The country of origin effect revisited: The case of American Oil MNCs in the UK

Abstract

American Multi-National Corporations (MNCs) have often been examined in significant literature which purports to support the thesis of a “country of origin effect” (COOE) whereby such corporations diffuse an individualistic ideology by way of distinctive employment practises which are based on the American business system and its culture. Our study was designed to obviate the methodological problems inherent in the literature, in particular, the aggregating and conflation of industry-specific variables. We tested the COOE hypothesis using data from all of the plants in the UK downstream oil industry (both American and European owned MNCs) to ascertain if there was such an effect. We offer strong evidence to refute a COOE in this industry in the UK context. We show that adaptation of American MNCs into the UK institutional and cultural context is a far stronger force to influence policy than a COOE. This is an important finding as it casts doubt on the accuracy of much of the literature, and on a broader canvas it suggests that research should limit generalizations to sector and country specific areas, rather than creating grand theory at too early a stage.