Cross-border mergers and acquisitions: the implications for labour

Recent years have witnessed a rapid growth in mergers and acquisitions between companies based in different countries. Estimates suggest that the value of cross-border mergers and acquisitions amounted to $342 billion in 1997, a fourfold increase in six years, For employees and their representatives three distinct effects of this international merger activity can be identified: first, a general ‘acquisition’ effect which is common to all mergers, not just those that are cross-border in nature; second, a ‘multinational’ effect in which mergers increase the extent to which the acquired operations are subject to international competition; and, third, a ‘nationality’ effect which arises from differences by country in the way that firms are governed and financed. The nationality effect is the subject of this paper. It is argued that takeovers by Anglo-Saxon multinationals pose significant challenges to employees and their representatives, primarily because the system of corporate governance in Anglo-Saxon countries pressurises management into a ‘cost-minimisation’ approach to managing labour. This Anglo-Saxon aspect of the nationality effect is likely to be widespread, mainly because most international acquisitions are undertaken by Anglo-Saxon multinationals but also because the purchase of firms in Britain and America is a key mechanism through which European multinationals are undergoing a process of ‘Anglo-Saxonisation’.