Leicester Business School

Multinational corporations, sub-national governance

and human resources

Feedback report for UK participants

Phil Almond, Anthony Ferner and Olga Tregaskis

March 2012
 acknowledgements III

executIvesummary Iv

chapter1– IntroductIon 2

chapter2– governanceactorsand 4
polIcy-relatedfIndIngs
CONTENTS
chapter3– whatdomultInatIonalswantfrom 13
regIonalgovernanceagencIes?

chapter4– regIonalhumancapItalnetworks 24
andfdI

chapter5– summaryfIndIngsfromthe 32
InternatIonalproject

references 36

dmu.ac.uk/research-areas/hrm/hrm-research-cross.jsp
 ACKNOwLEdgEMENTS
This study would not have been possible without the
cooperation of our interviewees in multinational corporations,
local and regional governance bodies and skills bodies.
We are most grateful for their time, particularly given our
research took place at a time of economic and political crisis.
Funding for the research came from an award from the
Economic and Social Research Council, award number
ES-062-23-1886.
We would like to acknowledge the work of Tomila Lankina,
of the Local Governance Research Unit, on this project.
III
The final chapter of this report draws on research primarily
conducted by our international teams. These are: Patrick
Gunnigle, Jonathan Lavelle, and Sinead Monaghan, all
University of Limerick; Javier Quintanilla, IESE; Maria
Gonzalez Menendez and David Luque Balbona, University of
Oviedo; Gregor Murray, University of Montreal; Tod
Rutherford; Syracuse.
We would also like to thank the participants at the feedback
event conducted at De Montfort University on 19 December
2011.

Objectives (Chapter 1)
• thisstudyexaminestherelationships
betweenmultinationalcorporations(mncs),
andsub-nationalgovernanceactors(local
andregionaldevelopmentagencies,relevant
levelsofgovernment,skillsagenciesand
providers,localisedcluster-type
organisations,etc)
• Itoperatesontheassumptionthat,in
coordinatingtheirinternationalactivities,
mncsareaffectedbylocalcharacteristics
suchaslabourmarketsandindustrial
networksaswellasspecificpublicattempts
atinvestorattractionandinvestor
development,andthatsub-national
governanceispotentiallyimportantin
shapingthenatureofsuchcharacteristics
• thereportthereforeexaminesthenatureof
sub-nationalgovernanceintworegionsof
englandasitaffectsfdI,whatmnc
managersanddirectorswantfromsub-
nationalgovernance,andthenatureof
regionalhumancapitalnetworks.findingsfor
parallelstudiesincanada,Irelandandspain
arealsobrieflyreported
• theprojectisbasedonsemi-structured
interviewswithgovernanceactorsandmnc
managers/directors,alongsideasocial
networkanalysistool
ExECUTivE SUMMAry
Governance actors and policy-related
findings (Chapter 2)
• whilethecomparativelyliberalapproachof
theukstatehashistoricallybeensuccessful
inattractingforeigndirectinvestment(fdI),
thispositionisunderincreasingcompetitive
threat
• long-standingpatternsofinstabilityin
englishsub-nationalgovernance,bothin
termsofregionaleconomicgovernanceand
skillscoordination,havecontinuedand
intensifiedoverthelastfewyears.In
particular,thedemiseofregional
developmentagencies(rdas)andtheir
partialreplacementwithlocalenterprise
partnerships(leps)camewithintheperiod
offieldworkforthisproject
• rdasweresignificantactorsindirect
relationswithinwardinvestors,aswellasin
widereconomiccoordination.Inparticular,
theywereimportantas‘brokers’between
inwardinvestorsandsometimescomplicated
institutionalsystems,particularlyinthearea
ofskillsdevelopmentandfunding
• rdashadsignificantproblemsrelatingto:
thelackofeconomicfunctionalityofregions;
uncertainboundariesbetweenlocal,regional
andnationalactors,bothrelatingtofdI
attractionandmoregenerally;andrelatively
weakpoliticallegitimacy.moregenerally,the
excessivecomplexityandfragmentationof
theskillsgovernancesystem,atregionaland
nationallevels,makescoordinationdifficult
IV
• thecentralisationofinwardinvestment
effortsunderanationalcontract,combined
withtheeffortsoflepsandlocalauthorities,
isseenbyrespondentsascausing
substantialrisksofincreasedinterandintra-
regionalinequalityininvestmentdestinations.
Inparticular,smallercitiesandtownsare
likelytostruggletoachieveadequate
degreesofcoordinationunderthenew
arrangements
• concernswerealsoraisedaboutthe
differencesinregimesbetweenenglish
regionsandthevariousdevolved
administrations
• themodelof“business-led”institutions,
favouredbysuccessivenational
governments,hasnotsucceededincreating
institutionswithadequatecoordinating
capacities
Multinationals and sub-national
governance agencies (Chapter 3)
• mncsfallintodistinctgroups:‘high
engagers’thatintensivelyinteractwith
local/regionalactors,and‘isolates’whohave
littleengagement.thisispartlyrelatedto
issuesofbusinessstructureandstrategy,
butalsotothepreferencesofindividual
managersanddirectors
• sub-nationalbodiesperformanumberof
functionsonbehalfofexistinginward
investors.theseincludeaggregatingthe
interestsoffirms,particularlyintheskills
domain,andactingasabrokerbetween
 mncsandlabourmarketandeducation
institutions,aswellasbetweengovernance
actorsatdifferentgeographicallevels
• coordinationofbidsforreinvestment,of
collectiveskillsandtrainingprovision,andof
bidsforvariousformsofpublicfunding,were
amongthemoreimportantrolesofrdas
fromanmncperspective
• mncsandotherlargefirmsoftenperceive
theirskillrequirementsasbeingmore
specificthantheyinfactare,suggestinga
needforcoordinationordirectbrokerageby
governanceactors
• perceptionsofrdaswereuneven:multi-site
operatorstendedtohavemorefavourable
viewsofnorthernrdasthanthoseinthe
south;managersofsmallsubsidiaryunits
typicallyreportedlittleinteraction
• anumberofseniormanagersinlargemncs
wereconcernedatthelossofaregional
interlocutorfollowingthedemiseofthe
rdas
• concernswerealsoreportedaboutthe
coordinatingcapacitiesofleps,andabout
thenewarrangementsforsupportforinward
investors
• governanceactor-mncrelationsemerge
dynamicallyoutofnegotiationsandalliances;
wheremncactorsthemselvestakeonarole
ingovernance,e.g.ofskills,theborderline
betweenprivatefirmandgovernanceactor
canbecomeindistinct
Regional human capital development
networks and FDI (Chapter 4)
• socialnetworkanalysisisusedtocapturein
visualformthesystemicrelationsbetween
actorsinthedomainofregionalhuman
capitaldevelopment
• analysisofaregionalhumancapital
developmentnetworkforanenglishregion
showsrelativelyloosetiesbetween
governanceactorsandmncsinaddressing
skillsissues
• Inthesecircumstances,asmallnumberof
organisationsplayedanimportantcentral
brokeragerole;therdaswereparticularly
importantinthis
• thenetworkstructurelargelyfollows
funding;itappearstooperateasameansof
matchingfundingtosmallnumbersofactors,
withfewpermanenttiesbeyondtheperiodof
funding.aslongasaperceptionof
competitionbetweenactorsforlimited
resourcesisprevalent,closecollaboration
amongnetworkactorsisunlikely
V
International findings (Chapter 5)
• comparativeresearchhasbeenundertaken
intworegionsineachofcanada,Ireland
andspain
• wheretherearestronglevelsofsub-national
governance(canada,spain),thesedo
permitadegreeoflocalflexibilitywithinthe
overallnationalsystem.thisallowsregional
actorstoinstitutionalisepatternsof
cooperation,andallows‘sub-nations’to
developsomewhatdifferentemphasesin
theirpoliticalgovernanceoftheeconomy–
forexample,oneregionineachofcanada
andspainisrelativelyliberalinitseconomic
policies,theothermuchmoreopentosocial
democratictypecoordination
• Ireland,whilehavinglittlesub-national
autonomyandabroadlyliberalapproach,
hassupplementeditsstrongnationalfdI-
orientedstrategywithinstitutionalised
informalnetworkingamongrelevantactors,
toafargreaterextentthaninengland.
• Ingeneral,skillsarereportedlessfrequently
asaprobleminallsixinternationalcases
thantheyareinengland
• ‘appropriate’geographiclevelsof
coordinationareprobablymoretiedtolevels
atwhichthereisanestablishedcivilsociety
thantofunctionalargumentsaboutsizeof
population
PAGE | ONE

This research on which this report is
based examined the relationships
between multinational corporations
(MNCs), and what we call sub-national
governance actors. By sub-national
governance actors, we refer to local and
regional agencies with direct public
responsibility for attracting and retaining
FDI and/or for fostering environments
favourable to high-quality inward
investment. These include local and
regional development agencies, the
relevant levels and departments of local,
regional and national government, skills
agencies and providers, and various
forms of business alliances, such as
localised cluster-type organisations.
workonthisresearchprojectstartedwiththe
assumptionthat,incoordinatingactivitiesacross
geographicallydispersedsites,mncsare
affectedbyanumberoflocalcharacteristics.
theseinclude:
• labourmarketsandskillsprofiles
• Innovationsystems
• widerindustrialandsupplychainnetworks
• specificpublicattemptsatinvestorattraction
andinvestordevelopment(whatwas
traditionallyreferredtoas‘aftercare’).
asthecompetitionforfdIbetweenandwithin
developedeconomiesbecomesincreasingly
intensive,andsuccessincreasinglydependson
theabilitytoassumehigherpositionsinglobal
valuechains,suchcharacteristicsaffectthe
natureofthecommitmentmncsarelikelyto
maketohostgeographies.
withinthisincreasinglyinternationalcompetition,
sub-nationalgovernanceiswidelybelievedtobe
important(see,forexample,mackinnonand
ChAPTEr 1:
INTRODUCTION
phelps,2001;coeetal,2004;maskelland
malmberg;1999).ofcourse,manymncs
continuetomakelocationdecisionsinorderto
gaineasieraccesstolocalandnationalproduct
markets.normally,though,highvalue-added
investorsaregeographicallyconcentratedon
eitherone,orasmallnumberof,siteswithina
countrythesizeoftheuk.
thismeansthat,whileitisobviouslyimportant
thatnationalgovernmentensuresacompetitive
environmentforfdI,manypotentialandcurrent
inwardinvestorsareconcernedwiththe
businessecosystematrelativelylocallevels.this
particularlyappliestoskills,giventhatthelabour
marketsformostinvestorsremainpredominantly
localorregional.forthesamereason,major
investmentdecisionsareofparticularimportance
tolocalandregionalgovernanceactors,asitisat
thislevelthattheemploymenteffectsofsuch
decisionsaremostkeenlyfelt.sub-national
actorsarethereforelikely,wheretheyhavethe
capacitytodoso,toattempttoshapebusiness
ecosystemsinordertopromotehighquality
investment.
yetwhiletheukhastraditionallybeen
successfulinattractingfdI,therehavelong
beenconcernsabouttheinstitutionswhichmight
beexpectedtobeimportantincreatingthesort
of‘ecosystem’thatmightbenecessaryinamuch
morecompetitiveglobalmarketforfdI.Instability
andconfusionastotherolesofdifferentbodies
–agenciesresponsibleforregionalandlocal
development,skillsagencies,andlocal,regional
andnationalgovernment–arelongstanding.
wethereforesoughttoexamine:
• therolesofdifferentsub-nationalgovernance
actors,bothindirectrelationswithinward
investors,andinattemptingtofosterthekind
PAGE | TwO
ofskillsenvironmentwhichcommentatorssee
asimportantfordeliveringhighquality
investmentfrompotentiallymobilefirms
• howtheserelationshipsaffectlocalmnc
units’supplyof,anddemandfor,skillsand
competencies
• theextenttowhichforeign-ownedmncs
canbesaidtobe‘embedded’insub-
nationalgeographies,particularlyinways
thatmightdrivewiderregionaldevelopment.
thecurrentreportmainlyconcernsouruk
research.weconductedresearchintwotop-level
regionsofengland(ie,whatatourstartingpoint
wererdaregions),oneinthenorth,andonein
themidlands.themainresearchinstrumentwas
semi-structuredinterviews,bothwiththeprincipal
governanceactorsineachregion,andwithsenior
managersanddirectorsinkeymncsata
regionallevel.wealsointerviewedmanagersina
numberofsmallermncunitswhichhadbeen
identifiedbylocalorregionalinwardinvestment
agenciesas‘successstories’.Intotal51
interviewswereconductedcovering53
respondents(asmallnumberoftheinterviews
weregroupinterviews).oftheinterviews,25
wereinthemidlandsregion,18inthenorth,and
8wereextra-regional(typicallyrepresentativesof
institutionswithanationalremit).35interviews
werecarriedoutwithinstitutionalactors,and16
withmncrespondents.chapters2and3ofthis
reportdrawmainlyontheseinterviews,alongside
relevantsecondarymaterial.chapter2examines
therolesofthevariousgovernanceactors,while
chapter3looksathowandwhymncunits
engagewiththeirregionalbusinesssystems.
chapter4mapssomeoftheserelationships
throughsocialnetworkanalysis.chapter5briefly
summarisesfindingstodatefromparallel
internationalresearchincanada,Irelandand
spain.
PAGE | ThrEE

g ov e r n a n c e  acto r s  a n d  p o l I cy - r e l at e d  f I n d I n g s
Introduction and context
drawingonourinterviews,thischapterexamines
thenatureofrecentattempts,atsub-national
levels,toorganisebothdirectpublicsupportfor
inwardinvestment,andtoproviderelevant
economiccoordination,particularlyinthelabour
marketandhumanresourcearenas.
theuk,asiswellknown,isaliberalmarket
economy(hallandsoskice2001),particularlyin
aneucontext.Inotherwords,thecoordination
ofeconomicactivityislargelyamatterforthe
hierarchiesofprivate-sectorfirms,ontheone
hand,andrelativelylightlyregulatedproductand
financialmarkets,ontheother.Incomparisonto
itseuneighbours,theroleofthestate–national
orlocal–orofcivilsocietyactorssuchas
businessassociationsortradeunionsinactive
economiccoordinationisrelativelylimited.
thecountryhaslongbeensuccessfulin
attractinginwardinvestment.historically,thishas
beenduetotherelativelyopennatureofits
economy,andcloselinkstotheunitedstates.
fromthe1980s,itwasalso,asanearlymoverin
theeuropeanmarketforfdI,abletoattractfirms
onthebasisofaccesstotheeuropeansingle
market,labourmarketflexibility,weakenedtrade
unions,and,atthetime,lowlabourcostswithin
thepre-expansioneuropeancommunity.the
globalisationandderegulationoffinancealso
entrenchedlondon’spositionasaworldcity.
theukcontinuestobeanattractivedestination
forfdI,formanyoftheabovereasons.however,
themarketplacehasbecomemuchmore
competitive.thisisnotonlybecauseofthewell-
knownopeningupoflower-costcountriesboth
ChAPTEr 2:
insideandoutsidetheeu,butalsobecauseof
anincreasedconcentrationonattractinginward
investmentinthecoreeucountries,particularly
germany.
Inthislight,someofthedifficultiesaliberal
marketeconomyfacesincoordinatingthe
provisionofwhataretosomeextentcollective
goods,suchasskillsprovision,potentially
becomemoreofabarriertoattractinghigh
qualityfdIwiththepotentialtosupportlocaland
regionaldevelopment.
england,despitebeingonaggregatetherichest
countryoftheuk,alsohassubstantialregional
disparitiesineconomicperformance.according
toeurostat(2007),gdpperinhabitant,as
correctedbypurchasingpowerstandards
(pps),was197percentoftheeuaveragein
london,and124percentinthesoutheast
statisticalregion,butbelowtheeuaveragein
thethreenorthernregionsandthewest
midlands.
statepowerinengland,ishighlycentralised,in
comparisonwithalmostanyotherdemocracyof
comparablesize.Inparticular,‘regional’
governancepolicy(ieanythingabovelocal
authoritylevel)islargelyinwestminsterhands,
and,giventhemajoritariannatureofthe
westminstersystem,vulnerabletochangesin
nationalgovernment,asrecenteventshave
illustrated.
Change and instability of sub-national
policy and institutions
newlabourandtheconservatives,while
sharingabroadlyliberaleconomicpolicy,differin
PAGE | FOUr
twoimportantrespectsrelevanttothisresearch,
bothofwhichmanifestedthemselvesinthe
periodduringwhichthefieldworkwas
conducted.
first,newlabour,fromitsarrivalinpowerin
1997,hadrelativelymoretendencytocreate
institutionsdealingwith‘marketfailures’,ie,
situationswheretheprivatesectorisnotseenas
capableofconstructinganefficientmarket
withoutintervention.second,labourisrelatively
moretolerantofregional-levelgovernancethan
theconservatives.scottishandwelsh
devolutionwereinitiallyseen,byatleastsome
ministers,asleadingtoapotentialdemandfor
someformofregionalgovernmentinengland.
foracombinationofthesereasons,newlabour
createdregionaldevelopmentagencies(rdas)
coveringtheninegovernmentofficeregionsin
1998.theirroleasinwardinvestmentagencies
isexaminedbelow.morebroadly,thesenon-
departmentalagencieshadstatutory
responsibilitiesforfurtheringeconomic
developmentandre-generation,promoting
businessefficiencyandcompetitiveness,
promotingemployment,enhancingthe
developmentandapplicationofskillsrelevantto
employment,andcontributingtosustainable
development.mostoftheirrolewasasa
coordinatingagencybetweenexistingpublic,
privateandthirdsectorbodieswithintheirregion,
or,usingolderlanguage,as‘enablingauthorities’.
theseresponsibilitieswerebroughttogetherin
therequirementtoproduceregionaleconomic
strategies.
theseagenciesbothdrewtheirfundingfrom,
andreportedto,centralgovernment.regional
assemblies,madeupmostlyofrepresentativesof
localgovernment,alsohadaroleinthescrutiny
ofrdas.howeverthesedeclinedininfluence
followingtherejectionofadirectlyelected
assemblyinareferenduminthenorth-east,and
wereeventuallyabolishedbythelabour
government.
rdasthereforerepresentedafairlycentralised
formof‘regionalisation’–theirresponsibilities
andtargetswereset,andboardmembers
appointed,bynationalgovernment.Boards
consistedofindividualsfromtheprivatesector,
localauthorityrepresentatives,andother
miscellaneousindividualsfromcivilsociety
organisations,nominatedandappointedin
personalcapacities.
rdaswereabolishedbythecurrentcoalition
government.asgovernmentofficesforthe
regionswerealsoabolished,thislefttheenglish
regions(otherthanlondon)withoutany
intermediate-levelgovernmentalstructuresto
speakof.localenterprisepartnerships(leps),
whichcoversmaller,self-determined
geographicalareas,werecreatedtofoster
strategiccooperationbetweencombinationsof
localauthoritiesandtheprivatesector.thesedo
nothavestatutoryobligations,meaningthattheir
precisescopeofactivityandfocusdiffersfrom
placetoplace.despiteasuccessionof
announcementsofcentralgovernmentfunds–
suchastheregionalgrowthfund-towhich
lepscanapply,theirtotalfundingremainsmuch
smallerthanthatoftherdas.
priorto2011,bothrdasanduktIwere
responsiblefortheattractionofnewinward
investment.‘leads’couldbegeneratedfrom
eithersource,andbothwereinvolvedin
investmentmarketingoverseas.rdaswould,
whetherdirectlyorthroughcontractedproviders,
alsoprovideanaftercareor‘investor
development’serviceforlargeemployersintheir
region,includinginwardinvestors.thisincluded
sitevisits,attemptstobrokerrelationsbetween
inwardinvestorsandotherbodieswithinthe
region(egskillsagencies),etc.thelargest
inwardinvestorswerealsoaccount-managedon
behalfofcentralgovernmentthroughuktI.
finally,localauthorities–orsometimes
combinationsoflocalauthorities–fundedinward
investmentagenciesofvaryingscopeatamore
locallevel.
thecurrentsituationisthattheattractionof
inwardinvestmentisprimarilytheroleofuktI,
throughanoutsourcedcontractdeliveredbya
consortiumconsistingofpaconsulting,oco
consultingandtheBritishchambersof
commerce.localauthorities,eitherindividually
orincombination,remainfreetoretaintheirown
inwardinvestmentagencies.Inprinciple,
however,‘leads’areintendedtobeshared
betweensuchagenciesanduktI.Intermsof
aftercare,thelargestforeigndirectinvestorsare
accountmanagedonanationalbasis.In
england,therefore,theregionallevelofinward
investmentefforthasbeenremoved(the
contactordoesmaintainitsownofficesinthe
regions,consistingpartlyofformerrda
employeestransferredundertuperegulations,
buttheregionassuchformsnopartofthe
structure).
alongsidetheirexperimentinregional
government,thelabourgovernment,likeits
predecessors,continuedtheukpatternof
frequentreformstothevocationaltraining
system.forexample,aconcernwith‘lifelong
learning’ledtothereplacementoftrainingand
enterprisecouncils–localbodiesresponsible
forskills,themselvesonlyestablishedinthelate
1980s–withalearningandskillscouncil
(2001),responsiblebothforyouthfurther
educationandforadultlearning.thisbodyhada
PAGE | FivE
substantialregionalpresence,workedclosely
withrdas,andwasimportanttoemployers
seekingfundingfortheupskillingofworkforces.
however,ascandalconcerningthemanagement
offurthereducationconstructionprojectsledto
theabolitionofthisbodyin2009,andits
replacementwithaslimmed-down,nationally
focussedskillsfundingagency.
Regions and FDI under the RDA regime
Inboththeirlocationmarketingandinvestor
developmentwork,therdasforboththe
regionsweinvestigatedattemptedtofocuson
sectorsortechnologiesinwhichtheregionwas
seenashavingspecificcapabilities.thiswas
sometimesalliedwithtargetingspecific
locations,attemptingtogeneratecluster-type
effects.similarly,therewasadegreeof‘supply-
chainmarketing’,ieestablishingpossibilities
affordedtopotentialnewinvestorsbythe
presenceofforeignmultinationalsorlargeBritish
firmsatthetopofsupplychains.particularlyin
thenorthernregion,organisedsectoral
associations,part-fundedbytherda,actively
soughttoattractfirmsintospecificperceived
regionalgapsinlargefirms’supplychains,as
wellasimprovingtheabilityofindigenousfirms
tocompetewithinthem.whilerdaswouldwork
withinvestorswhoexplicitlysoughtlocationin
theregionforreasonsconcernedwithmarket
structure-particularlyindeprivedareas-they
generallyattemptedtoconcentrateonsecuring
relativelyhighvalue-addedinvestment,givenone
ofthemaintargetstheyweremeasuredagainst
bynationalgovernmentwasincreasingregional
grossvalueadded(gva).
Investordevelopmentworkwasanimportant
focusofactivity.thisconsisted,atabasiclevel,
ofbeing,inthewordsofonemncmanager:
...a kind of umbrella for a lot of the other
agencies which are going to help with the activity
we’re going to do
alotofsuchworkwasroutine,comprisingsite
visits,reportingonissuesraised,dealingwith
thesewherepossiblethroughbrokeringrelations
withotheragencies,andcompilingrelevantdata
bothtoinformregionaleconomicstrategies,
andtofeedbacktonationalgovernment.some
rdasclaimedtogowellbeyondthis,however.
Inthenorthernregion,afunctionalsplitwas
madebetweentraditionalaftercare,i.e.dealing
withday-to-dayoperationalissues,andmore
‘strategic’work,
...about challenging a company, where are you
going to be in five or ten years’ time (inward
investment manager)
thelatterbeingorganisedthroughasectoral
approach.themanagerexplainedthelogicof
thisthroughanexample:
Hitachi made TVs in North Wales. And one day it
closed, and everyone went “Ugh!”, and four, five
hundred people closed [sic]. Well if you’d known
the sector, you’d have known that cathode-ray
tube televisions were on their way out,
everybody was buying flat-screens, but nobody
actually challenged Hitachi in that factory, how
they were adapting to the new technology.
Nobody said, where are you going to be in four,
five years time, and actually plan to either
downscale that plant, so there’s a managed
closure, or to look to work with Hitachi to
actually bring in new technology. So I think the
sector approach does allow you to have those
very informed discussions on where those
factories are going.
theextentofinvestordevelopmentworkdiffered
betweenregions,fromattemptstocreatea
strategicapproachindicatedabove,to
outsourcingthisworkinaminorityofrdas(not
thoseunderdirectinvestigationhere),while
keepinginitialinvestorattractionin-house.one
problem,inaverytarget-drivengovernance
structure,wastheintangibilityofinvestor
developmentwork,meaningthisareawasoften
deprivedofabottom-lineinintra-rdacontests
overresourceallocation.Inthewordsofan
inwardinvestmentmanagerinaregionwhichhad
outsourced:
Inward investment is a very tangible activity, you
can see a new company coming in, you can see
the 100 jobs associated with all of that...Investor
development was much more intangible, you
have worked with a company that’s already here,
what have you actually done to help them?
therewereinstanceswhererdaintervention
hadbeencentraltotheattractionofnewor
replacementinvestment,andwherethedomain
ofskillshadbeenimportantinthis.onelarge
project,involvinganautomanufacturerand
analysedinmoredetailinchapter3,involved
skillsupgradingatbothbasicandmore
advancedlevels,notonlywithinthesubsidiary
unititself,butalsoacrosslocalsuppliers.this
wascloselytailoredtotheneedsofthe
subsidiaryincompetingwithoverseasplants,
withthetrainingpackagefittedaroundcompany
practicesandshiftpatterns.rdaofficerswere
alsoco-responsibleforwritingasuccessfuleu
fundingbid.
however,themncunitabovewasunusualboth
foritssize,andthefactthat,forstructural
reasons,uksubsidiarymanagershadtobe
committedtoparticipatinginbiddingfornew
modelsinordertosecuretheviabilityof
productionfacilities.theprocesswas,inthis
case,alsopredictableenoughforsubsidiary
managerstobegintoprepareastrategysome
yearsinadvance.theskillsdomainwasalso
seenasoneofthefewareasinwhichachieving
theparentcompany’saimofarapidmovetofull
productionofanewproductlineatminimum
costcouldbeinfluenced,asothercostswere
largelyfixed.Itisalsoarguablyeasier,inthistype
offirm,tomakethecasethatensuringthe
PAGE | Six
upskillingoftheworkforceandofsuppliershas
widerbenefitstothelocaleconomy,thus
deflectingquestionsaboutlargesubsidiestoan
individualmnc.regionaldevelopmentbodies,in
thiscase,didhelpsecurerelativelywell-paid
employment,alongsidelocalskillsactorsand
interactionswithnationalgovernmentandtrade
unionleaders.
elsewhere,therewereanumberofcaseswhere
rdasweresignificantactors,eitherdirectlyoras
brokers.theseincludedensuringskillssupplyfor
newinvestors,orforexistingfirms,by
coordinatingskillssupplywithregionalskills
actorsandotherlocalfirms.theyalsosometimes
actedasbrokersbetweenmncsandhigher
educationinstitutions,particularlyaroundspecific
projectsaimedatbuildingupalocallabourforce.
theyweregenerallyrecognisedasaregional
interlocutorinthecaseofthreatsof
disinvestment,andasbrokersinmanagingthe
redeploymentofworkersmaderedundantby
largemncs.Importantly,therdas’roleasa
brokerforavailableeufundingmadethem
significantactorsintheeyesofmanagersof
largesubsidiaryoperations.
generally,thereactiontordaswasfairly
positiveamongthelargestinvestorsinterviewed,
whosawitasusefultohavea‘local’partner.
views,though,wereoverwhelminglynegative
amongmanagers/directorsofsmallermncunits.
Insomecases,mncrespondentswerehighly
criticalofrdas,and/orsaidthattheyhadhad
littleornointeractionwiththem,evenwhererda
intervieweeshadhighlightedinvestor
developmentworkwiththem.Itispossiblethatin
somecasesthismayhavebeendueto
misunderstandingsabouttheremitofrdas,or
managers’unrealisticexpectationsaboutwhat
supportcouldlegallybeofferedtoindividual
firms.
RDAs as broader business system actors
asstated,oneofthemaindriversbehindthe
creationofrdaswastocorrect‘marketfailures’.
Itisimportanttonotethattheinwardinvestment
professionalswithinrdasplayedasubstantial
roleinthis.
Investordevelopmentmanagerspresenteda
numberofexampleswheretheiraftercareduties
hadledtotheaggregationofskillsdemands,
sometimescorrectingverybasicfailuresoffirms
tocoordinatecollectively.forexample,onone
sitevisitedbyanaftercarerepresentative,one
largebiotechmncinthemidlandscomplained
aboutstrugglingtofindintermediatelevellab
technicians,askillsetforwhichtherewasno
appropriateapprenticeshiporsimilar
qualification.rdaemployeescontactedother
biotechandhealthcarecompanies,foundsimilar
problems,andcoordinatedworkshopsbringing
togetherhrmanagers.thishelpedtocreatean
aggregatepictureoftherelevantskilldemand.
theresultwasthedevelopmentofadiploma-
levelqualificationwhichisnowavailableforthe
industry.asimilarcase,moresurprisinginthat
thelargefirmsconcernedwerealllocatedwithin
averytightgeographicspace,wasreportedby
aneconomicdevelopmentmanagerinthenorth;
Now the advantage of, if you like the sector
approach is, Company A said to us, with their
investment skills was a major issue. They had to
upskill...and they wanted to put in certain
processes. We said well actually we’ve been
talking to Company B, and ...to Company C as
well, that have exactly the same issues as you
around this, we will look to fund a cross-
company training programme, if those
companies support it as well, if they put some
funding in it...That actually benefited three or four
biomed companies in (the same industrial
estate) because they all had the same issues.
Now they weren’t talking to each other, but
because our sector team was key account
managing three or four of them, we could draw
out those common issues.
thissortofinterestaggregationismoreformally
theroleofsectorskillscouncils(sscs)–
‘employerled’,butmostlystate-funded,bodies
whichareintendedtobethestrategicskills
bodiesrepresentingsectors,establishing
qualificationframeworksandinfluencingnational
governmentpolicy.thesehaveanational-
sectoralscope,butalsohave(scattered)regional
representativeswhoseektoaggregateneedsat
local/regionallevels.Inwardinvestmentmanagers
wouldthereforealsoattempttoactasabridge
betweenthemncandtherelevantssc:
We’ll bring the SSC into them to get a view as to
what the specific challenges are for their
business and how they can engage with
ensuring that future provision meets their need
rdas,againtodifferentextents,also
encouragedsystematicemployercoordination
throughtheestablishmentorre-invigorationof
regionalsectoremployeralliances,aimingto
developandexploitingregionalexpertise,inorder
thatregionalfirmsmetthestandardsoflead
firmsinglobalproductionnetworks.Inatleast
somecases,theseappeartohavehadsome
successinachievingregionalupgradingin
supplychains.
finally,rdashadskillsdirectorates,with
responsibilitiesforcoordinatingrelationshipswith
localskillsnetworks,includingjobcentres,skills
agencies,universities,localauthorities,etc.
theseweretargetedatawiderangeofgoals,
includingissuesaroundemployabilityandsocial
inclusion,andwhatinwardinvestmentmanagers
sawasthe‘smeagenda’,aswellas
productivity/investment.overall,fouroutofthe
ninerdashadskillsdepartmentswhich
structurallyweresituatedwithinthebroadareaof
economicdevelopment,whileskillssectionsof
theremaindersatmorewithindirectorates
PAGE | SEvEN
dealingwitha‘communities’,orsocialinclusion
agenda.
perhapsbecauseofthis,rdasdiffered
considerablyintheextenttowhichskills
directoratescoordinatedwithaninward
investmentagenda.Inoneregionunderdirect
considerationhere,inwardinvestmentmanagers
didnotworkcloselywiththeirskillsdirectorate,
preferringtodealdirectlywithregionalskills
actorsontheground(e.g.theformerlearning
andskillscouncil,sectoralskillscouncils).the
sometimeslowevaluationofthecompetenciesof
skillsdirectoratesiscapturedbyaquotefroman
investmentmanagerinaregionoutsideourdirect
remit;
We do have skills people internally that we
would work with, but we would tend to go to real
industry experts
Inanotherregion,though,theskillsteamwas
activelyinvolvedindealingwiththeskillsneeds
ofspecificinvestors,aswellashavingwider
strategicresponsibilities.thisinteractionwas
seenasimportantinsecuringthenewauto
investmentreportedabove.
Specific problems of RDAs
withinthearenasinourremit,itisdifficultto
reachclearconclusionsonthedegreeof
successofrdas.theyclearlydidhelpto
mitigatesomemarketfailures,andtoattractand
retaininwardinvestment.however,theyalsohad
anumberofspecificproblems,whichare
importanttoconsiderbothinapolicydebate,
andincontemplatingthewiderissueofthe
constructionofcompetitivenesswithinregions
underglobalisation.
oneproblemwasthelackofeconomic
functionalityofregions.theareaswhichthe
rdaseventuallycoveredwere,intermsof
population,typicallyverylarge,andclearlydidnot
coincidewithlocalorcityregionlabourmarkets.
thecitiesandsub-regionswithinthemoftenhad
differentskillssetsandeconomicstrengths,with
‘clusters’thatwouldinevitablyattractcertain
kindsofinvestment,andhaddifferenteconomic
andlabourmarketproblems.furthermore,in
spiteofthesizeoftheregions,commutingareas
inevitablycutacrossthem.forexample,the
scarcityofrelativelywell-paidmanufacturingjobs
ledtocommutesof50-70kmbeingcommonin
thelargestplantswevisited,meaningfirmshad
substantialnumbersofproductionemployees
fromoutsidetheirregions.theseproblemswere
exacerbatedinareaswithweakregionalidentity.
althoughwecannotdemonstratecausality,there
arestrongindicationsthatregionalgovernance
developedmorestrongly,andwithmore
employersupport,innorthernregions– where
therewassomecoincidencebetweenrda
boundariesandgeographicalidentities– thanin
thesouthernhalfofenglandwhere,broadly,any
sortofregionalidentitywasveryweak.asone
localinwardinvestmentprofessionalnow
workingaspartofalepargued:
At a regional level the RDAs never managed to
convince (large MNCs) to be involved...because
they didn’t recognise that artificial
geography...where we can influence them to get
involved...is by saying most of their
workforce...are local people. And I think that’s
where we need to engage with them and say
well what are your future skills needs...I think
they found it difficult with RDAs to get that
because...it was never an economic functional
area, the needs of (the extreme south of the
region) compared to those in (the extreme north)
are completely different
partlybecauseofthis,therewereproblemsof
fragmentationofdelivery.rdas’activity,in
inwardinvestmentandinotherareasrelatedto
economicdevelopment,includingskills,was
supplementedbyworkinlocalauthorities.
althoughintheorytheco-constructionof
regionaleconomicstrategies,andtheexistence
ofsub-regionalpartnershipsundertheaegisof
rdas,meantthattheworkofthevariousactors
involvedwasco-ordinated,inrealitythiswasnot
alwaysthecase.particularly,intra-regional
contestsforinvestmentledtoinwardinvestment
managersinsomepowerfulsub-regionsseeking
toappropriatesomeoftheresponsibilitiesofthe
rdas.this,alongsidethecomplexsub-
contractingrelationshipsbetweenrdasand
sub-regionalbodies,ledtoconfusionamong
private-sectormanagersaboutpreciselywhom
theyweretalkingto:
There seem to be all these layers that I’ve never
quite got my head round. I think there’s a city
one, there’s a (sub-regional) one and then
there’s (the RDA) and I can never quite work (it)
out (Subsidiary managing director, MNC)
multiplicityofdeliverywasalsobuiltintothe
relationshipbetweenrdasandthenational
investmentagencyuktI,whichwereco-
responsibleforattractinginvestment,andforthe
largestinvestors,foraftercare.rdamanagers
weregenerallycriticalofuktI,claimingthatthe
investmentreachingnon-metropolitanregions
fromuktIwasgenerallysmall-scaleandlow
value-added.uktI’sinwardinvestmentworkwas
notregionallytargeted.thismeantthat,inthe
eyesofregionsoutsidethesouth-east,the‘easy
sell’ofthelondonmarketmeanttargetscould
bereachedwithoutbenefitingotherregions
sufficiently.therewerealsoconflicts,both
aroundcostandthedangersofrepeatingauk
‘message’,overtheextenttowhichregional
bodiesshouldhaveofficesortraveloverseasto
attractinvestment.
finally,theprocessof‘centralisedregionalisation’
throughwhichtherdasweresetup,combined
withthewithdrawaloftheideaofdemocratic
regionalassemblies,meantthatthepolitical
legitimacyofrdaswasrelativelyweak.
PAGE | EighT
General problems of coordination
rdasthenhadanumberofproblemswhich
werebuiltintotheirinstitutionalconstruction.
however,mostoftheproblemsofcoordination
facedintryingtofosterhigh-skills,highvalue-
addedregionaleconomies–boththrough
inwardinvestmentandmoregenerally–have
littletodowithhowsub-nationaldevelopment
agenciesareconstructed.Itisalsonecessaryto
considerthemoregeneralinstitutionallandscape
withinwhichenglishregionalbusinesssystems
operate.
fromourinterviews,themostobviouspointis
thatinstitutionalinstability,bothofskills
institutions,andmorerecentlyofeconomic
developmentagencies,posesseriousproblems
tocoordination.thiswasanalmostuniversal
complaintfrombothgovernanceandmnc
actors:
I would like a period of stability, I would like a
period whereby we all knew what was available,
(and) how to get hold of what was available. And
by that I mean cash and training, and
qualifications. Qualifications are constantly
changing, we have NVQ down to QVC. So I
would like a period of stability so we can go in
this direction, go on one course and stay there
for a while and consolidate...Rather than just
change again, let’s get something that we all
think is the right thing to do and stick with it for a
while.” (Training Manager, auto manufacturer)
Because it is, it’s alphabet soup, it’s like make
your way through a labyrinth basically. Now if
we can hide the wiring and just get the right
people in at the right time to do the right things
with that company, so much the better. And
that’s essentially what we’re trying to do, it’s
certainly what I’m trying to do anyway because..it
is totally confusing. And when I used to work at
an employers’ association and we had member
companies, member companies would ring me
up and say what the hell is happening, how the
hell do I get to all this, can you help me get
through this maze.(Sector Skills Council
Regional Business Partner).
So it’s so complicated, and there are so many
different pots, that people try to make it more
efficient by getting these private contractors
involved in delivering, but it does hamper that
coordination and it does make it challenging at
times to really coordinate that recruitment and
training provision. (Inward Investment Manager)
thisconfusionofinstitutionsandagenciesmade
thebrokerageroleofrdainwardinvestment
professionalsparticularlyimportant.
anotherissueisthatmanymncmanagerstend
toemphasisethattheirskillrequirementsare
‘firm-specific’.thisisobviouslylikelytobethe
caseinsomespecialistcases.Butgivenfirms
areslowtoengageeachotherintheskills
sphere,itisatleastpossiblethatsomeskillssets
areinfactsomewhatmoregeneral,oratleast
related,thanoftenportrayed.
sectorskillscouncils,whicharenationally
licensedtosendandactuponcoherentdemand
signals,arethemselvesunder-resourced,
particularlyatregionallevels,meaningthatthey
...lack the granularity at regional and sub-regional
level...in order for it to make sense so providers
can deal with it (Skills Director, RDA).
Insomecases,seniormncmanagersthatsat
onregionalboardsclaimedthattherewaslittle
activityatthislevel,althoughemployerswith
nationalclouthadbeeninvolvedwithsscsin
settingnationalqualificationstrategies.while
intendedas‘business-led’institutions,theprivate
sectorhascontributedmuchlesstotheirfunding
thanwastheoriginaltarget(seepayne2008).
theyarealsolicensedbygovernmentonafive-
yearlybasis,perhapsmakinglong-term
commitmentsdifficult.
thispatternof‘business-led’institutions,with
targetsservicingtheinterestsofprivatefirms,but
fundedlargelybythestateandwithlittleemployer
buy-in,issymptomaticofwiderproblemsof
coordinationintheuk.sub-nationalinstitutions
canonlydolimitedamountstoamelioratethese.
therehavebeenreportedcaseswhere,witheu
funding,largefirms(nissaninthenortheastis
oneexample)havecollaboratedwithanrdato
organiseskillsupgradingthatwentbeyondthe
immediatesupplychain,butthesearevery
isolated.generally,weakemployerassociations
oftenmeanthatlittleisdonetorectifyskillssupply
anddemandproblemswithoutstate-sponsored
intervention.
The emerging context
whatofthenewarrangementsunderthe
coalitiongovernment?Itisnotnecessarilyeasy
toseparateoutadiscussionofthepotential
meritsofthenewinstitutionalset-upfromissues
offunding.also,ourresearchcoincidedwitha
setofchangeprocessespubliclydescribedby
theministerresponsibleas“somewhatmaoist
andchaotic”,meaningcommentsatthisstage
areinevitablysomewhatspeculative.
Ininwardinvestmentterms,thenationalcontract
foruktIisstronglybasedaroundtheideaofa
“ukfirst”proposition.thereisacontractual
targetforthenumberofnewinwardinvestment
projectsin“englandoutsidelondon”(i.e.the
partsoftheukwithoutasub-ukgovernance
structureforeconomicdevelopment).Beneath
this,therearenoregionaltargets(indeed,
‘regions’arenotrecognisedwithinthestructure).
somerespondentsarguedthattherewere
advantagestoamorenationalstructure.these
areprimarilyinaligning‘offer’tocorporateneed.
PAGE | NiNE
accordingtooneinwardinvestment
professional:
We had a project...and they were looking at the
North West, they were looking at the North East
and something in Wales. So (for) the first time
we could sit down with them and have a
conversation about their investment plans for the
UK and we could actually get information, if
you’re going to do this in one region how does
that impact your investment decision in the other
and, you know, what’s the plans, what’s the
funding. You couldn’t do that previously because
(of being very regionally focussed)”.
equally,oneinwardinvestmentmanagerfora
largecitywasrelativelyoptimistic,arguing,
perhapsreflectingearlierconflicts,thatmuch
rdainwardinvestmentworkreplicatedlocal-
levelefforts.
others,however,weremuchlesssanguine.one
inwardinvestmentmanagerarguedthatonly
threeofthelocalauthoritiesinhisregion“would
have any service of any degree of scale and
professionalism”.Intherest:
...it would be part of somebody else’s job that
does it almost as a part time resource, rather
than a dedicated high profile inward investment
team
Indeed,anumberofintervieweesinlocaland
sub-regionalauthoritiesinperipheralsub-regions
wereverypessimistic.whilethemajorcity
regionswillcontinuetofundinwardinvestment
efforts,andbecapableofensuringthattheyare
inthemindsofnationally-targetedcontractors,
respondentsoutsidelargecitiessuggestthat
bothfundingandcapturingtheattentionofa
nationalcontractprovideraredifficult.
otherconcernswiththenationalcontractual
arrangementincludedissuesaround
‘memorandaofunderstanding’betweenthe
nationalproviderandlocalinwardinvestment
bodies–thatis,themechanismsbywhich
investmentleadscreatedbylocalagenciesare
sharedwithuktI–andtheissueof
aftercare/investordevelopment.thenational
contractprovidesforinvestordevelopmentwork,
butresourcesarerelativelythinlyspread,andthe
difficultiesinintegratingsuchworkwithina
target-drivenculture–aproblemundertherda
regime,asmentionedabove–arelikelyif
anythingtobecomemoreproblematicundera
private-sectorcontract.
theprospectofalocalised‘patchwork’islikely
toexacerbateproblemscausedbycentralising
centrally-fundedinvestmentsupportnationally,
leadingtoasubstantialriskofincreasedregional
(andintra-regional)inequalityinthedistributionof
investment.fornewinvestment,thedangeris
thatnationalplayerswillseeregionsashaving
nicheofferingsonly,basedonexistingperceived
clustersorsectoralstrengths.thisisaproblem
becauseitrisksinsufficientattentionbeenpaidto
localneeds,suchasreplacinglostinvestment
withnewfdIofsimilarorbetterquality.Italso
ignoresthefactthatmncsdonotalwaysseek
tolocatein‘clusters’–indeed,ourinterviews
provideevidenceof‘anti-clustering’inplaces,
reflectingforexamplethedesiretoaccess
cheaperorunder-exploitedlabourpools.
whilelepsarenotrequiredtoprioritiseinward
investment,inmanycaseslocal/sub-regional
economicdevelopmenteffortshavebeenre-
configuredaroundthelepstructure.thisis
primarilybecausemuchoftheavailablefunding
ischannelledaroundlepsasinstitutions.thus,
inthemajorityofcases,lepsareexpectedtobe
thelocalinterlocutorstothenationalinward
investmentservice.theyalsoattempttotakeon
somewiderelementsofformerrdawork,as
locally-determinedprioritiesandfundingpermit.
lepsdo,itisargued,oftenmapontolabour
marketareasmoreaccuratelythanrdasdid,
andaretheresultofvoluntarycombinationsby
localauthorities.however,theirresources–
particularlyintermsofinfrastructure–willremain
limited,andintervieweesreportedconcerns
aboutwhethertheycouldgobeyondbeing
‘talkingshops’,andwhethermanagersof
prominentlocalfirmswerelikelytoparticipate.
fromanevidenceofthelepboards,evidence
sofarismixed(seealsochapter3).manylocal
governanceactorsseemedtobeengagingwith
leps,fautedemieux,withoutanygreat
enthusiasm.thereactionsofmncmanagers
anddirectorstolepsarecoveredindetailin
chapter3,butthelackofaclearregional-level
interlocutorisclearlyseenasaproblembysome
majorinvestors.
weshouldalsonotneglectthefactthatarguably
themainroleofrdaswasasachannelfor
fundingeffortsatthecoordinationofregional
economies.thereisclearlyarisktoexisting
institutions,suchascluster-typebodies,where
thesewerecreatedwith(orinsomecases
reinvigoratedby)rda-brokeredfunding.
whethercluster-typebodieshaveestablished
sufficienttrackrecordamongtheirprivatesector
co-funders–andcanovercomefree-rider
problemssufficiently–tothrivewithoutpublic
supportisuncertain.equally,without
infrastructurefundingfromaparticularregion,
managersofsuchalliancesarenolongerunder
anyobligationtodirectlyaidinwardinvestment
efforts.thosewhichhavea‘product’whichcan
sellonthemarketareaslikelytosellitoutside
theirgeography(includingoutsidetheuk)as
inside.
thetransitionfromrdastolepsisunlikelyto
affectallpartsofthecountryinthesameway.
someintervieweeswithaperspectiveonthe
nationalperspective,forexample,arguedthatthe
formsofpublic-privatecollaborationenvisaged
underlepsalreadyexistedinnortherncities,
whichhavelong-standingtraditionsofmunicipal
collaborationwiththeprivate-sector.thismay
PAGE | TEN
meanthatlepsinsomepartsofthecountryare
solvingaproblemwhichdoesn’treallyexist.
accordingtoonerespondentinacentral
governmentdepartment:
So there is a history in (the North) of local
authorities and the private sector working
together, which is not the case in other parts of
the country, it is in some parts but not in all the
parts. And therefore, you know, if you go down
to the South you’ll probably paradoxically in
some ways find more enthusiasm for LEPS
down there than you will in the North because
down in the South, this is a gross simplification
but I think it has an element of truth, the LEP
gives the private sector the ability to influence
local authorities, which it didn’t have before.
That’s not an issue in the North, that’s always
been there
finally,ourukresearchconcentratedonenglish
regionsoutsidelondon.clearly,therearenow
substantialdisparitiesintheextentof‘sub-
national’(orsub-uk)governancewithintheuk,
givendevolutioninscotland,walesand
northernIrelandontheonehand,andthe
abolitionofrdasontheother.Ininterviews
conductedtowardstheendofourresearch,this
hadbecomeaconcernofanumberof
respondents.accordingtooneinward
investmentprofessional:
Originally London was going to be into the
national delivery but Boris Johnson kicked off
and made a case for London being a special
example and therefore it’s exempt and he got
London and Partners. Well if (the national
model) is good enough for the rest of England,
why is it not good enough for London? Why are
the devolved administrations allowed to do their
own thing? If they can make a special case for
London and Scotland, Wales, wherever it is, to
be exempt, why can’t the northern regions or
Manchester or Birmingham…
Conclusions
examiningtherelevantsub-nationalgovernance
structuresoveraparticularlyunstableperiodof
time,anumberofpointscanbemade:
Iftheaimistomaketheregionsofenglandan
easyplacetodobusiness,ithastobe
recognisedthattheinstitutionalenvironment,
whileplacingrelativelyfewconstraintsoninward
investors,iscomplex.Ifsecuringinward
investmentisdependentuponsecuringpositive,
institutionally-derivedadvantagestolocations,
thereisaneedforbrokersofsomekindbetween
theprivatesectorandtherangeofgovernance
actorsinvolvedatlocalandregionallevels.while
therdasdidnotalwaysworkperfectlyinthis
regard,itisnotatallclearhowtheirrolehas
beenreplaced.
thereisprobablynoperfectanswertothe
questionofwhatgeographicallevel(s)sub-
nationaldevelopmentagenciesshouldbeat,in
ordertobestmanagewhatoneofrespondents
termed“theflexibleeconomicgeographyof
inwardinvestment”.anyattempttodrawlocalor
regionalboundariesaroundwhichsub-national
activityistobefocussedisalwayslikelytocreate
problemsofidentifyingboundaries,andof
accordancewiththegeographicidentitiesofthe
publicandofrelevantsub-nationalactors.
equally,betweenlocal,regionalandnational
agencies,thereisalwayslikelytobeeithera
degreeofreplication/redundancy,orgapsin
provision.thisisparticularlythecaseinengland,
giventherelativeweaknessofregionsasafocus
ofidentityorofcivilsocietyactivity.however,a
nationalinwardinvestmentagency,working
withoutregionaltargets,islikelytoexacerbate
regionalinequalitiesinthedistributionofquality
inwardinvestment.locally-ledlevelinward
investmentactivitycanberelativelysuccessfulat
inthelargestprovincialcities,whichbenefitfrom
greatertotalresourcesanda‘brandname’.the
difficultiesforperipheraltownsinapost-rda participationingovernanceinstitutions(skills
environmentarelikelytobemuchgreater. bodies,lepsetc)shouldideallyinvolvedecision-
makingonrelevantmatterswithinaframework.
theregionallevelofcoordinationwaswithdrawn forlepstoachievesuccess,bothwithregardto
withoutsufficientconsultation,includingoflarge inwardinvestmentandmoregenerally,theyneed
inwardinvestors.clearlysomeeconomic tofindwaysofcoalescingaroundprojectsin
challengesrequirecoordinationatlevelsbetween whichprivate-sectormanagersandotherscan
thegeographicalscaleofthetypicallepandthe participatefromatask-based,ratherthan
englishnationallevel.regional-levelcoordination primarilycommittee-based,startingpoint.finally,
undertherdamodelhadrelativelymore fundingforthecoordinationofeconomic
supportinthethreenorthernregionsthaninthe developmentcannotonlybeproject-based.
restofengland.whetherthisisrelatedtothe withoutinfrastructurefunding,thepossibilityof
greaterresourcesofrdasinpoorerregions,to developingofinstitutionalcapacitysuchthatit
thedifferentissuesfaced,tointernal cancreatemultipliereffectsislikelytobelimited.
organisationalissues,ortomattersofregional somesucheffectsworkonarelativelylongtime-
identityisunclear.Itisthoughpossiblethatthe scale,andarenothelpedbycontinualradical
formsandlevelsofregionalcoordinationrequired institutionalchange.
differbetweenregions.anyfutureattemptto
createsupra-localstructuresthereforeneedsto
beconstructedonthebasisofwhat
local/regionalactorsseeasdesirableand
necessary.
fromtheperspectiveofmorerecent
respondents,englishregionsthatcompete
directlywiththedevolvedadministrationsfor
investmentfaceparticulardifficulties,giventhe
devolvedadministrations’enhancedrelative
capacitytocoordinateactivitiesaroundinvestor
attractionanddevelopment.peripheralregionsof
englandthereforefacethedoublechallengeofa
“ukfirst”fdIpropositionfavouringareasclose
tolondon,andanincreasedchallengefromnon-
englishgeographiesattheirborders.
twofinal,moregeneralpointsshouldbemade
onthenatureofeconomicgovernance.first,
Britainhasdevelopedatraditionof“business-
led”(butlargelystate-funded)governance
institutions,withlittlegeneralemployerbuy-in.It
needstoberecognisedthatitisunrealisticto
expectsubstantialemployer-ledcoordination
whereinstitutionalremitsarevague.employer
PAGE | ELEvEN
PAGE | TwELvE
 ChAPTEr 3
W H A T D O M U LT I N A T I O N A L S W A N T F R O M R E G I O N A L
G OV E R NA NC E AG E NC I E S ?
Introduction
thischapterpresentsfindingsonwhyforeign
multinationalcompanies(mncs)engagewith
subnationalgovernanceactorsinengland–
entitiessuchasleps,andearlier,rdas,sector
skillscouncils,trainingproviders,andother
organizationsthathelpshapethe‘institutional
environment’ofthelocalityatregionalandsub-
regionallevel.
theactivityofmncstakesplaceinacontext,
sketchedintheopeningchapter,ofgrowing
competitionbetweenlocalitiestoattractand
retainforeigndirectinvestment(fdI).thismeans
thattheinstitutionalarrangementsthataremade
atlocallevelassumeincreasingimportancein
attractingmobilecapital.theextenttowhicha
localitycanprovidelabourmarketskills,training,
physicalinfrastructure,accesstofunding,and
specialistknowledgeresourcesimpactsonits
attractivenesstofdI.ofcourse,mncs
themselvesactivelyhelpshapelocalinstitutional
arrangements,asstudieshaveshown(e.g.
crouchetal.2009;djelicandQuack2003);and
phelpsandfuller(2001)gosofarastospeakof
theimportanceofthelocal‘state–mncnexus’
throughwhichinstitutionalarrangementsare
determined.
thechapterfirstexaminesthepatternof
relationshipsbetweenmncsandsub-national
actors,identifyingtheissuestheyinteracton.It
paysparticularattentiontoissuestodowithskills
development,theexternallabourmarket,and
redundancyandredeployment.second,it
examinesthefactorsthatinfluencethat
interaction.finally,itconsiderstheproblemsand
tensionsthatemergeinthesearchforlocally
competitiveinstitutionalarrangements.
Patterns of Interaction
High-engagers and isolates
thestudyfoundthatmncsfallintodistinct
groups:the‘high-engagers’ thatseriallyand
intensivelyinteractwithlocalactors,andthe
‘isolates’ whokeepverymuchtothemselves,
self-sufficientlycarryingouttheireconomicactivity
withlittleconcernfororengagementwithlocal
institutionalarrangements.theisolatestendtobe
smallerfirms,andsubsidiarieswithveryspecialist
ornicheskill-sets,orthosewhosecompetitive
resourceneedsarelargelyfurnishedinternally
withinthemnc’swidersupplychain.
nonetheless,bigmncscouldbeisolates,their
sizegivingthemasenseofself-sufficiency:the
hrdirectorofonefirm,engco,whichchanged
itsstancefromisolatetohigh-engagernotedthat
...Quite frankly as you have probably come to
appreciate huge multinationals can be quite
arrogant sometimes in the way they conduct their
business. And the fact is that I had not been
aware when I came in here of any desire to
actually engage with external help.
therearebroadersectoralfactorsatworktoo.
thuslargeengineeringsubsidiaries,forexample
intheautomotiveindustry,areparticularlyreliant
onaccessingexternalfundingforcapitalprojects,
upskilling,andsoon.Incontrast,servicemncsin
sectorssuchasItlookverymuchtointernal
corporateresourcesforskillsdevelopment,or
expectto‘buy-in’thehighlymobileskillsthey
needfromanactiveexternallabourmarket.
Inadditiontothesebroad‘structural’factorsthe
patternofengagementalsoreflectsmnc
strategy.somefirmsdetermineatsubsidiarylevel
PAGE | ThirTEEN
orevenattheglobalcorporatelevelastrategic
stanceonengagementwithlocalbodiesinthe
marketswheretheyoperate.thusengco
changeditsapproachfromoneofnon-
involvementtoaglobalstrategyofengagement
withlocalbodiesandagenciesaspartofraising
itsprofileinhostmarkets.thiswasseenas
importantforpositioningthecompanyin
competitivelocallabourmarketsandsecuringthe
future‘talentpipeline’,aswellasreinforcingthe
brandinproductmarkets.
finally,itwasstrikinghowfarengagement
dependedinonthepreferencesandpersonal
agendasofindividualmanagersinmncs.some
individualsweredeeplycommittedtoapolicyof
engagementthatoftenledtotheirassumingroles
inregionalorlocalbodiessuchassectorskills
councilsandleps.forexample,engco’shr
directorwasveryactiveinworkingwithagencies
onthedevelopmentofstemskillsinthelabour
force,andintheexpansionofapprenticeships.
Routine relationships versus sporadic high-
intensity issue-driven interaction
forthosefirmsthatinteractwithregional
agencies,thereappeartobetwopredominant
modes.thefirstcouldbedescribedasroutine,
protocol-drivenandregularinteractionassociated
withthecalendar-setagendasofbodiessuchas
sectorskillscouncils,producernetworkssuchas
theautomotivealliancebasedinoneregion,and
soon.thustotakearegionthatwasnotincluded
inthestudy,theboardofthesectoralskills
councilformanufacturing,semta,forthesouth-
easthasrepresentativesofseveralmajor
engineeringmncssuchasrolls-royce,
siemens,Bmwandge.
Incontrastthereisalsoamoresporadic,high-
intensityengagementaroundspecificpressing
issues:forexample,thesecuringofanewround
ofinvestmentbytheparentmnc;thesearchto
meetparticularworkforcetrainingneeds;or
handlingthefalloutfromamajorredundancy
programme.
Interactionwasofteninitiatedbylocalagencies
ratherthanbymncs.mncpresenceon
governancebodiessometimesreflectedthe
body’sdesiretofulfiltargetsor‘tickboxes’,rather
thanactivemncengagement.onerespondent
atthecentrallevelacceptedthat:
[The] challenge is to stop people interfering in an
[MNC’s] expansion that was going along quite
happily without us just so we get our name on it
and we can count it. And that happens, where
you’re kind of getting people jumping on the back
of stuff that was happening anyway in order to
look like we’ve been involved. [...] [You] end up
with people chasing the wrong target and having
lots of people knock on their door saying we can
help, we can help, we can help, and then when it
comes down to it actually they can’t really help
any more than the next person could but they did
need the tick in the box to help themselves. And
that frustrates companies a huge amount.
Buttheinvolvementofsub-nationalgovernance
actorscouldbemorestrategicandgoal-directed.
governanceactors–includingonoccasion
centralgovernment–wereoftenperceivedtobe
wantingtogetsomethingoutofmncsina
processthatthepublicaffairsdirectorofengco
termed‘reverselobbying’.thusinthenorthern
region,agencieswereinterestedinpromoting
localfirmsinthesupplychainandtriedtoinvolve
mncsinthis.Buttheagendadidnotinterest
somelargermncsbecausetheirsupplychains
wereglobalones.thiswasthecase,forexample,
inautomotive:
[The MNC] have got a worldwide contract on
nuts and bolts so for a small organisation in
Liverpool to suddenly knock on [our] door and
say I want to provide you with nuts and bolts, we
are going to laugh at them because we have a
contract worldwide.(Training manager,
VehicleCo)
thereseems,therefore,tohavebeenaprocess
ofimplicitbargainingbetweengovernance
agenciesandmncs:tosomedegree,each
wantedsomethingoutoftheother.thiswas
exemplifiedbythemidlandsengineeringfirm,
engco,whosenewcorporatestrategyof
engagementinvolvedtheestablishmentofa
majorapprenticeshipprogramme(thoughinthis
case,thegovernanceactorwascentral
governmentratherthanaregionalplayer).
politicallyaswell,[mncvisibility]wasan
importantaspectofitbecauseagainthiswhole
thingaboutraisingourprofile,hereisawonderful
opportunitythatnotonlydowehaveareturnon
investmentdirectlyinthemanufacturingspace,
butpoliticallythegovernmentisgoingtoloveus
becausehereisamajoremployerintheuk
sayingwewanttoinvestinalargescale
apprenticeshipprogramme...
(hrdirectorengco).
The functions that local agencies perform for
MNCs
sub-nationalbodiesperformedanumberof
generalfunctionsonbehalfofmncs.firstthey
actas‘interestaggregators’.thatisthey
collectedandarticulatedtheneedsandinterests
ofdisparatecompanies,forexamplewherea
numberoffirmshadsimilarskillsneedsthateach
firmwasunabletosupplyonitsownbutfor
whichacollectiveinterestundoubtedlyexisted.
moreover,agenciescouldfacilitatecooperation
betweencompetitorfirmsbyexploringareasof
commoninterest,notablyinrelationtoskills.such
aroleiscentraltotheworkofsectorskills
councilssuchassemtaforscience,engineering
andmanufacturingtechnologies.asreportedin
chapter2,therewerecaseswheretherda
realisedthattrainingandskillsrequirements,
PAGE | FOUrTEEN
articulatedbyanindividualfirminrelationtoits
ownneeds,actuallyconstitutedabroader
sectoralissueofskillsprovision.asaresult,the
rdawasabletoaggregatesuchdemandsand
bringtofruitionprovisionsthatbenefitedthe
sectorratherthanjustanindividualfirm.
thesecondmajorrolemncssawregional
governanceactorsasplayingwasthatof
coordinatororgatekeeper,giventheproliferation
andchangeabilityofgovernancebodiesand
schemesreportedinchapter2.rdasin
particularwereseenasprovidinga‘one-stop
shop’,simplifyingaccesstoarangeofother
pertinentlocal–andsometimesnational–bodies
suchastheskillsfundingagencyorjobcentre
plus,furthereducationcollegesanduniversities,
anditwasunclearhowthisfunctionwouldbe
performedwiththedemiseoftherdas(see
below).regionalactorsalsoplayedamediating
orbrokeragerolewithmncs,havingthe
accumulatedskillsandcontactstodealwiththird
partiesonfirms’behalf.thisisakintotherole
playedbythewelshdevelopmentagencyin
relationtomncrequirements,reportedby
phelpsandfuller(2001).suchbrokeragewas
primarilyinrelationtofunding.thisprovisionofa
linktofundingopportunitiesformsthethird
principalroleperceivedbymncs,andonethey
heavilyemphasised.theissueisconsideredin
moredepthbelow.
Brokeragecouldbevertical,tootherlayersof
governance,aswellashorizontalwithinthe
localityorregion.forexample,ajapanese
automotivemnchighlightedanissueoverthe
points-basedschemeforimportingforeignlabour.
... the original set of guidelines potentially
prohibited them bringing Japanese engineers
over if they didn’t speak English to a certain level.
Now in terms of them bringing people over to the
UK to work with the production process, them
speaking English is not the reason they’re
coming, you can use a translator, there are plenty
of Japanese employees ... who speak Japanese
and English via that service, it’s the technical
competency that’s important in that context.
(Development agency official)
thefirmsapproachedtherdawhichinturn
conveyedtheconcernstocentralgovernment
bodies(thethendepartmentofBusiness
enterpriseandregulatoryreform,andtheuk
Bordersagency).asaresult,thefinalpoints
ratingsystemwasamended,removingtheneed
forenglishlanguageskillforintra-company
transfers.thisallowedmncsfromnon-english
speakingareastotransferskilledemployeesto
theuktoprovidetechnicalsupportfor
operations.
whilerdas,whentheyexisted,provideda
verticalconduittohigherlevelsofgovernance,
therewaslesscoordinationhorizontally,between
regions.thiswasperceivedasaproblem
particularlyformulti-sitemncsoperatingacross
severalregions,aswasthecasewithfirmslike
engco,vehiclecoandchemcoforexample.the
firstofthesehadaroundtwentysitesspread
acrossfiveregions,fourinengland.auk
executiveofthefirmsawhistaskasoneof
establishingandmaintainingregularcontactata
seniorlevelwitheachoftherespectiverdas.for
thesecompanies,thevariabilityinquality,
competenceandproactivityoftherdaswasa
concern.theexecutiveofengcogaveafrank
assessmentoftherdaswithwhichhehad
dealings:
I will be quite open because they are on their
death bed. [One RDA] were hopeless... there
was just no relationship, there was no empathy.
And we did things with them and they were
helpful but frankly they were just not orientated
towards our sort of manufacturing type company.
There weren’t many of us in the region and quite
frankly I don’t think they knew how to handle it.
They just weren’t big enough in terms of resource
or whatever. The [second RDA] were different ...
[The regional plant of EngCo] was one of the
crown jewels for them in terms of promotion, and
I had a very good relationship with them.[...] The
[third RDA] were the best for us without doubt,
they had manufacturing in their blood in one
sense without being too emotional about it. But
they were clearly very switched on to
engineering, very switched on to companies like
ours and immensely helpful, and full of people
who I think were competent.
asthisextractindicates,thereasonsforvariability
inthequalityoftheserviceprovidedbyrdas
werebroadlytwofold:first,regionsvariedin
industrialstructureandtheroleoflarge-scale
manufacturing;andsecond,andrelatedly,rdas
variedintermsofthelevelofskills,expertiseand
competencethattheywereabletooffermajor
overseasmanufacturingfirms.similar
observationsweremadeofotherbodies,suchas
sectoralcoordinatingorganisations,forexample:
thattheywereprimarilygearedtosmesrather
thantotheneedsoflarger-scale,morecomplex
businesses.evenwhensubsidiariesweresmall,
theywerepartoflargeorganisationswhose
needswerequitedifferentfromthoseofsmes.
theproblemsthiscausedwereexemplifiedby
thefollowinganecdote:
We even had one situation up here where
Business Link came in and told a company that
employed 60 people here and 20 people in [a
northern city] that they were eligible for European
Social Fund money because they were an SME,
despite the fact they employed 22,000 people in
the States.(Executive of central governance
agency)
The issues that MNCs and regional
agencies interact over
theinteractionsbetweenmncsandgovernance
actorscoverawiderangeofsubstantiveissues.
thenatureandprocessofinteractiontendto
changeovertime.Inrelationtonewinvestors,
PAGE | FiFTEEN
regionalagencieswereusedforavarietyof
issues,primarilyofinfrastructureandlabour
supply,andtherelationshiptosomeextent
involvedcoordinationbetweenuktIandregional
bodies,forexampleinorganisingsitesearches,
andinsecuringlabouravailability,suppliersand
accesstosupportfunding.forestablished
mncs,issuesofskillsandreinvestment
predominated,while‘end-of-life’decisionsabout
disinvestmentandclosureagainprompted
interactionbetweenmncsandagencies.Below,
anumberofthemainissuesarediscussedin
moredetail.
thetextureoftherelationshipwasoftenone
negotiationasfirmstestedtheirinstitutional
environmentwiththeirregionalinterlocutors.one
newmanufacturinginvestorconstantlyprobedthe
positionofregional(andhigher-level)actors.
In the UK for the work permits there’s this point-
based system whereby to bring overseas workers
into the UK you now have to get 70 points on this
criteria. [The foreign investor’s] comment was,
“well OK, it’s normally 70 but can we have 40?”
So everything is a negotiating position because
of the culture of that business. [...] They wanted to
have manufacturing capability in the UK but they
didn’t want to incur the costs of doing that. So
they felt the appropriate thing was to set up
effectively a [east Asian] manufacturing plant in
the UK, employing [east Asian] labour and use
them. From an economic commercial point of
view it makes [...] commercial sense. So you can
understand why they want to look at that. We
obviously very quickly persuaded them that they
weren’t able to do that but there was a role for
bringing [east Asian] labour over to support the
set-up and to support the skills, you know,
knowledge within the business that they needed
to bring in. (RDA official)
Reinvestment
mncsalreadyestablishedintheregion
harnessedtheirexistingrelationshipwithlocal
governanceactorstobuildwhatmightbecalled
‘investmentalliances’.thesetypicallytookplace
inacontextofglobalinter-plantcompetitionfor
investmentwithinthemnc.twoexamples
illustratethewayinwhichsuchalliancesworked.
The car plant. Inoneautomotivemanufacturer,
vehicleco,thesubsidiarysetouttoconstructa
broadcoalitionthatincludedregionalactorsand
centralgovernmentinastrategicapproachto
securingcorporateinvestmenttobuildanew
model.theukplantwasincompetitionwith
severalotherplantsofthemncineuropeand
furtherafield.
I started with the local government first of all, with
local trade union, with ourselves getting them on
board. Then we went to the [Regional]
Development Agency, one of the RDAs, which
was a great RDA. Then high level of trade union.
Then I started to meet with [the secretary of state]
at the Department of Trade and Industry at the
time. And it’s about making sure that people
understand what you are trying to do, the
challenges that face you, and what is necessary
from all of the stakeholders in order to deliver.
And relative to skills I have got x million Euros in
grant for this model for training, obviously with
the great support of the government and the
support also of the trade union. (HR Director,
VehicleCo)
vehiclecosawthevalueofincorporatingsenior
unionofficialsintotheinvestmentcoalition,not
leastbecauseoftheirimportanceinproviding
commitmenttotrainingrequirementsassociated
withnewinvestment– astheaboveextract
indicates.
fromthepointofviewoftherdas,investment
coalitionstrategiescouldcreateproblems(see
chapter2),particularlywhereanmnchadmore
thanoneukplantandhencethepossibilityarose
ofinter-plantcompetitionwithintheuk.Inthese
cases,therewassometensionbetween
governanceactorsatdifferentlevels,withcentral
agenciesclaimingaperspectiveonnational
interestsasawholethatcoulddifferfromthatof
regionalplayers:
...if you took somebody like say [two multinational
motor manufacturers] with their plants at [English
sites], then what was the role of [the development
agency] in discussions with their local
management as opposed to the discussions
between HMG and the national or indeed
international management of [the two MNCs].
That was always an issue, it was always a source
of tension between the two, you know, who was
actually speaking, who had the authority to speak.
Because of course you do have a situation where
[these two MNCs] had a number of different
plants across the country, and where you could
see the development agencies would always see
it as being within their remit, within their interests,
to try and maintain the plant in their region as
opposed to elsewhere. So you had that bit of
competition. (Representative of central
government department).
IndustrialMachineCo’s location decision. alarge
globalengineeringandelectricalequipment
manufacturer,Industrialmachineco,respondedto
aseveredownturninsalesfollowingthe
economiccrisisin2008withareviewofitsplants
indifferentcountries,withtheaimofrationalising
activitiesthroughplantclosuresandmergers.the
mnc’splantinasmallmidlandscitywaspartof
thatcorporatediscussion,andquestionswere
askedaboutwhetherthatlocationwasthe
correctonefortheproductlinebeing
manufacturedthere.thesubsidiary’sactivities
werescatteredacrossseveraldifferentsitesin
thecity,andthemnc’sproposalwasto
rationalisetheoperationbybringingallthe
activitiestogetherononesite,eitheratthe
existinglocationintheuk,orincompetitorsites
ineasterneuropeorchina.localmanagement’s
PAGE | SixTEEN
responsewastomakethecaseforcontinued
investmentinthecity.asuccessfulcasewasbuilt
aroundthestrengthofthelocalsupplynetwork,
theproductivityofthelocalworkforceandits
specialistskillsinareassuchasproductdesign,
andthesubsidiary’sburgeoningrelationshipwith
thelocaluniversityforarangeofgraduateskillsin
businessandengineering.
thereemergedaninvestmentcoalition
comprisingthelocalmanagementteamofthe
mnc,theuniversity,andtheregional
developmentagency.asaresult,aviablenew
sitewasidentifiedandasuccessfulcasewas
madetotheIndustrialmachinecoboardfor
investmenttoberetainedlocally.
oneofthefactorsthatenabledtheemergenceof
suchcoalitionsbetweenfirmsandgovernance
agencies(cf.kristensenandZeitlin’s2005
accountoflocalcoalitionsinthedanish
subsidiaryofaukmnc),wasthecommitmentof
thesubsidiary’smanagementteamtothelocality.
InthecaseofIndustrialmachineco,local
managers‘hadgrownupwiththebusinessin[the
city]’.theissueofpersonalcommitmentoflocal
managersiswellexpressedbyarespondent
basedatthelocaluniversity:
[P]art of this embeddedness is what the
intentions and the views and ambitions and the
aspirations of the local team are. Are they here for
two years and off or are they people who have
grown up with the business? [...] So there are
different levels of agency within organisations
which is quite interesting.
asthissuggests,thepersonalcareeraspirations
andstrategiesofkeylocalmanagersarean
importantfactorindeterminingtheemergenceof
investmentcoalitionswithregionalactorsattimes
ofnewinvestmentorglobalrationalisationof
operations,asinthetwocasesdescribed(cf.
dörrenbächerandgeppert,2009;also
kristensenandZeitlin2005).
Skills and training
accordingtoofficialsatoneoftheformerrdas,
theissueofskillswasthesinglemostimportant
andmostfrequentlyraisedmatterbetweenmajor
firms,includingmncs,andtherda’sinvestment
developmentmanagers.skills,aswehaveseen,
areoneareawithintheinfluenceofmnc
subsidiarieswhenplantsarebiddingfornewor
renewedinvestmentincompetitionwithother
subsidiaries.thusthehrdirectorofvehicleco
workedwithgovernanceactorstomakesurethat
credibleplanswereinplaceforworkforcetraining
intheeventthattheplantwasawardedthe
contracttomanufacturethenewmodel.
Everybody in Europe will want to build that
vehicle so there will be a free for all to get the
rights to build it. And what I am trying to do [is
that] if they are going to build it in Europe we can
say we have got all our people, not trained but
identified what training we would need, we have
got the training available so we can very quickly
then switch it on and start training them so we
can build it here. We are not going to train them
how to build a vehicle if we are not going to get it,
but we are trying to get everything in line from a
training point of view so we know what training is
required in each of the areas of our
manufacturing process. (VehicleCo plant training
manager)
‘gettingeverythinginline’meantworkingclosely
withtherda,sectorbodies,trainingproviders
andotherlocalagenciestoestablishplausible
plans.thusvehiclecointeractedwithasectoral
promotionbodyundertheaegisoftherda
abouttheavailabilityoftrainingandtraining
providersintheregion.
So it’s looking at what we are doing as far as
training, is there anybody local and regional that
can provide that. And if the opposite, there is not,
then I let them know [we] can’t find anybody
within this region, shall I take it somewhere else.
So identifying where we have got shortages of
providers...
trainingwasseenasacrucialpartofthebidding
competitionamongplantsindifferentcountriesto
buildthenewmodel,particularlysince
technologicaladvancesplacedadditional
demandsontheworkforce:
Every plant had to put together a bid and part of
that bid was what training you can bring to the
table for your people. Because every time we
bring a new model in there is a significant shift in
the technology with that product. And VehicleCo
are keen to ensure that we build a vehicle of the
right quality at the right levels from day one. And
training is very important when you are building a
new product. So they were keen as to how we
would manage that and what the cost would be.
We were fortunate that we put together a good
plan and the plan was funded to a large extent by
[the RDA] so they helped us to be successful in
bidding for the car. It [...] was part of a massive
programme but it was I believe a significant part
and it helped us be successful in the bid.
astheextractmakesclear,governanceactors,
includingtherda,hadanimportantrolein
brokeringtherelationshipsthatwouldallowskills
andtrainingtobeavailable,andthisincluded
brokeringfinancialsupportfortraining(see
below).
InIndustrialmachineco,likewise,securingthe
supplyofskillswasseenasprovidingacrucial
competitiveadvantagethathelpedensurethe
viabilityofareinvestmentbid.thesubsidiary
cametoanagreementwiththelocaluniversityto
setupanengineeringschool,aprimaryroleof
whichwastoassureasteady,long-termsupplyof
tailoredengineeringskills,aswellastocarryout
researchanddevelopmentincollaborationwith
thecompany.
We are actually the anchor because they [the
MNC] wouldn’t be able to replicate the
relationship they have got with another university
pretty much anywhere else. So ironically we are
the ones who stopped them from thinking about
PAGE | SEvENTEEN
relocation to [eastern Europe or China] (Senior
university executive)
Beyondthesporadicandintenseinteractionover
renewedinvestmentinplants,trainingwasan
issuewhere,asmentionedearlier,development
agenciesplayedaroleinaddressingmarket
failure(seetheexampleoflaboratorytechnicians,
pg7).Itwastheexperienceofdevelopment
agenciesthatmncsexaggeratedthefirm-
specificnatureoftheskillsthattheyrequired,and
ittookthebroaderperspectiveofanrdadealing
withmanyfirmstounderstandsectoral
requirements.nonetheless,theredoesappearto
beanimportantdistinctionbetweengeneralskills
wherethereisaninterestincollaborationwith
otheremployerstocreatetheappropriateskilled
labourpool,andveryspecialist,highlycompetitive
skillsrelevanttosmallnumbersoffirmswhere
thereislessofaninterestaggregationrolefor.
onecarmanufacturer,carco,spokeforexample
ofitsveryparticularskillsneedsindigitaldesign,
whichwerecompany-specificandhardto
generatethroughbroadertrainingschemes.
thisinterestaggregationroleinrelationtoskills
waseasiertoaccomplishinsomesectorsthan
others.thusintheautomotiveindustry,there
wereasmallnumberoflargeplayerswhoshaped
theskillsmarket,anditwaseasiertoprovide
institutionalmechanismsofcoordination,whether
throughtheregionalentitiesofsectorskills
councilssuchassemta,orthroughregion-
specific,adhocsectorbodiessuchasthe
organisationrepresentingautomotive
manufacturingfirmsandgovernancebodiesin
oneregionweresearched.thisorganisation
playedaroleinvehicleco’splanningfortheskills
andtrainingrequirementsforthemnc’snew
modelforwhichitwasbidding.
Buttherolewasbroadertoo.sub-national
governanceactorshelpedmncsplanforthe
skillsimplicationsofforeseeabletechnological
change,suchastheexpansionofthemarketfor
electricvehicles.asonetrainingmanagerputit,
theresultingskillsrequirementsaffectedthe
logistics,healthandsafety,maintenanceand practicalsupplyofskills.Inthewordsofthe
clear and they articulate the needs of the to be
I’m too generalistic
always getting emails for ourfromrequirements [...]
the local training
wholeofthesupplychainintheautomotive
roadsiderecovery. personneldirectorofcarco,
automotive sector to align with our needs. [....] I There needs
providers sayingto be more
work input
with us from
and welocalcan secure
sector,frombatteriesthroughtoretailers, think translating that into action is always much employers
you and more
this funding control
but when really
you given
delve intotoit,how
well
anotherexampleofregionalinterestaggregation
logistics,healthandsafety,maintenanceand ...
moremy view is [the
difficult isn’tsector
it, andskills
that’scouncil] are verySo
the challenge. the know
we funding how is used.
it works[...]sort
We of need
thingtoand
be maybe
it tends
inthenorthernregionconcernedskillsforthe
roadsiderecovery. clear
if youand talk they
to [thearticulate the needs
sector skills of the
council] they were more
to specific
be too to like the
generalistic for heavy industry or the
our requirements [...]
compositessector.compositesarecarbonfibre- automotive
very clear it’s sector
abouttohigher
align with
levelour needs.
skills, they[....]
are I heavy needs
There engineering environment
to be more input from whereas
local what’s
basedmaterialsusedintheautomotive,
anotherexampleofregionalinterestaggregation think translating
very clear it’s aboutthatsomeinto action
of theisdigital
always much
design been offered
employers and is more
quite control
soft. [...]really
My viewgiven ontothehow
aerospaceandothermanufacturingindustries.
inthenorthernregionconcernedskillsforthe more
skills, difficult
very clear isn’t
it’sit,about
and that’s
somethe of challenge.
our leadershipSo [regional]
the funding approach
is used. has been
[...] We it’s very
need to bemuch
maybe
theheterogeneityofthesectorandthevarietyof
compositessector.compositesarecarbonfibre- ifand
youhigher
talk tolevel
[the manufacturing
sector skills council] they were
skills. That’s fine, around
more supporting
specific to likeSMEs
the heavy who industry
can’t afford
or theto
finalproductsinvolvedcomplicatedtheprocess
basedmaterialsusedintheautomotive, very clear it’s
no issues withabout
that and higher level
there areskills,
any they are organise
heavy training inenvironment
engineering the way we probablywhereas could.
what’s
ofdevelopingskillsstrategies,andasthe
aerospaceandothermanufacturingindustries. very clear it’s about
qualifications that meet some of the
that. Thedigital design
challenge that (HR director
been offered MetalworkCo)
is quite soft. [...] My view on the
followingextractshows,astrategywasconceived
theheterogeneityofthesectorandthevarietyof skills,
we have verygotclear
as ait’s about some
business is how of do
ourweleadership
actually [regional] approach has been it’s very much
ofintermsofnationalratherthanpurelyregional
finalproductsinvolvedcomplicatedtheprocess and
in thishigher
locallevel
area manufacturing
upskill people.... skills. That’sit’s
Because fine, mncrespondentsalsowerewaryofrelyingon
around supporting SMEs who can’t afford to
engagementbetweengovernanceactors(both
ofdevelopingskillsstrategies,andasthe no
fineissues
havingwith that and
identified therebut
need, arehow
anydo you trainingproviderstoguidethemthroughthe
organise training in the way we probably could.
centralgovernmentandsectoral),mncsand
followingextractshows,astrategywasconceived qualifications
actually then meet that meet that. The challenge that
that need? labyrinthoffundingopportunities,sincethe
(HR director MetalworkCo)
othercorporateplayers:
ofintermsofnationalratherthanpurelyregional we have got as a business is how do we actually providershadavestedinterestinpointinga
engagementbetweengovernanceactors(both therewasafeelingamonganumberof
in this local area upskill people.... Because it’s potentialclientfirmtoprovisionforwhichthey
mncrespondentsalsowerewaryofrelyingon
There are so many companies out there working
centralgovernmentandsectoral),mncsand respondentsthatthesectorskillscouncil,while
fine having identified need, but how do you wouldreceivefundingonapercapitabasisunder
trainingproviderstoguidethemthroughthe
with composites and aircraft industry, wind
othercorporateplayers: expertatsecuringmoneyfromgovernment,was
actually then meet that need? governmentschemes.oneresponsetothiswas
labyrinthoffundingopportunities,sincethe
turbine, or certainly the blade manufacturers, they lessthanstrategicinspendingit.thebroader forfirmstoseekmoreobjectiveadvice,for
providershadavestedinterestinpointinga
There
all at thearetime
so many
thoughtcompanies
that theyoutwere there working
using therewasafeelingamonganumberof
issueconcernedtheprioritiesoftraining examplefromthenationalapprenticeship
potentialclientfirmtoprovisionforwhichthey
with composites
proprietary and aircraft
techniques industry, wind
and technology but they respondentsthatthesectorskillscouncil,while
expenditurebycentralgovernment.therewasa service,thebodythatoverseesandfundsthe
wouldreceivefundingonapercapitabasisunder
turbine,
were doing or certainly
broadly the blade
similar manufacturers,
things in different they expertatsecuringmoneyfromgovernment,was
perceptionthatmoneywasmorereadilyavailable deliveryofapprenticeshipprogrammesin
governmentschemes.oneresponsetothiswas
all
partsat the time
of the thought
country thatdifferent
with they were usingand
shapes lessthanstrategicinspendingit.thebroader
foroverly-generic‘low-end’skillsataroundnvQ england.
forfirmstoseekmoreobjectiveadvice,for
proprietary
sizes. And ittechniques and technology
took a national compositesbut they
strategy issueconcernedtheprioritiesoftraining
level2thanforhigherandmoreindustry-specific examplefromthenationalapprenticeship
were
to bring doing
them broadly
togethersimilar
to saythings
well in different
actually rather expenditurebycentralgovernment.therewasa
skills.thisviewwasnotnecessarilyheldbyall finally,mncsusedbodiessuchasBusinesslink
service,thebodythatoverseesandfundsthe
parts
than itofbeing
the country
a bit ofwith differentthat
engineering shapes
you and
tack perceptionthatmoneywasmorereadilyavailable
majorfirms.Inthecarindustry,forexample, orjobcentreplustocoordinatetherecyclingof
deliveryofapprenticeshipprogrammesin
sizes. And it tookelse,
onto everything a national
what ifcomposites
we were to strategy
develop foroverly-generic‘low-end’skillsataroundnvQ
mncswerekeentotakeadvantageofnvQlevel skillsinthewakeoflargeregionalredundancy
england.
to bring themoftogether
a framework to say well
qualifications aroundactually rather
the use of level2thanforhigherandmoreindustry-specific
2trainingschemes.nonetheless,manymncs programmes.forthefirmmakingredundancies,
than it beingand
composites a bitthe
of engineering
processes that thatpeople
you tackneed. skills.thisviewwasnotnecessarilyheldbyall
weremoreconcernedwiththedevelopmentof local/regionalgovernanceactorshelpedplace
finally,mncsusedbodiessuchasBusinesslink
onto everything
And that’s what else, what ifbut
happened weit’s
were
takento 18
develop majorfirms.Inthecarindustry,forexample,
apprenticeshipschemesatnvQlevel3oreven surplusskillsbackintothelabourmarket;for
orjobcentreplustocoordinatetherecyclingof
acompanies,
frameworkthree of qualifications
governmentaround the usetwo
departments, of mncswerekeentotakeadvantageofnvQlevel
level4withapathwaythroughtoan otherfirmsintheproductmarket,agencies
skillsinthewakeoflargeregionalredundancy
composites
Sector Skillsand the processes
Councils and twothatandpeople need.
a bit years. 2trainingschemes.nonetheless,manymncs
undergraduatedegree.thiswasthecasewith facilitatedtheaccesstotheredundantskills.
programmes.forthefirmmakingredundancies,
And that’s whatgovernance
(National-level happened but it’sofficial)
body taken 18 weremoreconcernedwiththedevelopmentof
engcointhemidlands,andwithonenorthern engcodescribeditsexperienceasfollows:
local/regionalgovernanceactorshelpedplace
companies, three government departments, two apprenticeshipschemesatnvQlevel3oreven
engineeringfirm,aeroco,whichspentsome surplusskillsbackintothelabourmarket;for
thefocusofmanufacturingmncsinparticular
Sector Skills Councils and two and a bit years. level4withapathwaythroughtoan
yearsworkingwithsemtaaswellaswith ...when [a regional motor manufacturer] were
otherfirmsintheproductmarket,agencies
wasonthesupplyofhigh-endskills,andhere
(National-level governance body official) undergraduatedegree.thiswasthecasewith
industrycompetitorstodeveloparangeofhigher- laying a lot of people off, that was a joint initiative
facilitatedtheaccesstotheredundantskills.
firmstendedtobecriticalofsomeoftheskills engcointhemidlands,andwithonenorthern
levelapprenticeships.Inthewordsofamidlands between [...] our agency worker provider and [the
engcodescribeditsexperienceasfollows:
thefocusofmanufacturingmncsinparticular
initiativesbeingundertaken,particularlybycentral engineeringfirm,aeroco,whichspentsome
engineeringsubsidiary,metalworkco, RDA] to some extent, although it was more our
wasonthesupplyofhigh-endskills,andhere
government.firmsalsocriticisedthegap yearsworkingwithsemtaaswellaswith initiative[ainregional
...when saying are motoryoumanufacturer]
doing something? were
firmstendedtobecriticalofsomeoftheskills
betweentheidentificationofskillsneeds,andthe industrycompetitorstodeveloparangeofhigher-
I’m always getting emails from the local training Because
laying a lotobviously
of peoplethe off,skill
thatsets
wasare veryinitiative
a joint similar.
initiativesbeingundertaken,particularlybycentral
practicalsupplyofskills.Inthewordsofthe levelapprenticeships.Inthewordsofamidlands
providers saying work with us and we can secure And that manifested
between [...] our agency itselfworker
in us attending,
provider and well[the
government.firmsalsocriticisedthegap
personneldirectorofcarco, engineeringsubsidiary,metalworkco,
you this funding but when you delve into it, well actually
RDA] tothey
some had a jobalthough
extent, shop on itsite wasasmore
you can our
betweentheidentificationofskillsneeds,andthe we know how it works sort of thing and it tends imagine, in
initiative because
saying are theyyou were laying
doing off a large
something?
... my view is [the sector skills council] are very

PAGE | EighTEEN
Because obviously the skill sets are very similar.
And that manifested itself in us attending, well
actually they had a job shop on site as you can
imagine, because they were laying off a large
number of people and we were, along with other
employers, we were advertising our vacancies.
(HR director EngCo)
The search for funds
mncscommonlysawthegatekeeperroleof
regionalbodiesasprovidingaccesstosourcesof
funding.rdasandotherbodieswereseenas
havingexpertknowledgeoffundingframeworks,
whetherateuornationallevel,andhavingthe
skillsneededtoaccessfundsfortraining,capital
investment(e.g.fortrainingfacilities),andsoon.
theabilitytotapsourcesoffundingwas
regardedbysubsidiariesasasourceof
competitiveadvantage.Inthewordsofa
japanesecarmanufacturer,motorco,ithelped‘to
keepbusinessgoing,keepushereintheuk.’
firmsadoptedapragmatic,calculativeapproach
tofunding,fortrainingforexample,inthesense
thattheysawitasawayofloweringtheunit
costsofproduction,andhencecontributingto
successinthecompetitivecorporateinvestment
(orreinvestment)tournamentsinwhichtheywere
requiredtoparticipate(seeabove).thus
vehiclecoexplainedhowtrainingsubsidieswere
partofthepackagetheplanthadtoofferin
biddingforthenewmodel.therewerecost
pressuresonaplanttoproducehighvolumesof
anewmodel‘fromdayone’:
So in order to do that you have got a lot of
training to do up front with the people to get them
so you can build your car at that rate. So that’s
what [the parent company] will tell you, it’s
volume, it’s also the cost. And they are not
looking at cost as far as the training cost, they are
looking at the cost as far as cost per car, which is
sucked into the cost. [...] So the more you can get
down your cost per car, the more volume, lower
cost, then a better position you are in to bid for
the car. So if someone else is willing to pay for
the training [...] then the costs are reduced and
your cost per car is going to be reduced. If you
can do things smarter because of the training
then you can reduce your costs. (VehicleCo plant
training manager)
crucial,therefore,wastheabilityofthesubsidiary
tocoordinatefundingfortraining.withthehelpof
therda,andthedepartmentoftradeand
Industry,thesubsidiarymanagedtolineupnearly
€10mintraininggrantsforthenewmodel.
similarly,inIndustrialmachineco,therdaplayed
akeyroleinputtingtogetheracaseforremaining
intheregionthatmightappealtothemnc’s
corporateboard.partofthiscasewasthe
provisionofskilledengineersthroughthedeal
withthelocaluniversity.Inordertosetupthe
training
We had a commitment of a million from us and a
million from IndustrialMachineCo as the capital
but we estimated it was effectively a 7.5 million
build. So we went to [the RDA] to get match
funding through ERDF single part match funding
subregional, to get the outstanding 3.2 million to
get it going. And [the RDA] I have to say were
very good, they didn’t call it this but they fast
tracked it through the ERDF process so we could
get the capital. (Senior university executive)
engco’shrdirectorsuggestedthatakeytask
forlocalmanagersofmncswastoexplainto
regionalactorsandfundingactorswhymulti-
billionpoundinternationalcorporationsrequired
localtrainingsubsidies.
Now that is always a very difficult thing to say
because they would look you in the face and say
are you telling me that a company with a $30-40
billion revenue stream around the world is not
going to do this job unless we the RDA give you
a million pounds, or whatever it happened to be.
PAGE | NiNETEEN
We had to look them in the face and say yes
because we would say at a plant level every plant
in the EngCo world has to compete with every
plant in the EngCo empire for new investment
and they have to make their case as best they
can. And in the end that sort of argument played.
forthesamefirm,partoftheexpertiseandknow-
howofregionalagencieswastheskillrequiredto
avoidbureaucraticover-complicationofthe
searchforfunding,forexamplebyavoidingthe
needforfundingtobesanctionedbyhigher-level
governanceactorsincentralgovernment.
The relationship, a lot depended also on how the
individual RDA got on with the London civil
service. How you tailored your application bid for
capital assistance. Some RDAs were much cuter
than others about how to play the system to
ensure the programmes did not unnecessarily
have to go to London for approval. Because there
was a financial limit, and if you were above it, it
absolutely had to go to London and you knew
then it would go round a completely different
appraisal process and a much longer one.
Whereas if you were cuter and stayed within the
RDA approval limits it would be a whole lot more
straight forward. It wouldn’t guarantee success
but it would take you away from a whole lot of
bureaucracy. (HR director EngCo)
The impact of institutional change
therewaswidespreadconcernthatthechanges
intheinstitutionalfabricresultingfromthe
abolitionofrdaswouldexacerbateproblemsof
coordinationandintegration,bothacrossregions
butmostnotablywithinthem.thechangeswere
seentorespondtothecoalitiongovernment’s
localistagendaratherthanreflectingacoherent
andrationalstructureforpromotingregional
development,andthelackofcoherenceledsome
toexpectthatthenewstructurewouldbequietly
abandonedasunworkable.
thenotionthattherewasasingleregional
interlocutor,apointofaccesstootherbodiesand
anentitycapableofcoordinatingactionamonga
rangeofgovernanceactors,wasseriously
underminedbythemovetoleps.forexample,
vehiclecowaslookingtoencourageachinese
componentssuppliertoestablishasubsidiary
closetoitsoperationsinthenorthernregion.as
thehrdirectorputit,
This is a problem I have got, now that the RDA
has disappeared who do I talk to in order to make
that happen. There I am, I am trying to bring
company XYZ from China to here, they are
already supplying us with parts and are desperate
to establish a manufacturing base say
somewhere within the UK, it’s going to bring jobs
which is exactly what the government wants.
RDA has gone away, who the hell do I talk to? I
have had meetings with senior people from [a
regional county council] and [one of the LEPs], I
have had meetings with them, I had the RDA
people involved and it’s now ground to a halt. I
am now in a situation where I am bringing our
local MPs in to see me in a couple of weeks time
to start pushing this.
Inotherwords,theresponsibilityforcoordinating
diverseactorstoachieveacomplextask–inthis
case,securinganewinvestmentbyasupplier–
fellbacktoafargreaterextentonthesubsidiary
itself.suchasituationwouldbelikelytocause
particularproblemsforrelativelynewand
‘unembedded’mncs.
forfirms,suchasengco,thatoperatedmultiple
sitesacrossseveralregions,theabolitionof
rdasandcreationoflepswasseenasa
‘nightmare’:
There is no way we can have any degree of
coordination across our entities [...] [The
government] are wedded to localism and that in
turn is not good news for big companies because
there is going to be no consistency across, even
within the old regions there will be no
consistency. (Senior executive EngCo).
thiswasacknowledgedbyonesenior
governanceactor:
Where you have large companies with 23
manufacturing sites across England, Scotland
and Wales who really don’t want to speak to 23
different local authorities to manage their skills
agenda.
aconcernwiththebreakdownofhorizontal
institutionalcommunicationwasparalleledby
fearsthattheroleofverticalcoordinationwhich
rdashadperformed,linkingregionaland
nationalgovernancelevels,wouldbebeyondthe
capabilitiesoflocalistleps.asaresult,firmsfelt
theywerelosinganeffectiveconduitfor
communicatingtocentralgovernmentabout
businessissues.
Because we have gone from a position whereby
we had regionally based contacts that fed back
into government reasonably efficiently. So if you
said something to an RDA you would be pretty
confident it could get back in the right way into
government. Particularly if it was a BIS related
issue. And that our facility managers would have
no inhibition about talking to an RDA if they
wanted to, they would not be a threat. Whereas
the long trail from [a northern LEP] to Whitehall
might inhibit someone running one of our plants
in the north east. So we have lost that
connection. (Senior executive EngCo)
Itwasfeltthatthegovernmentrecognisedthe
danger,however,andthecreationofaquasi-
regionalstructureforBIswasseenastryingto
plugthegapinverticalinstitutionallinkagesleftby
theabolitionofrdas.
thenewinstitutionallandscapecreateddilemmas
ofengagementformncs.shouldtheyget
involvedinthenewbodies,ornot?onetheone
PAGE | TwENTy
hand,involvementwasimportantforaccessto
theinstitutionalnetworksthatwerenecessary,for
example,formobilisingresourcesandidentifying
providersfortrainingprogrammes.ontheother
handtherewasscepticismastothequalityand
competenceofthenewbodies,andfearsthat,
starvedofresources,theywouldbelittlebetter
thantalkingshops.
Some of our facility managers have asked me,
“Should I apply or should I offer myself to sit on
LEPs?” And I said, “Well it’s entirely your
decision but you should recognise what you’re
letting yourself in for. If you do join a LEP,
because very few of them are genuinely business
or business run or dominated, I think you will find
there will be a lot of councillors, either former
ones or otherwise, going into it”, and they are
going to be sort of downmarket, crudely, could
become down market talking shops on a Friday
night with no money, no resource and little ability
to do something massive. They could really
struggle to make a difference I believe because
they have got no money, no resource and that
combination is pretty damming I think. (Senior
executive EngCo)
when,despitethereservations,mncexecutives
didattempttogetinvolvedinthenewleps,their
experiencessometimesconfirmedthefears,with
parochiallocalinterestsbeingseentotrumpmore
strategicconcernswitheconomicdevelopmentof
thelocality,asthefollowinginstanceillustrates.
...we have a highly competent facility manager in
[the midlands], he runs a [component] plant with
about 800 people, it’s absolutely a fundamental
part of the business in the UK.... And I know the
MP very well, he is in his 50s, he has an industry
background. He came to talk to us about the LEP
because he is a great promoter of the LEP, he
believes if we have to have LEPs the one in [the
midlands town] had to be the best it could
possibly be. And he said would this guy be
interested in putting an application in [...]. And the
bottom line was he was, he put an application in
and he got nowhere. And the [LEP] were
hopeless, they were just all bordering on the rude
and so he came away very disillusioned. The MP
was distraught because he realised that he had
essentially pushed it at us in one sense, but he
went away with his head in his hands in disbelief
that our guy didn’t even get an opportunity. So
that message goes out on the EngCo network,
guys this is what can happen if you put your head
above the parapet. I am not aware we have got
anyone in a LEP.
acentralgovernancerespondentconfirmedthat,
atthetimeoftheresearchatleast,largelocal
employerswere‘eitherthroughfirmchoiceor
throughnon-selection’inmanycasesnot
representedonlepboards.withoutinvolvement
ofseniorfiguresfromkeymncsintheirlocality,
leps’credibilitywithmncsasinterest
aggregatorandgatekeeperwouldappearlikelyto
dwindlerapidly.
Inthenewstructure,uktIandspecificallythe
consultancy,paconsulting,thatdeliveredits
serviceswasseenasprovidingcross-regional
integrationandcoordinationforbiggermncsin
coresectorssuchasautomotive,lifesciences
andIct,inrelationtosuchissuesasrecruitment,
managementsuccession,ortraining.thusone
officialoftheconsultancyexplainedhisroleinthe
followingterms:
...Where they’re multi-sited, that’s where I add
most value because they’re needing more hand
holding into the different bits and joining that all
together for them. Whereas if you’ve got one
company in one place with one skills issue, I can
be polite and hand them over [to lower-level
agencies] to deal with. But the real value is
added where you’ve got 20 sites across the UK
and they need it managed for them, and all the
different relationships brought together, or they
want to run a pilot in one or two places with a
view to then going national with an
apprenticeships campaign or a recruitment
campaign.
despitethisexpandedroleforacentralagency,
however,therewassomescepticism.
respondentsacknowledged,forexample,thatfor
uktItoplayacoordinatingrolethroughthe
consultancy’soperations,themnc’sneedshad
tocometoitsattention,atatimewheninter-level
linkageswere,asmentioned,disruptedbythe
abolitionofrdas.moreover,mncshad
reservationsabouttheabilityoftheconsultancyto
playaproactivecoordinatingrole.onemajor
multi-sitemnc,engco,claimedtodealonly
rarelywithuktIortheconsultancy,andsawitas
mainlyconcernedwithexporters‘to assist
primarily people who are not well connected
externally’(seniorexecutiveengco).Indeed,the
firmsawitselfmoreassupportinguktIinthe
latter’seffortstoattractinwardinvestors,by
showcasing‘who is already in the UK and
therefore, to potential inward investors, a major
reason why they should consider coming to the
UK versus somewhere else’.
Conclusion
tosummarisethemainargument,whatmncs
wantfromsub-nationalgovernanceactorsis:
• accesstoadditionalfunding,particularlywhere
thishelpsthemretaininvestmentintheregion,
orattractnewinvestmentintothesite
• theabilitytoprovideaccesstoaproliferating
andchangeablerangeofrelevantbodiessuch
asskillsandtrainingproviders,atregionallevel
• toactasconduitifnecessarytoactorsat
higherinstitutionallevels,notablycentral
government
• expertiseinidentifying,aggregatingand
articulatinginterestsfromarangeoffirms,
particularlyatasectorallevel,sothat
resourcescanbetargetedforexampleon
PAGE | TwENTy ONE
thedevelopmentofnewskillsneededbythe
sectorasawhole
• Inthecaseofnewinwardinvestors,help
withidentifyinganddevelopingappropriate
physicalinfrastructure,suchassuitablesites
thathaveappropriateinfrastructureandare
attractivetomobilekeyemployees.
therearearangeofrelationshipsbetweenfirms
andgovernanceactors,fromlow-keyroutinelinks
tohigh-intensity,issue-focusedburstsofactivity.
manymncssimplygetonwiththeireconomic
activityandhavelittleifanyinteractionwiththe
institutionalactors.
anumberofissueswereevident,particularly
concerningtheproliferationandchangeabilityof
relevantbodies,intherelationshipbetween
mncsandsub-nationalgovernanceactors.the
plethoraofpotentiallyrelevantbodiesandthe
frequentinstitutionaltinkeringcreatedsignificant
problemsofcoordinationthatwereonlypartially
resolvedbytheintermediaryroleoftherdas.
suchproblemsweremoresevereformulti-site
mncsthatoperatedcross-regionallywithinthe
uk.Institutionalvolatility–theconstant
developmentofnewbodiespartially
supplementingorreplacingexistingentities,
combinedwithamultiplicityofcentralinitiatives
whosecomplexityfrequentlybaffledmncs–was
afactoflife.Butvolatilityaffectednotjustthe
schemesavailable,e.g.intraining,butalsothe
basicinstitutionalfabricoftheregionsduringthe
timeofourresearch,withtheabolitionofrdas
andtheirreplacementbyleps.
thenewstructureprovokedconsiderableunease
andscepticismamongmncrespondentsabout
theabilityofthearrangementstoperformthe
coordinatingandintegratingfunctionsthatrdas
hadpreviouslyperformed,howeverunevenly.the
dangerofsuchvolatilitywasthatthehardworkof
buildingeffectivenetworkslinkinginstitutional
actorsandmncswouldbeundermined.the
‘institutionalmemory’,basedasitwasonthe
networksofindividualsoperatingwithinthese
structures,wasindangerofbeinglosttothe
system.
otherpotentialproblemsareapparentinthe
‘mnc–localstatenexus’(phelpsandfuller
2001).whiletheinterestsofsub-national
governanceactors,particularlyinwardinvestment
agencies,andmncslargelyoverlap,theyareat
timesdissonant.theformerareconcernedwith
thebroaderpictureofregionaleconomic
development,notjustwiththecorporateinterests
ofparticularmncs,andthisdifferenceof
perspectivesometimescreatedtensions.onthe
otherhand,therewasalsothedangerofa
relationshipsoclosethatineffectadominant
mnccould‘capture’or‘colonise’governance
bodies,withtheresultthatthelatterpursued
particularist,sectionalobjectivesratherthan
broaderendsofregionaldevelopment.
finally,theevidencesuggestssomewider
implicationsforhowweunderstandthe
institutionalfabric.firstly,theresultstellus
somethingaboutthenatureofmncs.theseare
nothomogeneous,monolithicentities,butrather
collectionsofoperationswithoverlappingbut
sometimesconflictinginterests.thisisseenmost
clearlyinthestrongalliancesbetweenlocalmnc
managementandshiftingconstellationof
governanceactorsrangingfromtheregional
developmentagencytothesectorskillscouncil,
andaplethoraoftrainingprovidersatdifferent
levels;insomecasesalliancesalsoinvolved
workingcloselywithseniortradeunionofficials.
such‘locationalcoalitions’weremostvibrantly
observedinrelationtoplannedstrategiesfor
securingnewinvestment,orcontinuing
investment,inaplantthatwasregardedasakey,
embeddedelementoftheregionaleconomy.
econdly,thestudyemphasisesthedynamicand
creativenatureoftherelationshipbetweenmncs
andgovernanceactors.togethertheygive
meaningtotheinstitutionalfabricthroughtheir
interactions.Inotherwords,institutional
arrangementsarenotsomegiven,inherentor
pre-existingcontextthatdefinesthe
characteristicsofalocality.onthecontrary,they
emergedynamicallyoutofthenegotiationsand
alliancesofmncsubsidiariesandgovernance
actorsinalocality.aswasseeninexamplessuch
asthatofvehicleco,firmsandgovernanceactors
worktogethertocreatetheinstitutional
environmentintermsoftheavailabilityof
appropriateskillsthatareneededforthemncto
performandexpanditseconomicrolewithinthe
locality.thusthereisanimportantrolefor
‘agency’andproactivecreationbylocal
governanceactors,inalliancewithlocal
management,oftheconditionsforembedding
high-skillmncs.moreover,andrelatedly,the
findingsindicatethatgovernancerolesare
blurred.mncsfrequentlythemselvesperformed
aquasi-governancefunction,singlyormore
commonlyasacollective,forexampleoversector
skillsplanningforfutureneedsinindustriessuch
ascompositesormotormanufacturing,orinthe
developmentofapprenticeshipprogrammes.the
borderlinebetweenprivatefirmandgovernance
actorcouldthusbecomesindistinct.
PAGE | TwENTy TwO
PAGE | TwENTy ThrEE
 ChAPTEr 4
R E G I O N A L H U M A N C A P I TA L D E V E L O P M E N T N E T W O R K S A N D F D I
Introduction
translatingpolicyintoactionisdependenton
boththestructuresthatarecreatedaroundaset
offormalrulesandactorsandtheemergent
socialrelationsthatunderpinsuchstructures.
theresultinginterdependencyanddynamic
betweenstructuresandsocialrelationsdefine
theengagementandparticipationamong
relevantstakeholderswhichisnecessarytoboth
developanddeliverpolicywithimpact.the
analysishereseekstoshedlightonthestructural
characteristicsoftherelationshipsbetween
governanceactorsandmultinationalsthataimto
retainorattractfdIthroughlabourmarketskills
andcompetencies,withinaregionalframeof
reference.thesestructureswerefertoasthe
regionalhumancapitaldevelopmentnetwork
(rhcdnetwork).
therearetwokeypointstoconsiderwhen
interpretingtheanalysisthatfollows.first,the
particularfocushereisthenexusbetween
multinationalsandgovernanceactorswith
respecttoskillsorcompetenciesissues.manyof
thesub-nationalgovernanceactorsand
multinationalsmayconnectonawiderangeof
issuesinanumberofdifferentarenas.however,
theseotherareasofactivityarenotconsidered
aspartofthisanalysis.second,asweshall
discoverlaterintheanalysisthemembershipof
thenetworkofinterestispotentiallyextremely
large.consequentlyitwasnotpossiblein
interviewallpossibleactors,butinsteadthrough
snowballingtofollowatrailofkeyinformants
whowereableandwillingtotakepartinthis
work.despitetheselimitationsthedatacollected
enablesustodeveloparangeofdifferenttypes
ofgraphicalrepresentationsandstatistical
analysesbasedonegonetworks.1
The Network as a policy tool
therhcdnetworkthatemergesinthecontext
offdIreflectsapolicynetworkofinterdependent
governanceactorsandmultinationalsthathasa
sharedinterestinadvancinglabourmarketskills
policy,provisionand/ordelivery.assuchthe
networkmembersmaybeformallyorinformally
institutionallylinked(rhodes,2007).thelinkages
betweennetworkactorsreflecttheflowof
resourceswhichmaytaketheformoftangible
resourcessuchasfundingforthedeliveryof
training.Butequallyintangibleresourcesinterms
ofknowledgeandexpertiseregardinghowto
leverageavailablefundingoridentifyingemergent
sharedskillsgapsandcreatingcollaborative
partnershipstodeliversolutions.thepolicyarena
oflabourmarketskillshasalwaysbeendefined
byadivisionofresponsibilitiesbetween
governmentandprivatestakeholders.however,
thedrivetowardpartnershipbasedpublicpolicy
developmentandimplementationunderpins
moderndemocraticpolicyandtherecognitionof
theinterplaybetweengovernanceactorsand
marketforcesisacornerstoneof‘civilsociety’
(mcarther,2008).theabilityofnetworksto
deliverpositiveeconomicandsocialimpactsis
consequentlydependentontheefficiencyofthe
structuresandthesocialrelationsthat
characterisetheflowofresourcesandoutcomes.
thelinksbetweenactorsmayarisefrompolitical
opportunity,institutionalroles,personal
preferences,reputation,orsocialtrust
(Bainbridge,pottsando’higgins,2011;leifeld
andschneider,2010).assumptionsand
perceptionsamongnetworkactorswithregard
totheabilityofthenetworktodeliveragainst
someofthesedriversarecriticalindetermining
engagementandparticipationactivity.further,
PAGE | TwENTy FOUr
thedeliveryonoutcomesislargelysubjectto
discretionarydecisionmakingwhichisshapedby
constraintsonresourcesandinterpretationby
individualactors(lipsky,1980).asaresultthe
devolvednatureofnetworkstructurescanmean
lossofcentralcontrolbypolicymakers-
associatedwithtraditionalcommandandcontrol
modelsofpublicpolicyimplementation-making
evaluationofpolicyimpactmoredifficultandthe
criteriaforpolicysuccessmorediffuse.
therefore,whilenetworkstructureshavebecome
apopularmechanismforintegratingpolicyefforts
withmarketdemands,theircomplexity,the
multiplicityofactorinterestsanddispersionof
powermakestherealisationofdesiredimpacts
challenging.
theanalysisherewillbegintoaddressthe
challengeofusingnetworkstructuresinthe
arenaoflabourmarketskillsandfdIbyexploring
themembershipandtiesbetweengovernance
actorsandmultinationalfirms.theanalysis
suggeststhenetworkconveyssignalregarding
thestatusandhierarchyofactors,andthe
centralityandconnectednessofnetwork
members.theresultingregionalhumancapital
developmentnetworkcanbecharacterisedasa
seriesoflooselyconnectedsub-groupswhich
usebothclosedandopentieswithin.arguable
suchastructureprovidesdynamiccapabilities
allowingthevarietyofstakeholderinterestsand
motivesfordiscretionaryengagementtobe
managed.ontheotherhandthelimited
coherenceacrossthenetworkgivesrisetoa
levelofcomplexitythatmakestheoutcomesor
impactsdifficulttotrack.
Network Analysis
themethodusedtointerrogatethedatais
socialnetworkanalysis(sna).thismethodcan
beusedtoprovideinsightintothetiesbetween
networkmemberswithrespecttoissuessuchas
responsibilities,accountability,resourceflows,
distributionofpower,dependency,cohesionand
importance(wassermanandfaust,1994).sna
usuallyconsidersanetworkofactorsthat
operatewithinaprescribedpolicy‘boundary’
whichinthiscaseislabourmarketskillsand
developmentactivityfocusedonattractingor
retainingforeigndirectinvestmentataregional
level.theattributesandrelationshipsofactors
canberepresentedgraphicallythroughnodes
andtiesrespectively.thenodesrepresentthe
actorandtheirattributes(e.g.policymaker,
policyimplement,governmentalactor,
educationalactor).thetiesarethelinksbetween
theactorswhichcanbedescribedintermsof
presenceorabsence,strength,direction,
centralityrelativetootheractors(wasserman
andfaust,1994).
themethodofidentifyingthenetworkpopulation
usedwassnowballingbeginningwithasetof
policyactorsthathavedesignated
responsibilitiesforfdIinvestmentregionallyand
labourmarketsskillsi.e.theregional
developmentagency(rda)andassociated
governmentbodyuktI.throughtheanalysisof
documentsandinterviewswithrdastaffalistof
thenamesofotherorganisationtheyhaveties
withwasconstructed.eachintervieweewas
askedabouttheirtiestootherorganisationsand
inthiswaythelistwasaddedtountilnofurther
neworganisationalnamesarose.the
snowballingtechniqueswasparticularpertinent
inthisinstanceasitwastheonlyfeasibleand
reliablewayofidentifyingthemultinationalsand
smallerorganisationsengagedinthesenetworks.
furtherthediscretionarynatureofactor
engagementinthisparticularlytypeofnetwork
meantthatnopublicallyavailablelistofnetwork
membersexisted.
Characteristics of the Regional Human
Capital Development Network
analysisofnetworkshasprovidedinsighttohow
andwhytheycanbeapowerfultoolfor
mobilisingresources.asaconsequenceactors
withinthenetworkcanholddifferentpositions
androleswhichreflectthedependencybetween
actors,theeffectivenessofinformationflowor
accesstoresources.weexaminethedata
collectedtographicallyandstatisticallyexplore
issuesofsignally,centrality,densityandstructural
holes.
Signalling
networkscanprovideasignaltothemarket
placeregardingthequalityorstatusofnetwork
actors.forexample,thestatusofanewcomerto
anindustryandregionmaybeinferredfromtheir
relationshipwithotherhigh-statusnetwork
members(Baum,calabreseandsilverman,
2000).thisisimportantasitcouldbealever
thatpolicymakerusetoengagemultinationalsor
otherkeyplayers.withinthenetworksobserved
aspartofthisworkthepolicygroupshadclearly
identifiedsignificantfdIsthattheymadeefforts
toengagewith.however,encouragingfdI
engagementinpolicyobjectiveswasstrongly
linkedtobothpartiesbeingabletoidentify
mutualgainsfromengagement.figure1shows
thetiesbetweentheactorsengagedwithinthe
regionalhumancapitaldevelopment(rhcd)
network.
Intotalthediagramrepresents77individual
actornetworkmembersrepresentedthrough
137ties.thecolourcodingonthediagram
indicatesthedifferenttypesofactorsthatare
involvedwithinthisnetwork.thevarietyof
stakeholdersactivewithinthenetworkisclear:
• themultinationalcompanies(mncs)are
representedingrey
• Bluerepresentsthesub-nationalgovernance
actorsincludingtherda,Businesslinkand
regionallyoffices/representativesofthe
PAGE | TwENTy FivE
manufacturingadvisoryservice(mas),job
centreplus,learningandskillscouncil(lsc),
nationalskillsacademy(regionaloffice)
• redrepresentsthenationalgovernment
actorssuchasBIs,uktI,skillsfunding
agency(sfa),stemnet,nationalskills
academy,nationalapprenticeshipservice
• greenrepresentsspecificskillsgroupssuch
assemta,connexions,othersectorsskills
councils
• Blackrepresentsuniversitybothregionallyand
nationallywithinthehighereducationsector
• darkgreenrepresentsuniondrivenunion
learn
• darkgreyrepresentslocalcollegeswithin
thefurthereducationsector
• yellowrepresentsemployerledassociates
suchasengineeringemployersfederation,
Instituteofdirectors,confederationof
BritishIndustry(cBI)
• finallythepoliticalarenarepresentedinlight
blueincludescounty,cityandlocalmembers
ofparliamentorcouncils.
thisgraphallowsustoexploreifthedifferent
typesofnetworkmembersholddifferent
positionswithinthenetworkandasaresulthave
adifferentrole,accesstoresources,powerand
relationtoothers.Itisclearfromthediagramthat
nationalgovernmentactors(red),forexample,
haveaquitedistinctpositioninthenetwork
comparedtosub-nationalgovernanceactors
(blue).thelaterhaveclosertiestoamuchwider
rangeofmncsandaremorecentralwithinthe
networkoverall.theformerbycontrasttakeup
peripheralpositionsinthenetworkandtendto
tiewithamuchsmallernumberofmncsand
educationallyinstitutions.thisislikelytoreflect
thedistinctioninroleswithspecificcentral
governmentactorshavingrelationswithasmall
numberoflargefdIsandassociatedskills
funding.Itcouldbearguedthatthereisa
hierarchywithinthenetworkwhichsignalsthe
statusofthemncwithsignificantfdIsand
relatedskillsissuesbeingaddressedbycentral
figure1:graphicalrepresentationofregionalhumancapitaldevelopmentnetwork2
governmentdepartmentswhilstresponsibilities
tootherfdIsaredevolved.
theemployerassociationsalsotakeup
peripheralpositionswithinthenetworkand
wheretiesexistthesearedirectlywiththefirms.
thepositionofthemncswithinthenetworkis
interestinginthatitdemonstratesthediversityin
thelevelofengagement.thereareanumberof
mncs(e.g.mnc6,mnc18andmnc20)that
havemultipletieswitharangeofdifferenttypes
ofactorsandthereforeholdamorecentral
position.Incontrasttherearemanythathave
relationshipswithaverylimitednumberofactors
ie1or2otheractorsandthereforesitonthe
periphery.alsonotablemnc5andmnc13are
othernetworkmembers(wassermanandfaust,
examplesofactorsthataresignificantinvestors
1994).muchoftheresearchoncentralityhas
inaregionbuthavehadnoactiveengagement
focusontheinter-organisationalrelations
onskillsissuesduringthelifespanofthis
amongstprivatefirms.therelationshipbetween
research.thisisanimportantcharacteristicof
governanceactorsandprivateactorsislesswell
thenetworkforitdemonstratestherealityofthe
documented.however,theevidencefrominter-
networkinthatsomeactorsmaytakeon
organisationalanalysisshowsthat‘centrality
observerrolesorbecomeinactiveasthe
increasesperformance’(tasi,2001,2002).the
dynamicandprioritiesofthemembers
higheranorganisation’scentralitythegreaterits
themselveschange.
absorptivecapacityi.e.itabilitytolearnfromand
Centrality and Density utilisetheinformationitaccesses(george,
anactorinanetworkisconsideredprominentif Zahra,wheatleyandkhan,2001;cohenand
itstiestootheractorsmakeitprominent.one levinthal,1990).
formofprominenceiscentralitywhereanactor
anotherimportantcharacteristicofanetworkis
hasmanyconnectionstoothers.onemeasureof
theextenttowhichitsmembersareconnected
centralityisthenumberoftiesanactorhaswith
PAGE | TwENTy Six
toeachother.onemeasureofconnectednessis
density– anetworkwithcompleteclosureisone
wheretheactorsareconnectedtoeachother.
thereforedensityprovidesameasureoftheties
betweenactorsinthenetwork.coleman(1988)
suggeststhatwheremembersofthenetworkare
veryclosetoeachotherthentrustishigherand
transactioncostsarelowered.thesetypesof
networkshavebeenassociatedwithincreased
knowledgesharing(rowleyetal2000)and
enhancednetworkperformance(ahuja,2000;
uzzi,1997).
analternativemeasureofconnectednessiswhat
arereferredtoasstructuralholes.coleman
(1990)arguesthatstructuralholesarethe
oppositeofdensity.Inotherwordsthisoccursin
anetworkwherethereisaholebetweentwo
actorswhicharebothconnectedtoathirdactor,
butnotconnectedtoeachother(Burt,1992).
theactorthatcanbridgethestructuralholecan
leverbenefitsviaaccess,timingandreferrals.
somehavearguedthatratherthanstructural
holesanddensitybeingoppositestheyarein
factcomplementary(Burt,2000;reagansand
Zuckerman,2001).theargumentsuggeststhat
organisationsneedtoaccessinformationand/or
resourcesoutsidetheirgroup,buttheindividual
membersofthegroupneedtosharethe
informationwitheachotherinordertogain
benefitsfromit.whenthereiscompetition
outsidethegroupthenstructuralholecreate
opportunitiesforsocialcapitalamongthosethat
canspanthestructuralholes.Incontrastwhen
collaborationisneededwithinthegroupthen
closurecanhelpcreatesocialcapitaltodeliver
collaboration.Insum,socialcapitalisan
importantmechanismthroughwhichresources
areleveragedbuttheconditionsunderwhich
theyoperatecanvary.
thevalueofclosureandstructuralholeshasalso
beenfoundtobecontingentonthenatureofthe
knowledgebeingexploredinthenetwork.
specifically,wherenetworkmembersare
attemptingtoexploitknowledgealreadygathered
thenclosureinnetworksismoreproductive.this
forexamplecouldbereflectedwherenetwork
membershaveidentifiedacompetence
developmentneedandgroupofinterestedfirms
areworkingcloselywitheducationalproviders
andfunderstodeliveranintervention.Incontrast,
ifthenetworkisconcernedwithexploration
strategieswheretheobjectivesandoutcomes
arenotyetcrystallisedthenstructuralholesand
lessdensityispreferableasitenables
informationfromoutsidegroupboundariestobe
accessed.
figure2helpsusexplorethecentralityand
connectednessofnetworkmembers.herethe
numberoftiesanactorhaswithothersis
reflectedbytheirsizeonthegraph.thuswhilst
thenetworkislargeallmembersarenot
connectedtoeachotherbutinsteadthere
appeartobemultiplecoregroupsorsub-
networkswithintheoverallnetwork.these
subgroupsaremorecloselytiedtoeachother
thantheyaretiedtoothersubgroups.for
example,thereisasub-grouparoundnatgov6,
andexaminationwhichorganisationsaretied
togetheritsuggeststhissub-groupisprimarily
concernedwithscoping,developingand
planningskillspolicy.specifically,thesub-group
involvesarangeofactorsincludehigher
educationalbodies,significantmncsandsector
orskillsgroups.
thereisalsoasubgrouparoundmnc18which
reflectsthemncsrelationswithpoliticalactors
andlocalskillsproviders,employerassociations.
however,althoughtherearesubgroupswithin
overallnetworkitisrelevanttonotethatnoneof
thesesubgroupsareisolatedwithintheoverall
networks.Itcouldthereforebearguedthatthe
overallrhcdnetworkhasmultipleshubswhich
reflectdifferentiationintheresources,power,and
interestsofeachhub.
PAGE | TwENTy SEvEN
statisticalexplorationoftherelationships
underpinningthesenetworksindicatesthat
subnatgov3(i.e.therda)isthemostinfluential
inthesensethatithasbyfarthegreatest
numberoftieswithotheractorsinthewhole
networki.e.32directtieswithotheractors
specificallyonskillsissuesimpactingonfdI,this
translatestoconnectionswitharound40%of
thewholenetwork.natgovisalsoasignificant
sourceofinfluencehave22networkties
correspondingto28%oftieswithinthenetwork.
otherkeyactorsaresubnatgov9(newlep
structures)with12ties(15%ofthenetwork);
sectorskills2with16ties(20%ofthenetwork);
andmultinational6with12ties(15%ofthe
network),multinational18andmultinational17
withround10%ofthetiestootheractors.
generallythosewithmuchhigherlevelsofties
andthosewithveryfewtiesarepredictablein
thebehaviourpatternsi.e.theyarelikelyto
sustainhighorlowlevelsofbehaviouroverthe
longer-term.howeverthosewillmediumlevel
tiesasinthecaseofthemultinationalsorthe
newlepstructureswewouldexpecttobemore
difficulttopredictandcouldstrengthenor
reducetheirtieslong-termdependingonarange
ofnetworkfactorsfromavailableresourcesto
transactioncoststotrustrelations.giventhis
policynetworkisundergoingsignificant
readjustmentwiththedemiseofsomepolicy
actorsandriseofnewpolicyactorsthereisa
largegroupofnetworkmemberthatmay
continuetoengagebutcouldequallydisengage
iftheconditionsarenotperceivedasconducive.
whatisalsoclearfromthegraphicaland
statisticalanalysisistheinfluentialroletherda
hasundertakenwithinthenetworkintermsof
tiestootheractors.
thedensitymeasureconfirmsthatoverallthe
networkisnotconstitutedofclosedrelations
wherealotofthenetworkmembersaretiedto
eachother.hereoveralldensityofthenetwork
was.02where1representscompleteclosureof
figure2:graphicalrepresentationofthedifferingdegreesofinfluenceofnetworkactorsbasedonthenumberoftieswithothernetworkactors.
thenetwork.networkdensityisthusverylow.It
isalsopossibletoexaminethedensityofthe
networkstieswithineachofthegroupsof
networkactorssuchasthenationalpolicyactors
orthesub-nationalgovernanceactors.herethe
densityfiguresshowthatdensityisgreatest
amongthesectorskillsgroupwherethenumber
ofactorsisalsoverysmall(density.3),followed
bythesub-nationalgovernancegroup(density
.06)andthenationalgovernanceactors(density
.05).networkdensityamongtheactorswithin
theothergroupswasmuchlower.thusoverall
thepolicynetworkiswiderangingwithalotof
actorsbuttherelationshipsbetweenthese
actorsareloose.Itcouldbearguedthatthisisa
preferablestructureforapolicynetworkwhereit
isimportantthatasmallnumberofactorscan
linktolargergroupstosharingordisseminating
knowledge.Butequallythedevelopmentofsub-
groupscouldbeanefficientmeansthrough
whichcompetingprioritiesbetweengroupsof
stakeholderscanbemanagedacrossgroups.
alsothosegroupmembersthatsharepriorities
candevelopclosedrelationswheretrustcan
facilitatespeedyandinnovativesolutions.this
issueofthebenefitsofsubgroupsandtheir
structuresisexploredfurtherthroughfigure3.
Infigure3wefocusonthetiesofonespecific
networkmembersubnatgov3(ietherda).
withinthissub-grouptherdaholdsacentral
PAGE | TwENTy EighT
positionhavingthelargestnumberoftiesthan
anyotheractorinthegroup.however,overallthe
densityofthesub-groupislowat.16.thisis
becausemanyoftiesarenotclosebutinstead
reflecttheclassic‘star’shapewherebyasingle
actorhasaconnectionwithmultipleothers,but
theothersarenotconnectedtoeachother.the
analysisrevealsthattherdaisanidealposition
toactasbroker.whencomparedtotheposition
ofothernetworkmembersfromtheoverall
network,therdawasfoundtohavethehighest
numberofpotentialbrokeringrelationsat692i.e.
therewerepotentially692pairsofrelationships
betweenothernetworkmembersthattherda
couldbroker.
figure3:graphicalrepresentationoftheregionaldevelopmentagenciesconnectswithotheractorsintheregionalhcdnetwork3
wecandrilldownfurtherintheanalysisby
examiningthetiesbetween14membersofthe
widernetworkthatdescribethedirectionofthe
relationstheyhavewitheach.Intermsof
directionwemeanwhetherthenetworkmember
isasourceofinformationorareceiverof
information.asmightbeanticipatedthedirection
ofexchangesbetweenthenetworkmembersif
two-way.forexample,mnc18shares
informationwiththesubnatgov3(rda)andvice
versa.thecentralpositionoftherdareinforces
itspositioninconnectingactorsthatwouldnot
otherwisebeconnectedtoeachother.Inother
wordstherearealargenumberofstructural
holesaroundthelefthandsideofthegraph.
however,ontherightofthegraphwecansee
potentialstructuralholesbeingfilledbythe
sectskill2(inthiscasearegionalsemtagroup).
figure4:graphicalrepresentationofthedidactic
relationshipsbetween14networkmembers
Conclusion
oneofthebenefitsofthesocialnetworkanalysis
methodisitsabilitytocaptureinvisualformthe
complexsystemicrelationsbetweenawide
rangeofactors.theanalysisherehadillustrated
PAGE | TwENTy NiNE
theexistenceofsub-groupsthatarelooselytied
together.wemighthaveanticipatedmuchhigher
levelsofdensitywithinthenetworkreflecting
tighttiesbetweengovernanceactorsand
multinationalsinaddressingskillsissues.
however,itisveryapparentfromtheexample
examinedherethattheterrainischaracterisedby
asmallnumberofclosedtiesandahigher
degreeofopenties.Inthesecircumstanceswe
seeasmallnumberofgovernanceactors
performingabrokeringrole.Itremainstobeseen
whethertheinstitutionalrestructuringcurrently
underwaywillgeneratedifferentrelations
figure4:graphicalrepresentationofthedidacticrelationshipsbetween14networkmembers
betweengovernanceactorsandprivatefirms.
however,wherebrokeringrelationsarecommon
wealsotendtofindasingleorganisationandits
membersbuildupsignificantinstitutional
knowledgeregardinghowtoleverageresources
withinthenetwork.thisagainhasimplications
duringstructuralchangewithregardtowhere
thisknowledgegoesandthetimethatmaybe
takentogeneratenewinstitutionalknowledge
amongpartners.theinterviewevidencewould
suggesttheinstitutionsarealready
accommodatingtothisneedthroughthe
movementofpersonnelfromoldinstitutionsto
new.
thelackofdensityandbyimplicationthelarge
numberofstructuralholeswithinthenetwork
mayreflecttheresourcedynamicsunderpinning
tieswithinthisspecificnetwork.muchofthe
activitywithinthisnetworkisdrivenbyfunding.
thenetworkstructureappearstooperateasa
meansofmatchingfundingtosmallnumbersof
actorsratherthanwholegroupsofactors.once
thefundingfinishesthetiesarebroken.equally,
competitionbetweenthemultinationalsmaybe
moredominantthanthedesireorneedfor
collaboration.therefore,aslongasaperception
ofcompetitionbetweenactorsforlimited
resourcesisprevalenttheexpectationfor
PAGE | ThirTy
collaborationandclosedtiesamongnetwork
actorswillnotbemet.
Endnotes
1
egonetworkscanbecollectedthroughsurvey
orinterviewwherealistofnetworkmembersis
generatedandthenindividualsareaskedabout
theirtiestothoseonthelist.
2
graphbasedontheegonetworksof14focal
organisations
3
graphbasedontheegonetworkofthe
regionaldevelopmentagency
PAGE | ThirTy ONE
 ChAPTEr 5
S U M M A R y F I N D I N G S F R O M T H E I N T E R N AT I O N A L P R O J E C T
Introduction
Inordertogainafullerunderstandingof
relationsbetweensub-nationalgovernance
actorsandmncsunderavarietyofeconomic
andpoliticalsystems,ourresearchhasbeen
replicatedacrosssixotherregionsinthreeother
countries.thesewerecanada(Quebecand
ontario),Ireland(shannonandthegaeltacht
region)andspain(asturiasandthemadrid
region).withtheexceptionofIreland,research
isstillongoingatthetimeofwriting.thischapter
thereforebrieflysummarisesfindingstodate.
Spain
spainisanotablylessliberaleconomythanthe
othernationsundercomparisonhere.Italsohas
amongthehighestdegreesofregionalpolitical
decentralisationineurope.spainisdividedinto
17autonomouscommunitieswithdirectly
electedparliamentsandgovernments.these
haveextensivecompetenciesinplanning,
transport,cultureandsport,agriculture,health,
educationandsocialassistance,aswellas
economicdevelopment.referencesbyour
intervieweesto“thegovernment”frequently
meanttheregionalratherthannational
government.thedriversfordecentralisation
remainarepoliticalratherthaneconomic,related
to(continuallyrenegotiated)compromises
betweenthenationalstateandsub-national
politicalactors;thelatterare,inmany
autonomouscommunities,eitherstrongly
regionalistorsometimes,toagreaterorlesser
degree,separatist.
whilewehavesomeevidence,particularlyfrom
themadridregion,oflargemultinationals
seekingpoliticaldealswithnational
governmentalactors,thebroaderpictureisthat
publicresponsibilityfortheattractionand
retentionoffdIisheldatregional(autonomous
community)level,withthenationalstatehaving
relativelylittledirectinvolvement.substantial
fdI,particularlyintheautomotivesector,dates
backintothefrancoera(1939-1975).the
moderncompetitionforfdI,however,dates
fromspain’sentryintotheeuropeancommunity
in1986.sincethen,therehasbeenintense
geographicalcompetitionforfdI.while,as
elsewhere,thereisobviouslycompetition
betweenlocalitieswithregions,and,wherelocal
authoritiesarerelativelypowerful,suchasthe
cityofmadrid,thereremainsthepossibilityof
conflictsofjurisdictionbetweenlocaland
regionaldevelopmentagencies,thelocusofthis
competitionisprimarilyregional.this
competitionhascentrednotonlyonnew
investment,butalso,andinsomeperipheral
industrialregionssuchasasturiasparticularly,
onmaintainingemploymentwithinlarge
privatisedplantsintheextensiveformerly
nationalisedsector,whichhavebeenextensively
rationalisedastheirownershiphaslargely
passedintoforeignhands.regionshaveinward
investmentagencieswithsubstantialdaytoday
autonomy,butunderthecontrolofregional
governments.thesearefairlypolitical
institutions,withtheirleadershipsubjectto
changefollowingthepoliticalfortunesofthe
regionalgovernment.
giventhesubstantialautonomyofregional
governments,regionshavebeenabletoseek
fdIthroughintra-nationalvariationsinelements
ofthesub-nationalbusinesssystemsfacing
potentialinvestors,andtoadoptdifferent
PAGE | ThirTy TwO
approachestowidercoordination–madridis
theepitomeofneo-liberalisminaspanish
context,whileasturiashas,sincethe1980s,
largelyfollowedaformof‘business-friendly
socialdemocracy’,withemployers’associations
andtradeunionshavinganimportantrolein
governanceoftheregionalpoliticaleconomy.
thereisobviouslyariskthat,withinacountry
comprisedofwhatsomeofourinterviewees
regardedas17‘mini-states’,suchcompetition
becomes‘zero-sum’,basedoncompetitivegrant
orloanoffersfromthepublicsector.heavy
relianceongrantsinthe1980sand1990s,and
thesubsequentclosureofsomeplantswhich
werepubliclyfunded,hasindeedcontributedto
thenegativeimageofmncsamongmuchofthe
spanishpublic.onabroaderbasis,
intervieweesinvolvedinthedefenceofexisting
largeplants,particularlytradeunions,werewell
awareoftheproblemsofpotential‘regime
shopping’withinspain.
atthesametime,foreignmncsingeneraldid
appeartobemoreintegratedwithinregional
businesssystemsinspainthanwasthecasein
theuk(orIreland).Ingeneral,strategic
initiativesatthesubsidiarylevelseemedto
receivefairlyeffectivesupportfromgovernance
actors,eitherthroughregionalinwardinvestment
agencies,ormoredirectlythroughrelationswith
regionalministries.Inasturiasinparticular,
subsidiary-levelactorshadbeensuccessfulin
attractingglobaloreuropean-levelmandates,
includingsignificantresearchanddevelopment
activity.theexistenceofclearandrelatively
powerfulregional-levelinterlocutorswas
generallyacknowledgedasimportanthere.
additionally,inacomparativeperspective,the
existenceofstrongregionalidentitiesdidseem
tobeanimportantfactorincreatingconsensus
andrelativelystrongtiesbetweentheactors
involved.theimportanceofregionalgovernment
itselfcontributestotherebeingaconvergence
betweenthegeographicalscopeofpolitical
governanceareasandregionaleconomies,
althoughthisoperatesinanon-identicalway
acrossspain;asturias,forexample,isfor
reasonsofphysicalgeographyaveryself-
containedregionaleconomy,withlittleinter-
regionalcommuting,forexample,whilemadrid,
asthecapitalregionattractingsubstantial
headquartersaswellasindustrialfdI,hasmuch
morefuzzyeconomicboundaries,perhaps
makingregionalactionshardertocoordinate.
whilecollaborationwithhighereducation
institutionswascitedasbeingofimportancein
someinvestmentdecisions,itwouldthoughbe
anexaggerationtoseespanishregionsas
examplesofstrongregionalinnovationsystems.
mncs,particularlythoseoutsidethegroupof
foreign-ownedformerlynationalisedenterprises,
werenotveryactivelyembeddedwithskills
institutions.Inotherwords,theproductive
systemsofmneswerecreatedatoneremove
fromformalqualifications,andemployment
systemsoftenatoneremovefromnationaland
regionalindustrialrelationsactors,withaheavy
relianceonfirm-basedsystems.thus,as
previousresearchonemploymentrelationsin
mncsinspainhasfound(e.g.ferneretal
2001),theapparentlydenselyinstitutionalised
frameworkofspanishemploymentisinfactvery
malleableasappliedtomnes;particularly
amongnewentrants,regionalorsubsidiary-level
compromisesallowedforthecreationofvarious
formsofnon-unionhrmorofmicro-levelsocial
partnershiparrangements,bothofwhichwould
beextremelydifficulttoestablishinlarge
spanish-ownedfirms.
whilethequalificationsandskillsofthespanish
workforcewithinmneswerenotgenerallyseen
asproblematic,managersdependenton
relativelylocalisedsupplychainsdidhave
concernswithentrepreneurialandmanagerial
capacitywithinthe‘industrialtissue’ofsmaller
enterpriseswhichoftenhadpreviouslyfairly
captivemarketsinnationalisedenterprises.this
wasalsoaconcernofinvestmentagencies,
particularlyinthemoreindustrialeconomyof
asturias.thisdidleadthemanagersofsome
subsidiaryunitstoengageinqualityinitiatives
withindigenousfirms,throughopendays,
membershipofqualityclubs,etc.,goingbeyond
immediatemarketneeds,onafairlyad-hoc
basis.
Ireland
Ireland,perhapspartlybecauseitismuch
smallerthantheothertwocountriesconsidered
here,hasstronglycentralisedpolitical
administration,with94percentofpublic
expendituredecisionsmadeatanationallevel
(o’Broinandwalters2007),andafragmented
sub-nationalinfrastructure.whileboththe
regionsinwhichwecarriedoutfieldworkhave
economicdevelopmentagencies,theirremitis
somewhatlimited.whatismostdistinctiveabout
Ireland,however,istheweightoffdIwithinthe
economy.thisisdrivenbyalong-heldpolitical
consensusoveranfdI-drivenindustrialpolicy,
withsupportforlowcorporationtaxand
liberalisedtradepoliciesextendingthroughout
thepoliticalclass.
thus,certainlycomparedtoengland,and
despitefragmentedsub-nationalgovernment,
IrelandhasanarticulatedfdI-orientedbusiness
system.thustheattractionandretentionoffdI
inIrelandoperatesviaahierarchy,witha
predominantlynationallevelorientation.the
nationalinwardinvestmentagenda,Industrial
developmentauthority,Ireland(IdaIreland),has
anextensiveremitandisrelativelypowerful;this
tendstooverrideregionalfocus,aswherefdI
PAGE | ThirTy ThrEE
locateswithinIrelandisnotaprimary
considerationforIdaIreland.Belowthis
national-leveltier,highereducationinstitutions
andnetworksofsupplychainfirmsoperateasa
secondarybodyofinstitutionscentraltothe
attractionandretentionoffdI.thesub-national
levelsubstructure–localandregional
government,thelocalofficesofIdaIreland,
regionaldevelopmentagencies–hassomerole
inlocalnetworkingandaccesstoresources,but
overallhasalwayshadamuchmorelimitedrole.
withinthisformalpicture,Irelandisalsomarked
bythedistinctiveimportanceofinformal
networking–bothamongmncs,among
institutions,andattheintersectionsbetweenthe
two-atthesub-nationallevel.Institutionalaction
tendstocoalesceinrelationtofdI.Institutions
tendtoadoptahomogenousperspectiveonthe
roleandimportanceoffdItonationalandlocal
economies,andthussystematicallyengage,
bothformallyandinformally,toencouragea
positiveenvironmentforfdI.Institutional
engagementwithmnesoccursbothona
personallevelandaformalinstitutionallevel,to
enhancepositiveinteractionsandestablish
goodrelationswithinthesubnational
environment.finally,thereisevidenceofmncs
engaginginpositive,informalorsemi-formal
networking,namelycollaborationonwinning
newmandatesandinvestment,sharingbest
practiceoronissuesofcommoninterest,such
asinfrastructurewithinthesubnationalspace.It
appearsthereisasignificanttendencyformnc
subsidiariesinIrelandtointeractwithotherIrish
subsidiariesinordertoenhancetheirpositionto
corporate.additionally,theinformalrelationships
oflocalsubsidiarymanagerswithinandbetween
mncsinthesubnationallocationoffera
significantcontributionthroughtheinformal
transferofknowledge,accesstounique
resourcesandpersonalnetworking.thissortof
activitywithinmncsappearstogowellbeyond
whatisfoundelsewhere.
thisispartlyaneffectoftheexistingweightof
fdIwithintheeconomy,andtheconcentration
ofmanagerialtalenttowardstheforeign-owned
sector.Intervieweesrepeatedlyarguedthat,over
time,Irelandhaddevelopedacadreofmanagers
whohadbecomeschooledinanmne
environment;theyhaddevelopedskillsand
politicalacumen,notonlyontechnicalissuesof
managementbutalsoindevelopingand
influencingcorporatedecision-makers,attracting
newmandatesandgenerallyembeddingmncs
moredeeplyinIreland.thisisalsoaffectedbya
particularformofoverspillresultingfroma
patternofformermnemanagerssettingup
supplychainoperations.
fdIinIrelandisfairlystrongly‘clustered’ona
sectoral-regionalbasis.thereishoweverno
evidenceofadeliberatepolicytostrategically
produceclustersinIrelandbutrather,thenatural
andorganicgrowthofparticularsectorsin
particularlocationshasbeenidentifiedby
institutionsandnowoffersasourceof
advantage.arangeofinstitutionshavenow
adoptedtheperspectiveofclustersinIreland,
withIdaIrelandusingthepresenceofsectoral
clusteringasamarketingtooltoattractnew
investment.thirdleveleducationalinstitutions
arefosteringstrongresearchlinkswithlocal
industrytoenhanceresearchcapabilitiesand
skillsdevelopment.also,localindigenous
industryisbeingpromotedbyotherinstitutions
tocreateasupplynetworkintheregion.
therefore,whileclusteringinIrelandwasinitially
serendipitous–associatedlargelytothe
availabilityofresources–thepresenceofa
clusterinalocationhasbeenidentifiedbylocal
institutionsandiscurrentlybeingadoptedasa
potentialmeansofattractingandretaining
investment.thepresenceofstrongpersonal
relationshipsbetweenindustryactorsand
managerswithinthesubnationalenvironment
hasbeenrecognisedasasignificanttoolinthe
transferofknowledge,developingsubsidiary
portfolioandembeddingthesubsidiarywithin
thelocation.
Insummary,intheformalspherethenational
investmentagencyIdaIrelandisofover-riding
importance.thisorganisationinmanyways
reflectsanationalconsensusonattractingand
retainingfdIinIreland.forallsignificantactors,
whetherspecificallymandatedtodosoor
otherwise,puttingonthe‘greenjersey’and
helpingthiseffortisimportant:whileissuesof
theintra-nationaldistributionofinvestmentare
notabsent,theyareofsecondaryimportance.
thisverystrongconsensusalsosomewhat
overridesthe‘skillsecosystem’roleofsome
institutionalactors,withsolutionssoughtmore
bydirectnetworkingratherthan,asismorethe
caseinengland,navigatingtheformalskills
system.
Canada
canadaisbroadlyaliberalmarketeconomyby
anyeuropeanstandards.however,itisnotably
less‘liberal’withinanorthamericancontext,
withalargerwelfarestateandasomewhatmore
employee-friendlyemploymentsystem.outside
thelargenaturalresourcesector,canadian
provincescompeteforfdIonthebasisofhigh
qualitygeneraleducationandvocationaltraining.
Interviewsalsorevealedthatrelativelyopen
federalimmigrationpolicieswereimportantin
attractingfdIbyincreasingthepossibilitiesof
attractinghighlyeducatedandskilledworkers;
thiswasparticularlythecaseinontario,whichis
inverydirectcompetitionforinvestmentwiththe
northernunitedstates.overallthough,the
concentrationofgovernanceactorson
developmentthroughforeigninvestmentwas
perhapssomewhatmoremoderatethaninthe
europeaneconomiesexaminedhere.InQuebec,
inparticular,theprovincialstate’sdevelopment
strategies,whileencouragingfdI,remainedpre-
occupiedwiththedevelopmentofinternationally
competitivelocalfirms.
PAGE | ThirTy FOUr
theprovincesofcanada(ontario,Quebec,
etc.)have,byanystandards,anextremelyhigh
levelofautonomyovermostdomesticaffairs.
provincialgovernmentsarethekeyactorswith
regardtofdIgovernancepolicy,andalsohave
substantialautonomyoverissuesrelatedto
employmentandskillsgovernance.Beneaththis,
sub-provincial‘regions’haveverylittlepolitical
autonomy.
themainlocusofpoliticsinQuebecis
separatismvs.federalism.thisisimportantfor
tworeasons.first,provincialstateattemptsto
reinforceaQuebecoisnationalidentityextendto
thefieldofeconomiccoordination.second,
electorally,conventionalconservativepartiesare
blockedfrompower.Quebecconsequentlyhas
pursued(atleastinanorthamericancontext)
relativelysocial-democraticpolicies.equally
institutionalisedrelationsbetweenemployers’
organisationsandtradeunionsonmatterssuch
asskillsaremuchdenserinQuebecthanin
ontario.Ingeneral,ontariopursuesamore
conventionallyliberalapproach,withfewer
attemptsatsystematiccoordinationbetween
civilsocietyactors.
Inwardinvestmentagencieshavearelatively
restrainedroleinbothprovinces;theirremit
doesnotextendbeyondtheattractionofinward
investment.sub-provincialofficesofthe
Quebecoisinvestmentagencyexist,buthaveno
realautonomyofaction.localinvestment
agencies–suchasinthehighlysuccessfulcase
of‘canada’stechnologytriangle’inthe
kitchener-waterloo-cambridgeareawestof
toronto–emergeonanad-hocbasisinontario.
theexistenceofQuebecois‘regionalpolicy’
leadstoinstitutionalisedstatesupportforlocal
inter-firmcooperationinlocalisedsectorsinthe
formofacluster-typestrategy.somelarge
mncshavetakenleadrolesofthesesectorally
basedalliancesofemployers.
Ingeneral,thecanadianworkforceishighly
skilled,andbothfurthereducationcolleagues
(“communitycolleges”inontario)anda
successfulhighereducationsectorhavehigh
degreesofcapacitytocollaboratewith
business.thisisadistinctcompetitive
advantage,includingformanualwork,wherethe
skillsprofileisrecognisedby,forexample,auto
manufacturersasbeingsubstantiallyhigherthan
inthecaseofusstates.
Concluding remarks
thereisaclearandunsurprisingdifference
betweenthecanadianandspanishcases,
wheresub-nationalgovernanceisstructurally
important,andtheenglishandIrishcases.for
thoseseekingtoattractandembedfdI,this
allowsadegreeoflocalflexibilitywithinthe
overallnationalbusinesssystem.thisallows
regionalactorstocreateinstitutionalised
patternsofcooperationwhichaugmentthe
nationalbusinesssystem,butatthesametime
sometimesriskscreatingzero-sumcompetition
betweenregions.Ireland,ontheotherhand,
retainsmanyofthefdI-facingadvantagesofa
liberalmarketeconomy,while,throughastrong
andstrategicconsensusontheimportanceof
attractingandretaininginvestment,overcoming
manyproblemsofcoordinationthroughrelatively
informalnetworkingbothatnationalandmore
locallevels.aswehaveseen,thecapacityof
thisnetworkiscloselyrelatedtoan
interpretationofIrish(economic)nationalidentity
thatisstronglyfdI-oriented;theveryweightof
fdIwithintheIrishnationaleconomycreates
mutually-reinforcingeffectsinthisregard.
theissueofscaleisimportant;forrelatively
smallstatessuchasIreland,theremaybeless
functionalneedforregionallevelsofnon-market
coordination.withinlargerstates,furtherworkis
requiredonthescaleatwhichthedevelopment
ofsub-nationalsystemsismostlikelytohave
someeffectiveness.Intervieweesinvarious
placeshavearguedthatthismightbeamatter
ofpopulation(i.e.whatisasensiblescaleat
whichtoattempttocoordinatefdIandrelated
businesssystemactivities),oflabourmarket
areas,ofaccordancetotheregionalidentitiesof
thepublic,orofsomecombinationofthese
factors.whilesub-nationaleconomicspacecan
beimportantinthepotentialcreationof
competitiveadvantageinattractingand
embeddingfdI,theprocessoftheconstruction
ofthegeographicalspace,andthelevelsofsub-
nationalautonomywithinit,isinherently
embeddedinnationalandmorelocalpolitics.
ourcomparisonsshowtheexistencebothof
neo-liberalapproachestofdI(england,Ireland,
ontario,and,atleastwithinaspanishcontext,
madrid),andmoreactivelycoordinated
approaches(asturias,Quebec).Boththese
approachescan,intherightcircumstances,be
successfulinattractinggoodqualityinward
investment.however,itoughttoberemarked
thattheliberalapproachesofIrelandand
canadaarestronglysupportedbypastand
currentcoordinationeffortsintheorganisationof
state-fdIrelations,andintheskillsdomain(itis
notableinthisregardthatconcernsaboutskills
deficienciesremainfarmorecommoninengland
thanelsewhere).therecentreductioninthe
degreeofcoordinationofsub-national
economies,alongsidethecentralisationoffdI
attraction,inenglandthereforeissomethingof
anuncontrolledexperiment.
PAGE | ThirTy FivE
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