Multinationals’ Compliance with Employment Law: An Empirical Assessment Using Administrative Data from Ontario, 2004 to 2015

Abstract

This study contributes new evidence to the literature on multinational corporation (MNC) behavior by exploring three related questions: 1) Do MNCs comply with local employment laws in a developed country? 2) To the extent that compliance varies across MNCs, what factors are important in shaping compliance? 3) Is there a “foreignness” effect for MNCs operating in developed countries, and does this effect vary according to country-of-origin and/or union status? To investigate these questions, the authors compiled unique firm-level administrative data on MNC compliance with regulatory and quasi-regulatory employment practices during mass layoffs in Ontario, Canada. Adopting a research design that uses the behavior of Canadian MNCs as the comparison group, their key findings suggest that unions are a very robust predictor of compliance across all foreign MNCs and systematic country-of-origin effects on MNC compliance are present only in non-unionized workplaces.