Skill formation, automation and governance: comparing German and Korean automotive manufacturers in Central-Eastern Europe

Abstract

Building on neo-institutionalist models of the transfer of HRM practices within multinational companies, this article analyzes the transfer of skill formation concepts using the cases of two automotive OEMs in Slovakia. The purpose of the article is twofold. First, it aims to explain the differences between the two multinationals. Second, it builds on the empirical analysis to reconsider the neo-institutionalist theoretical framework.The article is based on two qualitative case studies of automotive multinationals in Slovakia. The home country locations of both companies represent different approaches to skill formation: systematic vocational education for blue-collar workers is regarded as crucial at the German manufacturer, while the Korean company relies mainly on on-the-job-training and puts much less emphasis on skilled blue-collar work. The article shows that the differences between the companies are related to different understanding of technology/automation. It argues that the increasing automation and the decentralization of responsibilities for the product-launch processes supported the transfer of German skill formation concepts to the plant in Slovakia, while the Korean manufacturer's specific engineering-led automation concept and centralization of product launch responsibilities in its Korean headquarters reduced the need to invest in skill formation for blue collars abroad. The article concludes that theories of the transfer of HRM practices within multinationals must include technological factors, and must also develop more specific concepts of the centralization of multinationals. The article is to our knowledge the first to include technology as a core variable into the neo-institutionalist theory in the field of international business and HRM. While the relationship between technology and organization has gained huge prominence in the recent discussions about digitalization, it has been so far neglected by scholars of international business.