) other service industries and (8) civil service and education. If an organization is located in a respective category it is coded 1, and 0 otherwise. ‘‘Other industries’’ make up the reference category.

no0, m¼0. n¼0, m¼0. no0, m40.

Independent variables. Besides the location dummy in Eq. (2) we also build dummy variables for 13 of the countries in which organizations are located. Organizations located in Portugal build the reference category. We take these dummies as covariates in a second model, which we estimate with the full sample. We also take the country dummies as control variables in the models estimated with the split dataset. Organizations in Germany make up the reference category in the model for initial VET countries, and organizations in Portugal are the reference category in the model for continuing VET systems. The headquarters location dummy in Eq. (3) was constructed as follows. If the headquarters of an organization is located either in one of the seven countries of our continuing VET subsample, or in the USA, Japan or Finland,5 the dummy variable takes the value 1 (and otherwise 0). This means that single-site firms, central units and subsidiaries with headquarters in the same country or in another continuing VET country were coded 0. We did not distinguish between these categories, since from a

Table 1

RESULTS Table 1 shows the results of the bivariate analysis. It becomes evident that the assumptions shown in

Comparison of the means of average yearly training days: Initial VET countries and continuing VET countries

Average number of yearly training days

For all employees For employees at higher positions For employees at lower positions

Initial VET cultures

Continuing VET cultures

Initial–continuing VET

N

Mean

s. d.

N

Mean

s. d.

|t|-value

1012 1012 1012

4.569 5.910 3.229

2.762 3.749 2.555

1200 1200 1200

4.956 5.786 4.127

4.153 4.847 4.189

2.614** 0.678 6.185**

*po0.05; **po0.01.

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1 2 3 4 5 6 7 8 9

ln(Trhigh)ln(Trlow) Appr. country log(size) Not unionized 1–10% unionized 11–25% unionized 26–50% unionized 51–75% unionized 76–100% unionized Mechanical etc. Energy Chemical ind. Construction Trade etc. Other service Banking & insur. C. service & educ. Other industry Great Britain France Sweden Spain Italy Ireland Portugal Germany Norway Denmark The Netherlands Switzerland Austria Belgium

Mean

s. d.

1

2

0.527 0.458 6.245 0.088 0.175 0.107 0.152 0.171 0.294

0.618 0.498 1.248 0.284 0.380 0.310 0.359 0.377 0.456

1.000 0.184 1.000 0.050 0.113 1.000 0.004 0.201 0.193 1.000 0.027 0.118 0.087 0.155 1.000 0.018 0.009 0.078 0.116 0.159 1.000 0.028 0.014 0.006 0.143 0.196 0.147 1.000 0.035 0.064 0.006 0.152 0.208 0.156 0.192 1.000 0.064 0.162 0.002 0.218 0.298 0.223 0.275 0.291

0.209 0.036 0.056 0.056 0.109 0.096 0.048 0.125 0.147 0.207 0.073 0.053 0.068 0.019 0.085 0.037 0.085 0.105 0.085 0.056 0.026 0.038 0.062

0.406 0.185 0.229 0.230 0.312 0.295 0.213 0.331 0.354 0.405 0.261 0.225 0.251 0.137 0.279 0.189 0.279 0.307 0.280 0.230 0.158 0.190 0.242

0.074 0.035 0.033 0.007 0.037 0.124 0.038 0.123 0.050 0.012 0.075 0.052 0.046 0.040 0.081 0.085 0.059 0.160 0.013 0.006 0.068 0.030 0.058

0.017 0.048 0.075 0.002 0.029 0.008 0.029 0.113 0.057 0.469 0.223 0.235 0.252 0.136 0.288 0.185 0.317 0.395 0.350 0.259 0.177 0.215 0.256

3

0.048 0.038 0.072 0.011 0.075 0.051 0.027 0.076 0.006 0.122 0.026 0.062 0.098 0.093 0.184 0.001 0.061 0.105 0.115 0.025 0.017 0.011 0.071

4

0.022 0.027 0.009 0.045 0.136 0.047 0.090 0.132 0.020 0.258 0.018 0.086 0.049 0.050 0.168 0.040 0.038 0.094 0.109 0.072 0.025 0.029 0.047

5

0.017 0.006 0.066 0.110 0.054 0.014 0.043 0.142 0.141 0.010 0.254 0.112 0.214 0.022 0.109 0.027 0.027 0.127 0.134 0.101 0.107 0.016 0.102

6

0.001 0.008 0.012 0.032 0.003 0.032 0.025 0.010 0.018 0.031 0.056 0.088 0.115 0.035 0.096 0.050 0.064 0.104 0.069 0.162 0.033 0.006 0.010

7

0.027 0.010 0.075 0.029 0.053 0.018 0.008 0.000 0.050 0.032 0.036 0.090 0.003 0.084 0.027 0.032 0.091 0.084 0.033 0.074 0.021 0.027 0.002

8

0.027 0.006 0.056 0.015 0.046 0.011 0.001 0.025 0.007 0.009 0.077 0.036 0.071 0.006 0.039 0.007 0.016 0.073 0.015 0.075 0.046 0.034 0.077

9

10

11

12

13

14

15

1.000 0.101 0.129 0.119 0.181 0.160 0.113 0.201 0.208 0.036 0.105 0.009 0.019 0.002 0.024 0.041 0.210 0.091 0.000 0.081 0.010 0.004 0.013

1.000 0.049 0.045 0.069 0.061 0.043 0.076 0.079 0.063 0.004 0.013 0.027 0.029 0.020 0.036 0.014 0.065 0.007 0.008 0.042 0.023 0.020

1.000 0.058 0.088 0.078 0.055 0.098 0.101 0.087 0.021 0.025 0.013 0.021 0.028 0.014 0.058 0.011 0.049 0.008 0.048 0.012 0.140

1.000 0.081 0.072 0.051 0.091 0.572 0.026 0.064 0.018 0.034 0.034 0.041 0.005 0.007 0.025 0.015 0.044 0.038 0.006 0.046

1.000 0.109 0.077 0.137 0.142 0.068 0.001 0.039 0.000 0.009 0.030 0.020 0.037 0.014 0.030 0.002 0.002 0.051 0.036

1.000 0.068 0.122 0.126 0.009 0.067 0.015 0.059 0.033 0.038 0.053 0.076 0.080 0.034 0.006 0.011 0.040 0.005

1.000 0.001 0.021 0.064 0.029 0.058 0.036 0.085 0.233 0.085 0.174 0.146 0.311 0.162 0.071 0.034 0.049 0.126 0.244 0.244 0.143 0.075 0.021 0.058

Nikolaus Beck et al

10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32

Descriptive statistics and correlations (all countries) The cultural dependence of vocational training

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Table 2

The cultural dependence of vocational training

Nikolaus Beck et al

1.000 0.077 1.000 0.052 0.039 1.000 0.064 0.047 0.032 1.000 0.076 0.056 0.038 0.047 1.000 1.000 0.117 0.087 0.059 0.072 0.086 1.000 0.106 0.094 0.069 0.047 0.058 0.069 1.000 0.059 0.073 0.065 0.048 0.033 0.040 0.047 1.000 0.063 0.091 0.114 0.101 0.075 0.051 0.062 0.074 1.000 0.046 0.030 0.043 0.054 0.048 0.035 0.024 0.029 0.035 1.000 0.040 0.086 0.055 0.080 0.099 0.088 0.065 0.044 0.054 0.064 1.000 0.070 0.038 0.080 0.051 0.075 0.093 0.082 0.061 0.042 0.051 0.060 1.000 0.062 0.066 0.036 0.076 0.049 0.071 0.088 0.078 0.058 0.039 0.048 0.057 1.000 0.123 0.130 0.139 0.075 0.159 0.102 0.148 0.185 0.164 0.121 0.083 0.101 0.120 1.000 0.004 0.033 0.018 0.012 0.016 0.061 0.057 0.042 0.069 0.012 0.029 0.026 0.002 0.025 1.000 0.158 0.001 0.088 0.082 0.075 0.058 0.054 0.070 0.078 0.175 0.068 0.072 0.008 0.010 0.063 1.000 0.086 0.089 0.024 0.042 0.023 0.002 0.040 0.050 0.004 0.045 0.023 0.008 0.157 0.019 0.002 0.019 Banking & insur. C. service & educ. Other industry Great Britain France Sweden Spain Italy Ireland Portugal Germany Norway Denmark The Netherlands Switzerland Austria Belgium 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32

Table 2

Continued

16

17

18

19

20

21

22

23

24

25

26

27

28

29

30

31

32

1385

Figure 1 are supported by these results. An employee of an organization located in an initial VET country receives, on average, 4.6 days of training, whereas an employee in a continuing VET country receives, on average, almost 5 days of training. This difference is significant, as the t-test (for independent samples) proves. Thus organizations in continuing VET countries offer more training to their employees. However, there is no difference between the two training systems with respect to the provision of training to employees at higher levels of the organization. The differences for employees at lower levels are, however, quite strong and significant: whereas organizations in initial VET countries offer on average only 3.2 days of training per year to employees at lower hierarchical levels, these employees receive on average 4.1 days of training per year in continuing VET countries, which is 28% more. Thus, although the absolute difference in the amount of training between VET systems does not seem very large, it is evident that the relative difference is quite considerable. The results in Table 1 also show that in both training systems employees at higher levels of the organization receive noticeably more training than employees at lower levels. Table 2 shows the descriptive statistics and correlations of the variables that we use to estimate the multivariate regression models with the full dataset. In Table 3 the means and standard deviations for the location of a company’s headquarters are depicted. Whereas about 15% of the organizations located in initial VET countries have a parental organization in a continuing VET country, only about 10% of the organizations in continuing VET countries have headquarters located in an initial VET country. The results of the regression models estimated with the full dataset are shown in Table 4. In Model 1, the coefficient of the dummy for initial VET countries is positive and highly significant, which means that in these countries the difference in the amount of training between employees at higher and lower organizational levels is noticeably greater than the difference in continuing VET countries. The more detailed analysis in Model 2, in which the training system dummy variable is replaced by the country dummies, reveals that in almost every initial VET country the differences in the amount of training between employees at higher and lower organizational levels are significantly greater than in Portugal. Organizations in the Netherlands are the only exception. It may be the egalitarian norms

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that prevail in this country that lead to smaller differences in the amount of training (Haller & Hoellinger, 1994).6 Interestingly, the effect of the dummy on organizations in Great Britain is significantly positive. It is important to note that Great Britain represents the least typical continuing VET country: it contains more elements of initial VET systems than any other continuing VET country in our study (Ainley & Rainbird, 1998; Maguire, 1998). The coefficients of the control variables show that the level of inequality in the provision of training increases with organizational size, whereas the degree of unionization tends to decrease the level of difference. However, in the model with the detailed country dummies, only organizations with a unionization degree of 51–75% display significantly smaller differences than organizations with no union members. Finally, ‘‘white collar industries’’ reveal stronger inequalities in the provision of training than industries in which the production of goods is executed on a manual basis. As a consequence, one can state that larger organizations and organizations in white collar industries focus particularly on the training of employees at higher positions, while unions try to reduce inequalities in the provision of training overall. Table 5 shows the result of regression models estimated separately for organizations located in initial VET countries and those located in continuing VET countries. In initial VET countries the inequality in the provision of training decreases greatly, and in a highly significant way, if a company’s headquarters is located in a continuing VET country. For organizations located in continuing VET countries the inequalities are significantly higher if an organization’s headquarters is located in an initial VET country. This means that Hypothesis 3, which represents the country-of-origin effect, receives strong support from these results, since a reciprocal cross-cultural transfer of practices from headquarters to subsidiaries can be determined. Neither Hypothesis 1 nor Hypothesis 2 receives support from these findings. We assumed that the effects of the headquarters location, which support Hypothesis 3, are caused by different mechanisms in the respective training systems. We expected headquarters in continuing VET countries to persuade their subsidiaries in initial VET countries to offer more training to employees at lower levels. On the other hand, we expected headquarters in initial VET countries to be anxious to offer more training to employees at

Journal of International Business Studies

higher organizational levels in their subsidiaries located in continuing VET countries. The descriptive results in Table 6 support this reasoning. In initial VET countries, employees at higher organizational levels receive an average of about 5.9 days of training per year – no matter where the company’s headquarters is located. However, employees at lower organizational levels in initial VET countries receive 3.7 days of training per year if the headquarters is located in a continuing VET country, whereas their colleagues in organizations with headquarters in an initial VET country system (including single-site firms and central units) receive only about 3.2 days of training per year. In continuing VET countries employees at lower levels receive on average slightly more than 4.0 days of training per year, independent of an organization’s headquarters location. However, employees at higher levels of organizations with headquarters in initial VET countries (including single-site firms and central units) are granted substantially more training (6.5 training days per year) than their colleagues in organizations with headquarters in a continuing VET country (5.6 training days per year). The effects of the control variables in Table 5 show that a significant positive effect of organizational size on the differences in the provision of training is detectable only in continuing VET countries. Moreover, it is only in these countries that a higher degree of unionization leads to a significant reduction of the inequalities. This reduction becomes effective when more than 25% of the employees are union members, and does not increase if an organization has a higher degree of unionization. Generally, the greater differences in the provision of training in white collar industries that were detected in Table 4 remain in the split models. However, in continuing VET countries, organizations in the construction industry also exert a significantly positive effect on the inequality of training provision. Organizations located in the Netherlands and Denmark display significantly smaller differences in the provision of training than organizations in Germany.

DISCUSSION Contribution In this study, we analyzed whether headquarters influence the subsidiaries’ arrangements of

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Table 3

Descriptive statistics for location of a company’s headquarters (separated according to training systems)

Initial VET cultures Continuing VET cultures

Headquarters: continuing VET culture Headquarters: initial VET culture

vocational training in foreign cultures. We found that a cross-cultural diffusion of two different models exists concerning vocational training: headquarters in continuing VET countries have the power to export their cultural model of vocational training to their subsidiaries in initial VET countries, and headquarters in initial VET countries are able to influence the distribution of training in subsidiaries located in countries that are based primarily on training on the job. This is supported by the result that inequalities in the provision of training between employees at higher and lower levels of the organizational hierarchy are greater in continuing VET countries if the headquarters of the organization are located in an initial VET country. On the other hand, these inequalities can be observed to a lesser extent in initial VET countries for companies with headquarters located in a continuing VET country. This result corresponds with the thesis of a country-of-origin effect, which implies a cultural heritage that is exported to or imposed on the subsidiaries in host countries with a diverging VET system. Thus MNEs are imprinted by the local institutional context from which they originate, and the headquarters of these MNEs are able to export the elements of their own cultural model of management to their subsidiaries located in divergent cultural and institutional contexts. This export of practices occurs in order to decrease the level of insecurity and liability of foreignness. Thus it helps headquarters to remain – at least to some extent – in control of the operations of subsidiaries located outside the home country. We did not find support for the globalization approach, that is, for the idea that the AngloAmerican model of training diffuses worldwide. If there was a worldwide adjustment to the AngloAmerican model, only an effect of headquarters located in continuing VET countries on the provision of training for employees in subsidiaries located in initial VET countries should have been observable and not vice versa. In contrast to the considerations of this model, which suggests that only one dominating, but very general and abstract, cultural model of education and training

Mean

s. d.

N

0.151 0.099

0.358 0.299

942 1071

is spreading to different countries around the world (e.g., Meyer, 2002, 2005; Meyer & Ramirez, 2005), our results suggest that cultural models of training diffuse in both directions. However, this finding does not imply that the arguments of the globalization approach in general or with respect to training will not hold true. What we currently observe in Europe is an increasing standardization of higher educational systems. By 2010 all countries of the European Union will have introduced Bachelor and Masters degrees at universities, with a standardized amount of credit points and student working hours devoted to a given study program. This standardization is due to the so-called Bologna Process, which was begun in 1999. Recall that the higher amounts of training provided to employees in higher positions in continuing VET countries with headquarters located in initial VET countries can be explained by the supposedly greater amount of vocational knowledge that graduates from universities and polytechnics in initial VET countries acquire. This greater amount of vocational knowledge is provided – among other reasons – because traditional courses of study in initial VET countries (such as the typical German Diplom programs) take longer than the period of studies for a Bachelor degree. Once the Bachelor is imposed as the standard degree of university graduates all over Europe, the edge that graduates in initial VET countries have in terms of their vocational knowledge can be expected to decrease. As a consequence, the reason for a higher amount of training for employees in higher positions in continuing VET countries, and thereby a higher degree of inequality in the provision of training if the headquarters are located in an initial VET country, should decrease as well. This means that one can expect a reduction of the country-oforigin effect as the institutional context of training and education becomes more similar between countries. At the same time, it can be expected that the globalization approach will become more relevant in the near future. Since our study used cross-sectional data collected in the year 2000, it is clear that such a tendency could not be observed with our data.

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Table 4 Linear regression models on degree of inequality in amount of training between employees at higher and lower positions (all countries)

Constant Initial VET country

Model 1

Model 2

Banking and Insurance

0.278** (0.079) 0.227** (0.029)

0.172 (0.106)

Civil service and education

Germany Norway Denmark The Netherlands Switzerland Austria Belgium France Great Britain Sweden Spain Italy Ireland ln(Size) 1–10% unionized 11–25% unionized 26–50% unionized 51–75% unionized 76–100% unionized Mechanical engineering etc. Energy Chemical industry Construction Trade etc. Other service industries

Journal of International Business Studies

Table 4 Continued

0.027* (0.012) 0.103w (0.056) 0.064 (0.063) 0.141* (0.058) 0.151** (0.057) 0.094w (0.054) 0.006 (0.040) 0.061 (0.077) 0.017 (0.063) 0.072 (0.067) 0.130** (0.050) 0.319** (0.054)

0.395** (0.086) 0.441** (0.084) 0.192* (0.085) 0.137 (0.093) 0.455** (0.111) 0.311** (0.099) 0.404** (0.093) 0.068 (0.092) 0.175* (0.077) 0.069 (0.092) 0.095 (0.087) 0.074 (0.116) 0.079 (0.085) 0.022w (0.012) 0.050 (0.059) 0.003 (0.065) 0.090 (0.059) 0.123* (0.058) 0.044 (0.059) 0.025 (0.041) 0.074 (0.077) 0.043 (0.064) 0.048 (0.067) 0.124* (0.050) 0.291** (0.054)

N R2

Model 1

Model 2

0.156* (0.070) 0.239* (0.048)

0.183** (0.070) 0.223** (0.049)

1827 0.080

1827 0.100

w

po0.10; *po0.05; **po0.01.

However, we should note that this reasoning is still very tentative. Moreover, even proponents of the cultural globalization approach argue that the standardizing effect refers primarily to the formal level of national systems, that is, to standardized formal curricula or standardized educational titles. Standardization at this level does not necessarily imply a depth effect, such as a change in the contents of teaching in schools, polytechnics, universities and vocational training systems, such as for those in apprenticeships, for example. This means that the need for a certain amount of vocational training has not changed, even though formalities in the vocational systems have changed. Therefore it is also possible that the country-oforigin effect with respect to the amount of vocational training will remain unchanged in the future. In any case, even if there are indications of a global diffusion of management practices or training measures, local institutional contexts can be expected to influence the degree to which organizations are likely to adopt globally diffusing practices, and should therefore be taken into account (e.g., Guler, Guillen, & Macpherson, 2002; Polillo & Guillen, 2005). We did not find any support for the thesis of the effect of national peculiarities of business systems. Our findings show that subsidiaries of MNEs do not fully adapt to the VET system in their host country, but seem to apply or at least be influenced by the model of training that is used in the headquarters and which is shaped by the VET system in the MNE’s home country. This finding implies that the recent trend to conceive the MNE as an interorganizational network (Ghoshal & Bartlett, 1990) or as a federation (Andersson, Forsgren, & Holm, 2007) must be qualified to a certain extent. As Bartlett and Ghoshal, and many other scholars after them, have argued, MNEs’ subsidiaries in foreign countries must adapt to the local conditions of their

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Table 5 Linear regression models on degree of inequality in amount of training between employees at higher and lower positions (separated according to training systems)

Constant Headquarters: continuing VET Headquarters: initial VET ln(Size) 1–10% unionized 11–25% unionized 26–50% unionized 51–75% unionized 76–100% unionized Mechanical engineering etc. Energy Chemical industry Construction Trade etc. Other service industries Banking and insurance Civil service and education Norway Denmark The Netherlands Switzerland Austria Belgium France Sweden Spain

Initial VET countries

Continuing VET countries

0.715** (0.166) 0.162** (0.060)

0.104 (0.130)

0.002 (0.019) 0.042 (0.124) 0.021 (0.128) 0.003 (0.122) 0.045 (0.123) 0.086 (0.123) 0.078 (0.065) 0.100 (0.104) 0.134 (0.087) 0.132 (0.101) 0.207** (0.081) 0.291** (0.084) 0.147 (0.103) 0.180* (0.073) 0.067 (0.078) 0.291** (0.079) 0.279** (0.085) 0.099 (0.101) 0.126 (0.088) 0.010 (0.086)

Table 5 Continued Initial VET countries Italy

0.085 (0.121) 0.067 (0.090) 0.121 (0.081)

Ireland Great Britain

0.178** (0.067) 0.040* (0.018) 0.072 (0.073) 0.011 (0.085) 0.164* (0.076) 0.148* (0.074) 0.128w (0.077) 0.002 (0.055) 0.054 (0.123) 0.026 (0.099) 0.235* (0.096) 0.087 (0.068) 0.321** (0.082) 0.214* (0.105) 0.260** (0.087)

0.008 (0.096) 0.085 (0.113) 0.002 (0.093)

N R2 w

Continuing VET countries

779 0.105

881 0.067

po0.10; *po0.05; **po0.01.

procurement and sales markets in order to control their business in local markets efficiently. Bartlett and Ghoshal (1989) particularly emphasize those aspects of local adaptation that concern the market strategy of MNEs. This argument has been supported by many studies conducted in the wake of Bartlett and Ghoshal’s seminal contribution (e.g., Andersson et al., 2007; Mudambi & Navarra, 2004). Their argument, however, may hold less true with respect to internal practices and procedures that aim at efficiently controlling and managing a business. Our study clearly shows that, at the very least, the model of training for employees applied in the subsidiaries of MNEs in host countries is still affected by the VET system in the home country of the MNE. The non-adaptation of training to the local conditions of foreign subsidiaries may – at least to some extent – also be due to the fact that cultural heritage is taken for granted: that is, a certain distribution of training expenses between different groups of employees is regarded as appropriate, based on the wide dissemination of this type of distribution in the home country of the MNE.

Limitations and Future Research A major limitation of the present study is the fact that we could not fall back on longitudinal data to test our hypotheses. This is particularly a drawback with regard to the changes and adjustments in educational systems in Europe that we mentioned above. Thus what we could present is a momentary snapshot of differences in training systems, and the consequences for the provision of training in subsidiaries that are located in a VET system that is different from the VET system in the home country. However, we could not investigate the

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Table 6 Comparison of means of average training days per year with respect to location of headquarters (separated according to training systems and position of employees)

Average number of yearly training days

For employees in higher-level positions For employees in lower-level positions N

Initial VET cultures Headquarters in a continuing VET country

Headquarters in an initial VET country

5.892 3.729 142

5.846 3.161 800

Average number of yearly training days

For employees in higher-level positions For employees in lower-level positions N

Continuing VET cultures Headquarters in an initial VET country

Headquarters in a continuing VET country

6.500 4.049 106

5.585 4.036 965

consequences of changes and dynamics of the educational systems in European countries. We were also not able to examine the possible effects of the temporal development of subsidiaries. For example, a young subsidiary in a foreign country might first take over the home country’s practices and then gradually adapt to the local business system.7 Thus one useful follow-up to the present study would be a dynamic study using data that cover the changes in vocational and educational training systems as well as the temporal developments of organizations. However, it is not easy to obtain such data. To our knowledge, a comparably comprehensive longitudinal dataset on HRM practices in many different European countries does not exist. Moreover, although we controlled for national peculiarities, we did not undertake a separate analysis for each country. We dispensed with a country-specific analysis for several reasons. First, our goal was to find effects that are relevant to different training systems, and not to specific countries. Second, for many countries, the number of firms with headquarters located in a country with a different VET system was too small to undertake such an analysis. Finally, we observed firms in 14 different countries. Consequently, a country-by-country analysis of our research question would have been overly complex. Nonetheless, future research could focus on national differences in the cross-cultural diffusion of practices concerning vocational training for selected countries. Another shortcoming of this study is the remarkable number of missing values with which we were faced. This can be regarded as the trade-off for the comprehensiveness of the dataset. The Cranet

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survey was undertaken by postal interviews, with limited leverage for acquiring follow-up information. Thus, in most cases, it is simply the lack of knowledge of the interviewees about certain questions that caused the missing values. There is no evidence that the missing values lead to sample selection bias. Thus we are confident that our results are valid.

CONCLUSION Despite the limitations of our study, we believe that this finding of a reciprocal cross-cultural diffusion of institutionally shaped practices is a very promising starting point for further analyses in this direction. The approaches that currently dominate the discussion on institutional frameworks do not shed much light on reciprocal diffusion processes. On the one hand, approaches such as the business systems approach or related perspectives that emphasize the differences between cultural or institutional systems (e.g., Hall & Soskice, 2001; Maurice & Sorge, 2000; Whitley, 1998, 1999) take a relatively static view of these differences. The globalization approach, on the other hand, underestimates the possibility of various diffusion processes. Thus the additional view on institutional frameworks and processes of globalization that the country-of-origin effect offers may considerably enrich the current scientific debate in the research on institutions and should be used as a framework for future research. ACKNOWLEDGEMENTS We are indebted to Filippo Wezel, Xavier Martin and the members of the subtheme ‘‘Organizations and

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Environments in (Inter)action: New Perspectives from International and Comparative Studies’’ at the EGOS Colloquium 2006 in Bergen for helpful advice on a previous version of this paper. We also wish to thank two anonymous reviewers, and the Area Editor, Anand Swaminathan, for their tremendous effort in improving the paper. NOTES Cranfield network on comparative HRM. 2 Training of employees in firms consists of the transfer of job-specific and firm-specific knowledge (Franz & Soskice, 1995). However, for the argument that we develop in this paper, only the transfer of jobspecific knowledge is relevant. Moreover, our theoretical considerations and empirical investigations will focus on the primary segment of the labor market (Doeringer & Piore, 1971; Kalleberg & Sørensen, 1979): that is, we will not consider training for unskilled and semiskilled workers. 3 At the same time we wish to maintain that studies in the international management literature also exist that do not claim that subsidiaries are powerful 1

strategic actors. These studies only underscore the importance of subsidiaries’ autonomy for corporate success (Bartlett & Ghoshal, 1988; Birkinshaw & Fry, 1998; Birkinshaw, Hood, & Jonsson, 1998). 4 French acronym for Centre Europe´en pour le De´veloppement de la Formation Professionnelle. 5 The classification of these countries as continuing VET cultures is again supported by the literature (e.g., Arum & Hout, 1998; Ishida, 1998; Mu¨ller & Shavit, 1998), as well as by experts of the Cranet project. 6 In order to test whether the amount of inequality on a national or organizational basis increases the differences in the inequality in the provision of training in general, we conducted additional analyses with the national GINI coefficients for income inequality and several measures for egalitarian organizational activities (e.g., the existence of advancement programs for women) as covariates. None of these measures showed a significant influence. Thus the lower training inequalities in Dutch firms could also be due to another – unknown – reason. 7 We should like to thank one anonymous reviewer for the suggestion of this argument.

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APPENDIX Description of Further National Training Systems Initial VET Systems In Austria, approximately 40% of all young people aged 15–18 prepare for their future occupations within the apprenticeship training system. Apprenticeship training has a length – according to the trained profession – of between 2 and 4 years, and concludes with the apprenticeship leave exam (CEDEFOP, 2005). The training is mainly work-/ company-based, with complementary but mandatory attendance at a part-time vocational school for apprentices. For each individual apprenticeship the Minister of Economics issues a training regulation, which is binding for training measures provided in enterprises throughout Austria. In a catalogue broken down by apprenticeship years, the regulation lists the basic skills and knowledge to be taught in the course of enterprise-based training. The apprenticeship training imparts an occupational qualification at the level of a skilled worker or clerk. The Swiss educational system varies by language region and by canton (Gonon, 2005). In the French- and Italian-speaking parts some elements of the educational system resemble those of the neighboring countries of France and Italy, thus setting them apart from the characteristics of the Swiss-German educational system. Swiss Germans constitute the vast majority of the Swiss population, however. Moreover, the educational systems of the three language regions also share some commonalities, particularly with regard to vocational orientations and the strong connectedness with labor markets (Buchmann & Sacchi, 1998). Also, despite the federalist structure of Switzerland, vocational education is defined nationwide for the great majority of occupations. There is therefore a high level of standardization across cantons, which guarantees the mobility of workers across the boundaries of the cantonal labor market. Apprenticeships involve a 2—4-year training program, combining some formal vocational training in a state-run school with practical training in a firm or organization in the private or public sector. Those who complete an apprenticeship receive official certification of having acquired the skills necessary

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to practice a particular occupation. The overwhelming majority of young Swiss men and women undertake an apprenticeship. In 1990, for example, 80% of school leavers were enrolled in traditional apprenticeship programs. VET in Denmark also combine theoretical instruction with practical training in a company or public institution. As in Germany, training is based on a system alternating between theoretical instruction in a vocational education institution and practical training at a company. The theoretical part of the education takes place in technical and vocational colleges, while practical training is generally done on placements in business enterprises that must be approved for this purpose (Ministry of Science and Technology, 2006). The vocational system in the Netherlands is quite comparable to the German system. In many industrial trades apprenticeship training has a long tradition, and coexists as a separate training system alongside school-based vocational training. Practical training for apprentices in firms is provided in large blocks. Apprentices undergo a practical year after a longer period of training in vocational schools. School-based vocational training is part of the public educational system (van Hoof, 2005), which is divided into vocational schooling at higher, intermediate and lower levels (De Graaf & Ultee, 1998). The skills taught within the vocational tracks are not of a general nature – as in the Swedish system, for example (see below) – but are instead very specialized. Vocational training in the Netherlands is thus said to lead to a degree of occupational specificity on a par with the apprenticeship systems of Germany and Switzerland (Korpi, de Graaf, Hendrickx, & Layte, 2003). Similarly, the main model for training in Norway in recognized occupations requires 2 years at school followed by 2 years of in-service training and practical work in industry, business or the public sector. The curricula cover the whole period at school as well as the apprenticeship period (Farstad, 1999). Belgium has what is probably the weakest apprenticeship character in our subsample of countries based on initial VET. While most young people attend technical and vocational streams in schools – 68% in the late 1990s (Cotton, 2001) – the number of young people attending training systems under typical apprenticeship schemes remains low, although it is currently increasing slightly from year to year (Saint-Hubert, van Griethuysen, Hellemans, Verhelpen, & De Streel, 2001). Appren-

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ticeships are found in industry, such as for example in metal manufacturing, chemicals or furnishing and the wood processing industry, and in the craft professions, commercial business and in small and medium-sized enterprises. More important in Belgium, however, is full-time technical and vocational education in schools. The objectives for technical and vocational secondary education are (among others): to provide mastery of competences and knowledge that all pupils must have acquired at the end of the qualification section in accordance with the training profile defined by the Community Commission for Occupations and Qualifications (Saint-Hubert et al., 2001). This means that Belgium has at least one thing in common with the more typical apprenticeship countries, such as Austria, Germany and Switzerland: standardized occupational qualifications are acquired by employees before they start their working careers.

Continuing VET Cultures In Ireland, vocational schools do exist. However, the relationship between VET at schools and labor market demands is relatively weak. Even if there is no shortage of people to fill particular jobs, Ireland suffers compared with other leading industrial societies from specific qualification gaps. Further, apprenticeship training in Ireland is relatively insignificant, accounting for no more than 5% of labor market entrants (Breen & Whelan, 1998). However, the number of school leavers following designated apprenticeship routes is increasing (CEDEFOP, 2004). The bulk of training is, however, still carried out at work (Breen & Whelan, 1998). Great Britain is probably the most ‘‘apprenticeship-like’’ country among the countries in which continuing VET systems prevail. Whereas in former times apprenticeships were quite common, they declined sharply in the second half of the 20th century (Heath & Cheung, 1998). Vocational training is – with the exception of the construction and engineering industries – to a great extent organized in training-on-the-job systems. However, quite recently, apprenticeships in Great Britain have been undergoing a sort of revival. Apprenticeships were launched in over 50 industrial sectors in 1995. However, this route of occupational training was chosen in the late 1990s by only a minority of the relevant age group (Ainley & Rainbird, 1998; Maguire, 1998). In Spain, regulated vocational training has always been one step behind general education, not least

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because of the widespread belief that those opting for vocational training do so because they are not good enough to pursue higher education (Hidalgo, Machado, & Sa´nchez, 1999) – an argument that holds true for most countries with continuing VET on the job (Crouch, Finegold, & Sako, 1999) Training subsequently acquired through work plays a fundamental role. In fact, training acquired through work experience has constituted the essential source of skill acquisition for most of the generations that are currently working in Spain (Planas, 2005). Only recently has this system of skill acquisition begun to change towards an integrated system of education including vocational studies. Portugal has also historically based its technical and economic development on a deep-rooted belief in training on the job (Centeno & Sarmento, 2001). As in Spain, this system of skill acquisition has only recently begun to change towards an integrated system of education including vocational studies. The Italian educational system has traditionally privileged general education over specific vocational education and even training in vocational and technical schools. The links between education and the labor market are thus very poor. Vocational training is often said to improve the general knowledge of ‘‘weak’’ students rather than provide marketable skills (Bianchi, 2005: 207). In Italy, therefore, internal labor markets prevail over occupational labor markets. Italian firms hire young people to give them training on the job. The same applies in the public sector (Schizzerotto & Cobalti, 1998). In Sweden, the guilds lost their influence early, and craft organizations have almost no influence today. Apprenticeships are uncommon in Sweden, and nothing like a widespread apprenticeship system ever existed. Vocational education – important as it is in the Swedish school system – is almost entirely disconnected from interest groups on the labor market. One consequence of the weak relationship between vocational schooling and labor-market actors is that primarily very broad

and general occupational skills are taught in vocational programs. Firm-specific skills are a matter for training on the job (Erikson & Jonsson, 1998; Korpi et al., 2003).

ABOUT THE AUTHORS Nikolaus Beck ([email protected]) is Professor of Organization and Management in the Faculty of Economics at the University of Lugano, Switzerland. He earned his PhD in business administration at the University of Mannheim. His research interests include new institutional theory, population ecology and organizational change. He has published in several journals, including the Academy of Management Journal, Organization Studies, Schmalenbach Business Review and the Ko¨lner Zeitschrift fu¨r Soziologie und Sozialpsychologie. ¨ diger Kabst ([email protected] giessen.de) is Professor of Human Resource Management at the University of Giessen, Germany. He earned both his PhD and his Habilitation at the University of Paderborn, Germany. His research interests include international comparative human resource management, international entrepreneurship and evidence-based research. He has published in the International Journal of Human Resource Management, Economic and Industrial Democracy, Employee Relations and Management Revue. Peter Walgenbach (peter.walgenbach@uni-jena. de) is Professor of Organization, Leadership and Human Resource Management at the Friedrich Schiller University of Jena, Germany. He earned his PhD and his Habilitation at the University of Mannheim, Germany. His research interests include new institutionalism and comparative management studies. He has published in several journals, including Human Relations, International Journal of Human Resource Management, Journal of Management Studies, Organization, Organization Studies and Scandinavian Journal of Management.

Accepted by Anand Swaminathan, Area Editor, 20 June 2008. This paper has been with the authors for two revisions.

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