It is widely recognised that organizations continually respond to multiple institutional demands or ‘institutional logics’ which provide the organizing principles for an organizational field (Friedland and Olford, 1991). Organizational fields can be defined as communities of actors held together by their taken for granted assumptions, joint values and beliefs and can include populations of competing organizations and inter-organizational relationships (Di Maggio and Powell, 1983). Institutional logics can exist at different levels and they may overlap so that actors confront and draw on multiple logics within and across social domains (Scott, 2008).
Kostova, Roth and Darcin (2008) argue that due to their size and complexity multi-national enterprises (MNEs) can be seen as forming their own organizational field and intra-institutional logic, however, whether this ‘field’ provides one dominant logic which is coherent and consistent across national boundaries is questionable. We argue that MNEs which operate in different countries automatically join the respective sector-relevant national organizational field and that the institutional logics of a particular field can shape the intra-institutional logic of an organization and its activities in a country.
This is because MNEs are bound to increase their interactions in different fields with suppliers, customers, competitors and firms operating in related or complimentary markets. Once an MNE has entered a country it is likely to become increasingly aware of other participants in a particular organizational field and may be able in some case to shape the fields in which they operate or may be forced or choose to adapt to local practices which challenge or undermine its own intra-institutional logic. As Phillips and Tracey (2009) argue MNEs are therefore embedded in multiple organizational fields that both constrain their actions and provide important opportunities.
In this case we examine the home furnishing retail MNE IKEA and its directly-employed workers in its country of origin Sweden and one host country Spain. For our purposes we define the large retail sectors in these two countries as two distinct organizational fields and examine their influence on IKEA’s employment relations and working conditions in both countries. The actors in these fields comprise of suppliers, competing firms in the sector, the relevant employers’ associations and trade unions. In addition these two fields are embedded in the national employment relations system (or regulatory regimes) of the two countries concerned. At the meta-institutional level the behaviour of MNEs is also said to be influenced by broader international guidelines and norms such as the Conventions of the International Labour Organization (ILO), Organization of Economic Development (OECD) guidelines for MNEs and more recently the 2011 United Nations framework for Business and Human Rights.
Finally, IKEA has an intra-institutional logic which is arguably shaped by the Swedish neo-corporatist and social partnership environment in which ownership and management are supposed to promote corporate social responsibility and cooperative, non-hierarchical employment relations, encouraging the idea that better working conditions lead to better productivity (Fichter et al., 2007).
The findings for the paper are based on 50 face to face interviews with IKEA workers, managers, union representatives and union officials in a number of European countries along with an analysis of secondary materials which began in late 2010, but the majority of the interviews were carried out in 2011 and 2012 in Sweden and Spain. The findings presented here are also underpinned by another qualitative research project which is being undertaken by two of the authors in the large retail sector in Spain. The interviews include IKEA retail workers and store-level managers as well as union representatives and union officials in both countries. In Spain this included the affiliates of the main two union confederations ComisionesObreras (CCOO) and the Unión General de Trabajadores (UGT) covering the retail sector (CCOO-FECOHT (FederaciónEstatal de Comercio, Hostelería y Turismo) and UGT-FCHTJ (Federación de Comercio, Hostelería-Turismo y Juego). We also interviewed one ex-senior union official of the ‘yellow’ union Federación de TrabajadoresIndependientes de Comercio (FETICO). In Sweden we interviewed trade union officials and union representatives from the Commercial Employees Union (Handelsanställdasförbund -Handels) which organises the majority of IKEA retail workers, the Hotel and Restaurant Workers Union Hotell- och Restauranganställdasförbund (HRF) which organises IKEA’s catering workers and the Trade Union for Professionals in the Private Sector Unionen which organises IKEA’s supervisors and managers. Interviews and the interpretation of interviews and documents were carried out by the authors.
The findings suggest that IKEA’s intra-institutional logic is not consistent across the two organizational fields, we suggest that this can be explained by the effect of the organizational fields in the two countries, in particular the characteristics of the national regulatory regime and the retail sector in each case. We also suggest that dominant logics in each field can coexist within an MNE over the long term and are not necessarily detrimental to firm performance. These partly competing logics shape IKEA’s employment relations practices in different ways in the two countries. In the Swedish organizational field, a key aspect of IKEA’s own intra-institutional logic is reflected to some extent in its CSR policies and is fairly closely aligned with Swedish norms and values. For example, at IKEA retail stores in Sweden there are relatively high levels of trade union membership, active local trade unions ‘shops’ in every store, board-level representation for workers and in most cases cooperative relations between management and unions. In addition there is a well-entrenched system of sector-level collective bargaining between employers’ associations and trade unions. The majority of workers are employed on permanent contracts and enjoy reasonable pay levels and terms and conditions of work. In the Spanish organizational field however, there are very different outcomes. In the Spanish large retail sector there is a ‘yellow union’ FETICO which was established by a large Spanish-owned MNE in the same sector in the 1980s. IKEA management have actively supported FETICO in organising workers in its stores since it entered the country in 1996. The result is that FETICO has effectively marginalised the main independent unions CCOO and UGT and strongly influenced sector-level collective bargaining rounds. There is a hostile employee relations climate; most workers are employed on temporary and part-time contracts with low numbers of guaranteed hours and low pay levels. Working conditions are poor and workers attempting to join independent unions have been actively discriminated against.
In Sweden we argue that the Swedish organizational field largely constrains IKEA’s behaviour, a strong regulatory environment, strong unions and strong norms create an environment which means that IKEA may little choice but to comply with the broader meta-institutional logics associated with international norms and guidelines as these are broadly in line with core Swedish norms and values and reflected in IKEA’s espoused intra-institutional logic. By contrast the Spanish organizational field has provided IKEA with an ‘opportunity’ rather than ‘constraint’ to avoid independent unions and create more insecure jobs with poorer terms and conditions; this is also encouraged by a weaker and weakening Spanish regulatory regime which has made it easier for employers to hire and fire workers with limited redress for workers. IKEA Spain is in clear violation ILO Convention 98 (which Spain ratified in 1977) as well as its espoused intra-institutional logics as stated in its CSR policies. Despite the highly standardized nature of its production regime across national borders, in terms of employment relations which are often seen as being strongly embedded in national institutional arrangements, IKEA has adapted to the Spanish organizational field in effect following the dominant institutional logic of the sector.
References
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Fichter, M., Sydow, J., Volynets, L. (2007) ‘Organization and Regulation of Employment Relations in Transnational Production and Supply Networks. Ensuring Core Labour Standards through International framework Agreements?’ 8th European Congress of the International Industiral Relations Association, Manchester, 3-6 September.
Friedland, R. and Olford, R.R. (1991) Bringin society back in: Symbols, practices and instituional contradictions, in Powell, W.W. and Di Maggio, P.J. (eds) The New Instituionalism in Organizational Analysis, Chicago: University of Chicago Press, 232-263.
Kostova, T., Roth, K. And darcin, M.T. (2008) ‘Insitutional theory in the study of multinmational coproations. A Critique and new directions’, Academy of Managment Review, 33, 994-1006
Phillips, N. and Tracey, P. (2009) ‘Dialogue: Institutional Theory and the MNC, Academy of Management Review, 34, 1: 169-173
Scott, W.R. (2008) Institutions and Organizations, Thousand oaks CA: Sage.