J BUSN RES 179 1989:18:179-193

Management and Industrial Relations Strategies of Multinational Corporations in Developing Countries

Sorab Sadri University of East Asia, Macau

Caroline Williamson University of Reading, England

If capital and labor are the two factors of production that combine to form the basis of all economic activity in the market, would it not be valid to assume an ongoing relationship between corporate business policy (involving capital) and industrial relations policy (involving labor)? What would be the precise nature of this relationship? Would it be possible to systematize this relationship and describe it within the context of the macro economy of a country? These are some of the questions that the Thurley and Wood Model was addressing itself to. The Thurley and Wood Model is not only valid in a macro-economic situation but also relevant and valid for a micro-economic situation. To that extent we extend the scope of the model and demonstrate its relevance in the case of a large multinational cor- poration (MNC). To some extent we go beyond the original aims of Thurley and Wood (1983), and, in so doing, we present on one hand an analysis of the strategies adopted by a single MNC and on the other hand show that the MNC is a living example of a macro-micro synthesis. Only if the second argument were valid would a macro model hold true in a micro situation as well. But the MNC is not an ordinary micro-economic entity. It is a genre in its own right. Hence, we could say that an MNC operates as a micro-economic entity with a macro-economic logic, and, to that extent, a macro-micro synthesis is conceivable.

Neither Unilever as an MNC nor Nigeria as a peripheral capitalist country is unique. Hence, the conclusions of this empirical study can be extended to other multinationals and other countries. This paper, however, bases its prognosis on one geophysical region and thus lays the foundation for other researchers to extend the scope of the findings by studying MNCs in other peripheral capitalist countries such as India, South Korea, Malaysia, and the Philippines.

Address correspondence to Sorab Sadri, Department of Economics, University of East Asia, P.O. Box 3001, University Hill, Taipa, Macaw

Journal of Business Research 18, 179-193 (1989) 0 1989 Elsevier Science Publishing Co., Inc., 1989 655 Avenue of the Americas, New York. NY 10010

0148-2963/X9/$3.50

180 J BUSN RES 1989:18:179-193

S. Sadri and C. Williamson

Introduction

If capital and labor are the two factors of production that combine to form the basis of all economic activity in the market, would it not be valid to assume an ongoing relationship between corporate business policy (involving capital) and industrial relations policy (involving labor)? What would be the precise nature of this relationship? Would it be possible to systematize this relationship and describe it within the context of the macro economy of a country? These are some of the questions that are addressed by the Thurley and Wood Model. The Thurley and Wood Model is not only valid in a macro-economic situation, but it is also relevant and valid for a micro-economic situation, so the scope of the model is extended to demonstrate its relevance in the case of a large multinational corporation (MNC). The original aims of Thurley and Wood (1983) and Thurley (1983) are extended, and, in so doing, we present on the one hand an analysis of the strategies adopted by a single MNC and on the other hand show that the MNC is a living example of a macro-micro synthesis. Only if the second argument were valid would a macro model hold true in a micro situation as well. The MNC is a genre in its own right and operates as a micro-economic entity with a macro-economic logic, and, to that extent, a macro-micro synthesis is conceivable.

Research Background

This paper was born out of extensive field research conducted in Nigeria between 1979 and 1983 and library research conducted in the United Kingdom during 1984 and 1985. The giant singled out for analysis was Unilever (an Anglo-Dutch mul- tinational), the largest single multinational interest in the nonpetroleum sector of Nigeria. If Unilever is a typical nonpetroleum multinational and if Nigeria is a typical developing capitalist country, perhaps we can hazard an exercise in gen- eralizing from the particular.

Review of Literature

Multinational corporations are one of the most important and yet least known of institutions in today’s society according to Takayama (1985). Of the 100 largest economic units in the world, Macrae (1972) says that 50 are nation states and 50 are MNCs. La11 (1983) went so far as to claim that U.S. multinationals account for some three-quarters of the country’s export of manufactured exports. Dunning (1974) argues that MNC’s recorded a foreign output that increased at the rate of 10% per annum. This rate is twice the size of the growth of the world GNP and 40 times faster than world exports. The power of the MNCs has been described by writers such as Dunning (1974), Wilczynsky (1976), Curzon and Curson (1977), Faundez and Picciotto (1978), La11 (1983), and Neghandhi (1985).

Takayama (1985), e.g., divides literature on MNCs into three categories, as follows:

1. The work of international economists concerned with the impact of MNCs on the balance of payments, international trade, and international division of labor.

Corporate Strategies in Developing Nations J BUSN RES 181 19X9:18:179-193

2. The work of political scientists examining the relationships between the MNCs and the nation states in terms of national sovereignty.

3. The work of business-orientated scientists investigating the internal operations.

We agree with Takayama in that although there is a growing body of knowledge incorporating the various aspects of the MNC, one field that we consider important and that is abundantly filled with problems (i.e., industrial relations) is not ade- quately researched. The ICPTU in 1971 commented that the potential power of MNCs to shift their operations and thus affect industrial relations in host countries is great. From the point of view of the MNCs, Kolde (1974) has remarked on the paucity of knowledge about industrial relations in foreign environments. Most studies are concerned with the impact of MNCs on the industrial relations system of the host country, since it is empirically convenient to pursue this line of enquiry. The IL0 study of 1973 casts serious doubts on the claim that MNCs are agencies that generate employment on a large scale. Gennard and Steuer in 1971 found that foreign subsidiaries of MNCs operating in Britain employed fewer personnel than they did in their factories in their home country. (In 1973 Forsyth came to the opposite conclusion when he found that MNCs operating in Scotland employed more personnel than they did in the factories in the home country.) According to Takayama, the lack of knowledge about internal labor management policies of MNCs is one reason why most researchers on industrial relations in MNCs have had inconclusive findings. He stresses the need for a study of the internal processes within a cross-cultural perspective. The study of Thurley et al. (1980) is important because it examined the development of personnel management practices among Japanese enterprises in Britain. Henderson andCohen’s study (1982) fills the second lacuna pointed out by Takayama: their paper describes the attempted cross-cultural analysis of Britain and Hong Kong through the international restructuring of capital labor. If the MNC negates the powers of both the market and the state, can we then say that it is “an economy within an economy”? _

MNCs are diversified in their operations, and their investments are linked by a vertical chain. Real control and policy making are functions reserved for the head office of the MNC in the core country while the operations are administered in the host country. This pattern is very much a common feature among multinationals. In studying the operations of Unilever from 1933 to 1985, we found that the substantive policies are laid down at the core headquarters while policies relating to procedural issues are often, but not always, left in the hands of the managers in the host country. The dependence of Unilever’s labor policies on its business policies shows that influence is usually unidirectional.

Purpose

A distinction is needed between a particular strategy and a company policy. A strategy is a proposed action or a sequence of actions intended to have far-reaching effects on the corporation’s ability to realize its objectives. It is, therefore, a con- sistent approach and signifies the direction in which the corporation is seen to be moving. Within the policies of an MNC a range of strategies emerge, and, by extending the Thurley and Wood typology, we propose to include the entire range

182 .I BUSN RES 1989:18:179-193

S. Sadri and C. Williamson

of these strategies. Since an MNC is almost an economy in its own right, the extension of the typology could be justified without committing either the fallacy of composition or the fallacy of accident. Modification of the typology will show how an MNC can vary its behavior to suit its immediate environment and yet remain within the broad policy guidelines set out by the headquarters at the core. The typology also aims to show the link between an MNC’s policies toward business and labor in a particular developing economy.

Whereas detailed information collated from different studies about the internal operation of MNCs would be of invaluable help to the student of industrial relations, the field of policy making continues to remain a “grey area.” Raymond Vernon in his classic 1971 study pointed out that the same policy measure may induce very different responses from different MNCs. We discover that the high degree of integration achieved by MNCs in developing countries gives them an even wider range of policies from which to choose than is generally realized. Neghandhi (1985), in analyzing the contributions of MNCs to host countries, has pointed out the existing gap between policy and practice, challenging the widespread notion that MNCs have made a significant (positive) impact on the developing economies. Our evidence of Unilever in Nigeria supports Neghandhi’s observations.

In adapting the Thurley and Wood typology to include our body of empirical evidence, what we are in fact saying is that, Vernon’s observation notwithstanding, one could posit a descriptive model, i.e., a typology of MNCs’ policies on business and labor. The word typology is used synonymously with the word model not because Thurley and Wood’s contribution is descriptive but because this typology is a part of Thurley’s Weltunschauung, which has begun to unfold over the last 4 years.

Explanation of the Typology

The Thurley and Wood typology has been modified and shown in the chart at the end of this paper. Also attached is a chart showing the various investment interests of Unilever in Nigeria.

Multinational Corporation’s Sales Outlet

The UAC began as a trading company that exported raw materials from Nigeria and imported consumer goods from Europe for sale in Nigeria. Along with the two French giants SCOA and CFAO, it managed to virtually monopolize West Africa’s distribution sector from the 1930s onward.

UAC operated in a situation where its share of the market was more or less secure. The smaller competitors were relegated to a secondary position not only because they could not compete with costs but also because they lacked sales outlets. Since the market was established and competition minimized, the levels of tech- nological innovation and advertising were minimal, brand loyalty was developed on a macro level, and the outlets themselves (Kingsway Stores or G. B. Olivant) were never advertised.

The attitude toward the union was one of detached paternalism, and, since negotiations were held by the UAC (N) conglomerate, the local industrial relations issues were often relegated to the background. Collective bargaining with the

Corporate Strategies in Developing Nations J BUSN RES 183 1989:18:179-193

National Union of Shops and Distributive Employees (NUSDE) was also dealt with on a superficial basis, and sales persons could be hired and fired at will.

The total absence of a welfare state and the large reserve army of unemployed persons made it possible for management to exercise tight control over work op- erations. Working class consciousness was low, and the attitude of the Nigerian managers was clearly colonial in character. Even in Niger Motors, a sales outlet for the Federated Motor Industries, and another operative of UAC (N), the man- agers displayed a marked autocratic tendency towards labor.

Multinational Corporation’s Service Organization

The Materials Delivery Service (MDS) and the Tractor and Equipment (T&E) divisions of the UAC (N) were basically service organizations aimed at profit making. The former set up a chain of warehouses scattered throughout Nigeria while the latter bought and hired out earth-moving equipment on behalf of Unilever.

The service rendered by both MDS and T&E division was always very effective and reduced Unilever’s transportation, material handling, and storage costs con- siderably. To add to this, the Research Bureau Nigeria Ltd. (RBNL) was an organization that had no connection officially with Unilever, but which was the eyes and ears of Unilever as far as market research went. RBNL was housed at Old Niger House, Apapa, where other UAC offices were located (see Table 1). When we approached them, they refused to even speak to us without first having obtained permission from UAC (N) headquarters. This seems rather odd for a concern that claims to be independent.

The market environment was purely oligopolistic, and all disclosure of infor- mation to the public was rigidly monitored. The rules covering this were so formal that they were virtually unpenetrable by the investigator. The market research unit was excellent, and it was claimed that it even conducted market surveys for the Ministry of Trade and Industries.

RBNL had a strange autonomy that gave it a wider scope for collective bargaining than the larger UAC (N). Since the white-collar staff was influenced by embor- geoisement, labor democracy at the lower levels of management remained only a theoretical possibility.

The public recognition of monopoly rights in Nigeria is ensured. Growth at MDS and RBNL is needed to avoid zero sum conflict. Management (and union) control over MDS, RBNL, and T&E remains very flexible.

Key Companies of the Multinational Corporation

The Federated Motor Industries (FMI), Bordpak, and Palmlines are three operative divisions of UAC (N) that could be called key companies. The first assembles automobiles, the second makes paper cartons and packages, while the third is concerned with stevedoring and ocean transport. Together they give some idea of the extent of vertical intergration in Unilever.

All three of these concerns are based on government industrial policy, have effective production lines, and are quite modern (by Nigerian standards) in their approach to manufacturing and trade.

Tab

le

1.

The

T

hurl

ey

and

Woo

d M

odel

A

dapt

ed

for

Uni

leve

r in

Nig

eria

Exa

mpl

e B

usin

ess

Stra

tegy

A

ppro

pria

te

Con

ditio

ns

Indu

stri

al

Rel

atio

ns

Stra

tegy

A

ppro

pria

te

Con

ditio

ns

Dep

artm

enta

l st

ore

(Kin

gsw

ay

Stor

es)

Serv

ice

orga

niza

tion

( Re-

se

arch

B

urea

u N

iger

ia

Lim

ited)

Key

pri

vate

co

mpa

nies

(G

uinn

ess

Nig

. L

imite

d an

d N

iger

ian

Bre

wer

ies

Ltd

. )

Eco

nom

ic

mis

sion

ba

sed-

St

able

m

arke

t w

ith a

n es

tab-

ra

tiona

l lo

ng-t

erm

tr

adin

g lis

hed

shar

e-lo

w

leve

l of

ob

ject

ives

fr

om

the

colo

n-

tech

nolo

gica

l in

nova

tion;

ia

l da

ys;

to c

reat

e a

de-

selli

ng o

f lu

xury

ite

ms;

m

aod

for

none

cono

mic

th

e he

gem

ony

of t

op

need

s so

app

ropr

iatio

n m

anag

emen

t fr

om

Lon

- th

roug

h di

stri

butio

n is

do

n is

nev

er

ques

tione

d m

ade

poss

ible

Serv

ice

base

d-pr

ovis

ion

of

Mon

opol

istic

m

arke

t-no

ef

fect

ive

serv

ice

to s

iste

r gr

oup

has

a m

ore

effi

cien

t co

ncer

ns

at l

owes

t co

st;

netw

ork

of w

areh

ousi

ng

tran

sfer

pr

icin

g ef

fect

ivel

y fa

cilit

ies

and

ship

ping

se

r-

used

to

step

up

pro

fit

vice

s m

akin

g ve

rtic

al

inte

- m

argi

ns

grat

ion

of b

usin

ess

poss

ible

Bas

ed

on g

ovt.

indu

stri

al

Exi

sten

ce

over

gov

t. po

l-

stra

tegy

-the

ne

ocol

onia

l ic

y-th

e In

digi

nisa

tion

and

peri

pher

al

capi

talis

t D

ecre

es

of 1

972

and

1977

, ec

onom

ies

allo

w t

he r

ela-

ha

ving

fai

led

the

Gov

t.,

tions

of

pro

duct

ion

to r

e-

polic

y ha

s al

way

s fa

vore

d m

ain

unal

tere

d in

con

tent

th

e fo

reig

n co

mpa

nies

ov

er 5

0 yr

s

Rec

ogni

tion

deci

ded

by t

op

man

gt.

belie

fs-t

he

scop

e of

col

lect

ive

barg

aini

ng

is

very

lim

ited;

se

lect

ion

of

empl

oyee

s ac

cord

ing

to t

his

crite

ria;

al

l be

liefs

te

le-

guid

ed

from

L

ondo

n

Rec

ogni

tion

of m

any

unio

ns-

the

Shop

and

Dis

trib

utiv

e E

mpl

oyee

s U

nion

(N

USD

E)

and

the

food

, to

bacc

o et

c.

Em

ploy

ees

unio

n ar

e jo

intly

re

cog-

ni

zed.

U

AC

de

als

with

8

trad

e un

ions

in

Lag

os.

Wid

e sc

ope

for

colle

ctiv

e ba

rgai

ning

on

man

agem

ent

term

s

Gov

t. re

cogn

ition

of

mul

dna-

tio

nal

righ

ts-g

row

th

need

ed

to a

void

a z

ero

sum

co

nflic

t. L

oose

m

angt

con

- tr

ol o

ver

day

to d

ay o

pera

- tio

ns

but

tight

con

trol

ov

er

polic

y is

sues

of

all

kind

s.

Gov

ernm

ent

keep

s a

low

pr

ofile

Rec

ogni

tion-

Uni

leve

r di

d A

dapt

ive

I.R

.-th

e ta

sk o

f no

t re

cogn

ise

a un

ion

until

I.

R.

is t

o av

oid

rock

ing

the

the

1950

s an

d st

ill m

aint

ain

boat

; he

nce,

by

thr

eat,

a po

licy

of p

ater

nalis

tic

au-

brib

e an

d,

fals

ehoo

d,

stat

us

tocr

acy

in I

.R.

quo

is m

aint

aine

d

Lab

our

mar

ket

allo

ws

seve

re

sele

ctio

n an

d di

smis

sal

a hi

gher

po

ssib

ility

-the

co

n-

trol

ove

r th

e w

orkf

orce

is

ve

ry t

ight

an

d th

e sl

ight

est

mis

take

ca

n re

sult

in d

is-

mis

sal;

larg

e-sc

ale

redu

n-

danc

ies

are

very

com

mon

as

tr

ade

cycl

es t

ake

a pl

unge

Tab

le

1 (c

onti

nued

)

Exa

mpl

e B

usin

ess

Stra

tegy

A

ppro

pria

te

Con

ditio

ns

Indu

stri

al

Rel

atio

ns

Stra

tegy

A

ppro

pria

te

Con

ditio

ns

Con

glom

erat

e (U

AC

of

B

ased

on

lon

g-te

rm

plan

- A

wor

ld b

ody-

form

alis

ed

Dif

fuse

d I.

R.

polic

y-I.

R.

is

Loc

alis

ed

I.R

. D

ept-

geo-

N

ig.

Ltd

) ni

ng-e

xplo

itatio

n of

ful

l pr

oduc

t or

gani

satio

n an

d no

t ce

ntra

lised

bu

t al

l 1.

R.

grap

hica

l m

obili

ty

of m

an-

prof

it fr

om p

rodu

ct

life

a po

wer

ful

cent

ral

body

de

cisi

ons

are

mad

e to

sup

- ag

ers,

de

skill

ing

of

and

deve

lopm

ent

of n

ew

to t

ake

stra

tegi

c de

cisi

ons

plem

ent

corp

orat

e bu

sine

ss

oper

atio

nal

jobs

an

d se

c-

luxu

ry p

rodu

cts

deci

sion

s tio

nal

barg

aini

ng

disc

our-

ag

ed;

larg

e-sc

ale

ratio

naliz

atio

n em

bark

ed

upon

Smal

l fi

rms

(Von

o Pr

od-

Bas

ed o

n ec

onom

ic

sur-

Fl

exib

ility

of

org

anis

atio

n-

Avo

idan

ce

of s

hop

stew

ard

Lin

e m

anag

ers

cont

rol

indu

s-

ucts

Ltd

. an

d V

itafo

am)

viva

&sh

ort-

term

pr

ofita

- go

od s

ourc

e of

fin

ance

co

ntro

l-th

e sh

op

stew

ard

tria

l re

latio

ns-a

ll I.

R.

mat

- bi

lity

and

mai

ntai

nanc

e of

(U

nile

ver)

an

d go

od

rela

- is

jus

t a

nam

e;

he i

s se

ldom

te

rs

are

deal

t w

ith b

y th

e sa

les

thro

ugh

a la

rger

tio

ns w

ith c

usto

mer

s in

co

nsul

ted

and

has

no p

ower

Pr

oduc

tion

Man

ager

; pe

r-

UA

C

netw

ork

the

nam

e of

UA

C

form

s a

PR f

unct

ion

New

fir

m p

rodu

ct

(Lip

ton

Bas

ed o

n in

nova

tion-

new

St

aff

with

pro

blem

-sol

ving

A

void

tr

ade

unio

ns-a

mph

a-

Skill

ed s

taff

-hig

hly

mot

i-

of N

ig.

Lim

ited)

lu

xury

pro

duct

s ar

e de

vel-

ca

paci

ty-l

inks

w

ith p

ro-

sis

on s

kills

and

in

the

vate

d st

aff

with

ded

icat

ed

oped

an

d m

arke

ted

spec

tive

cust

omer

s an

d fi

- na

me

of e

con.

de

v.,

trad

e an

d se

lfle

ss

attit

udes

ba

sed

nanc

ial

supp

ort

for

are

cast

asi

de

on f

alse

con

scio

usne

ss

inve

stm

ent

Est

ablis

hed

firm

s in

eco

- B

ased

on

cri

sis

reso

lutio

n-

Cri

sis

due

to t

rade

cy

cle-

Pr

oduc

tivity

ba

rgai

ning

- St

rong

un

ion

orga

niza

tion-

no

mic

dec

line

(Lev

er

dive

rsif

icat

ion

in 1

972

to

cris

is d

ue t

o th

e pr

oduc

- ac

hiev

ed

thro

ugh

a un

ion

poss

ible

re

depl

oym

ent

as

Bro

ther

s N

iger

ia

avoi

d a

falli

ng m

arke

t; re

- tio

n of

lux

ury

good

s th

at

orga

niza

tion

at a

ll le

vels

th

e ne

gotia

ting

unio

n L

imite

d)

tren

chm

ent

in 1

982

to

cann

ot

be s

old

as t

he

(NU

CN

NP)

i.e

., is

ver

y av

oid

fall

in p

rofi

ts

pric

es

wer

e be

yond

th

e co

nsci

ous

of i

ts r

ole

reac

h of

the

com

mon

m

an

LEV

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UN

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PLC

UNITED AFRICA COMPANY

INTERNATIONAL

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Corporate Strategies in Developing Nations .I BUSN RES 1989:1X:179-193

All three are provided with large resources needed for research by the Unilever empire. The Textiles Division of UAC (N) and Pamol in addition to the above three concerns have potential export markets in West Africa, operate closely in line with government policy, and show the degree of horizontal intergration within the group.

Since all five of these constitute the backbone of Unilever in Nigeria in terms of the fortunes they reap, it becomes necessary to have industrial peace at all times. The unions get more cooperation from the management, although the disclosure of information and industrial democracy leave a lot to be desired.

The personnel department is well managed and efficient, which is necessary if labor is to be manipulated to get optimal results. One way of avoiding con- flicts was to introduce an incentive bonus plan and emphasize growth as a nec- essary condition for existence. This situation is well managed by the personnel department, which rides roughshod over all union officials when it fails to buy them out.

The Multinational Conglomerate

The UAC (N) is a conglomerate that effectively uses its integrated structures to monopolize the West African market. Nigeria serves as an effective launching pad for this strategy.

Its operations are well planned and form a part of the overall global policy to establish a monopoly in developing countries. The last stage of distribution is used to appropriate its profits, and its long historical roots are used to exploit the system. UAC (N) influences state policies due to its close connection with the government and holds the labor movement liable to ransom by imposing mass redundancies if imports are restricted. The coups that overthrew Gowon and Shagari were pre- ceeded by such redundancies. The MNC then allegedly used the Nigeria Labour Congress to pressure the government to grant import licences, which had been delayed or denied them previously.

The global connections of the MNC help to formalize the divisional product organization. Its virtically integrated structure ensures profits at every stage of distribution. The oligopolistic nature of the import market and the oliopsonistic nature of the export mark assures Unilever a stable share at both ends of this trade continuum.

Therefore, it has the ability to portray itself as having a flexible labor policy. Its labor policy is in fact varied, and the degree of variation is regulated by the extent to which the product market varies. It always wants to bargain individually and does not wish to involve itself in industry-wide bargaining. Unilever’s identity (management argued), which must not be lost, would be lost if the MNC bargained along with other employers (controlling the Marketing Boards was a different matter, even when done jointly).

The localized personnel department, which appears to be both decentralized and autonomous, is in reality nothing of the kind. Job rotation and geographi- cal mobility of managerial staff ensures a uniform policy and centralized con- trol. Sectional bargaining is never used, and automation is encouraged. The training school at Apapa is used to effectively dovetail operational jobs to fall

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in line with changing market situations. Structural unemployment, though rampant, is negated by the large array of unemployed persons, and training costs are kept low.

The Small Firm within the Multinational’s Canopy

Small firms like Nipol produce plastic containers for Unilever products and brew- eries, Bordpak produces paper packaging for Unilever products, and G. B. Olivant provides sales facilities for Unilever products, RBNL, provides market research while Vono and Vitafoam as subsidiaries of UAC (N) provided further horizontal intergration.

All of these are based on the need for economic survival and are used to boost Unilever’s larger interests such as Nigerian Breweries, Lipton, Guinness, and Lever Brothers.

The production organization is flexible and customer relations are excellent. The close links between the Unilever Empire and both Lloyds Bank PLC and Barclays Bank PLC provide a dependable source of finance.

The industrial relations policies of Nipol, Vono, and Vitafoam are personalized. Union power is nonexistent, and the workers are told that the management knows what is best for them.

All personnel matters are dealt with by the operations manager to whom the personnel manager reports. The personnel policy is centralized, and the personnel officer at local level is in fact only in charge of canteens and latrines. The attitude of management towards researchers is antagonistic.

The Multinational’s New Firm Product

Lipton, Guinness, and Nigerian Breweries (NBL) are relatively new Unilever in- terests. They bridge the gap in the demand for beverages and create new markets by dint of superior marketing strategies.

They constantly encroach upon new zones of trade. For instance, you can buy Guinness, Harp, or Star beer hundreds of miles away from Lagos at a time when Nigeria boasted of having 21 breweries for 80 million people.

Top management is very efficient and has a reputation for being very sophisti- cated. All these three interests have a very good reputation with the general public, and the Unilever Empire ensures financial support not normally necessary since all three of these interests do quite well for themselves and have already secured a share in the Nigerian market because of brand loyalty.

Trade unions were only recognized when it became absolutely necessary. The officials of the Food, Beverages, and Tobacco Workers Union confirmed that management always emphasized skills and tried to professionalize the workforce. In Vono and Vitafoam, this was virtually achieved when industrial relations were left in the hands of the line managers.

Evidence exists to show that while the staff at NBL and Guinness was adaptive, the staff at Vitafoam and Vono had to be cajoled into working long hours for low overtime rates.

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The Multinational Corporation’s Declining Giants

Palmol and Lever Bothers of Nigeria Ltd. (LBN) are established Unilever firms that went into economic decline with untold effects after 1970 because of the dip in world trade cycle that ushered in the great slump of 1971.

The post-1971 policy of both these concerns was based on crisis resolution. Palmol imported Malaysian rubber trees to increase productivity while LBN went into manufacturing with a plant at ABA and at Oshobo. Productivity became a key phrase as both concerns made an all out bid to survive.

Although the crisis was brought about by the world trade situation, it was ag- gravated by the colonial industrial structure of both Palmol and LBN, which could not step up their productivity without major overhauls. This trend was later ar- rested, and by 1979 both concerns began to recover from the crisis. In 1981 the oil slump pushed them back again as demand fell along with the price of palm oil. The prevarication of the Shagari administration leading to the ill-construed Eco- nomic Stabilization Act of 1981 did not help the recovery either. Nigeria, one of the world’s largest exporters of palm oil, sadly began to import palm oil to meet domestic needs.

When the Second Republic had successfully dug its own grave, it began to look for scapegoats which it found in the foreign firms. Licences were restricted and the cost of living rose dramatically after 1981. Productivity became a bargaining point both at Pamol and at LBN, and union involvement was stepped up.

The check-off system was introduced in 1979, and the shop stewards became more conscious of their tasks. Industrial relations began to improve, and both these concerns adopted a more forward-looking policy. This was temporarily brought to a standstill during 1983-1984, but in 1985 recovery seemed to have begun once again.

Concluding Remarks

The sheer size of Unilever in Nigeria and the degree of intergration involved in the MNC’s operations has made adaption of the Thurley and Wood typology possible for a single multinational in a developing country. Within the broad frame- work of corporate objectives, Unilever’s business and labor policies vary according to the needs of the particular situation and the firm’s strategic position. A strategic change would become necessary if there was a gap between the firm’s objectives and its strategic position in future. Accordingly, Ansoff defined a business strategy as being concerned with the product market portfolio of a firm (1969). Ansoff’s approach underlines the need of having organizational resources that enable a firm to review its situation and decide on a basic business strategy rather than allow a strategy to develop on an ad hoc basic arising from decisions of individual managers. The Unilever experience points unmistakably towards the existence of such a basic business strategy under a canopy covering the period 1933-1983 and that industrial relations (or labor) strategies of Unilever are also dependent on the global business strategy of the group.

Industrial relations strategies are treated from a managerial viewpoint be- cause, for Unilever, there is but one role for labor, this being the role of a factor of production (in a strict neo-Ricardian sense), which needs to be appro-

190 J BUSN RES S. Sadri and C. Williamson 1989:18:179-193

priated to optimize business results. Unilever’s activities bear out the CIR’s (1973) fear that industrial relations could easily be neglected by the concentra- tion of top management decisions based purely on business activities and ob- jectives. The “labor” policy of Unilever is therefore subordinated to the business policies of the group and is meant to help in attaining the business objectives and to extend Unilever’s control over the processes of production in keeping with changes in the political economy of developing countries and with changes in the political economy of developing countries and geared along the guidelines set out by the MNC’s global policy. These are aimed at increasing the profit margin and market share over a period of time. Evidence exists of a definite relationship between business strategy and industrial relations strategy, and, since Unilever’s labor policy is ideally aimed at helping to achieve its business policy, the link is easy to establish.

Literature on corporate strategy seems to imply that strategy must be determined autonomously from above. If one knows how the capitalist system functions, this observation seems almost tautological. The Unilever experience points toward an amalgam of the positivist and the normative versions of Contingency Theory. At the very top, Unilever lays down the normative version, which instructs local management to fit their own policies within the overall global aims of the group. At the national level, Unilever appears to follow a positivist line by which man- agement adapts their organization to meet the “contingent” factors. Unilever’s “dualistic nature” in this respect is not paradoxical but pragmatic. The positivist line is followed with an overall normative canopy that is laid down by an global policy. The dependent position of the Nigerian economy and its links with the world capitalist system facilitate this policy. During both of these periods (1933- 1945 and 19451985), the labor policy of Unilever merely helped realize the business policies that in turn were a part of a conscious philosophy based on structured foresight. The development of the MNC’s “strategic management” depended on a special mix born out of experience of Nigeria.

There exist a wide range of possibilities open to Unilever in developing countries. Our investigation, like the Lyons et al. study (1982), reveals that it is correct to apply the “strategic management” thesis to MNCs. Our investigation also affirms that there is no justification for a simplistic thesis that asserts the exploitation of developing countries by MNCs. Most managers in Unilever are Nigerian, all the supervisors are Nigerian, and between them they take most procedural decisions. What the MNC has created is an “ethos,” a broad policy guideline within which managers must operate. All substantive issues are decided upon at the headquar- ters, while most procedural decisions are made in the New Niger House, which is the headquarters of the MNC within the host country, and relatively few decisions are taken at the actual production site. Hence, to say that the Nigerians have no control would be an. inaccuracy. The control is exercised by the Nigerian managers under supervision from London and Rotterdam, which, operating under a false consciousness, actively assists in the appropriation of the Nigerian economy. The class connections between the government and these Nigerian managers are used to create conditions whereby appropriation is legitimized. The parallel economy and the capitalist ethics of the government make it individually worthwhile for these officials to be a party to the appropriation. The labor aristocracy and a low

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level of class consciousness among many trade union leaders makes the task of appropriating wealth easy. The radicals are outnumbered and quite often outmaneuvered.

Implications

Therefore, if a “specific” theory of Industrial Relations (it was felt) were to be posited, it would have to be firmly based on the study of Economic Development and form a part of the overall study of political economy. Since an MNC is the only constant factor present in all phases of capitalist development, this specific theory will have to revolve around the MNC. The Thurley and Wood model was a very convenient tool for studying the strategies of the MNC, thereby forming the basis for the positing of the specific theory (Sadri and Williamson, 1988).

The management planners can see how the multinational looks in its entireity. This would help them to visualize the horizontal and vertical integration of pro- duction more clearly. That, in turn, would facilitate planning and coordination of operations. It would present more than just a bird’s eye view of the rather com- plicated network of relations between the various individual investments of the same multinational. To begin with, few except those at the very top know the full extent of a multinational’s investment interests in a geo-physical region.

The marketing manager could then see where he could procure the raw materials most readily from, and the sales manager could see where he could channel his output in the best way. The finance manager could similarly use it to plot a critical path for fund flows, and this would make his capital budgeting easier.

The real benefit would, however, accrue to the top level management, which could see at a glance how the various departments are linked in terms of (1) policies and (2) operations. They could see how the corporate business strategies influence the industrial relations strategies. That would help them to visualize how the various corporate policies effect both capital and labor through their industrial relations policies. This indubitable link between corporate business strategy and industrial relations strategy makes long-range planning more meaningful and comprehensible.

For the state, the implications are even more far reaching. The state can see the extent of the global reach of the MNC and the extent to which the MNC controls the product market of the country. From this, the extent of the dependency of the host country can be gauged both in form and in content. The Central Bank can similarly use it to see where and how the flow of funds can take place without its knowledge. A good idea could be obtained about the internal cross-influences within the canopy of the multinational’s investment, and this would give a good idea of how to control the flow of funds. For instance, the Central Bank of Nigeria did not have up-to-date data on fund flows. And, as Sadri (1988) has shown, the import bill of UAC of Nigeria alone was large enough to challenge the credibility of the IMF data on the total import bill of Nigeria from 1970 to 1980. This was made possible perhaps by the close links UAC of Nigeria (a principal Unilever conglomerate) has with the Barclays’ Bank PLC (the holding bank of Union Bank of Nigeria, which was the banker for UAC of Nigeria); without the link, fund flows could not be checked. If a study like the one undertaken by us was available to the Central Bank of Nigeria, perhaps it could have performed its audit function

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more easily. But the utility of such a study is limited by the fact that on its own, it cannot help the various management functions to perform efficiently. What it can do is to provide ideas and a basis for further work, which in turn can be beneficial to the realization of corporate goals.

Other studies being undertaken in other countries are recommended so that the findings of the study can be cross-checked. If our findings are found to be supported, then the Thurley and Wood model is a general model. If the findings are found to be in conflict with ours, then the experience of Unilever and Nigeria is specific.

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