The effects of competitive pressures on labour market institutions and economic performance : a cross-country comparative study
Traditionally, industrial relations have been studied with relation to three fundamental theories: pluralism, unitarism and marxism. However, over the past decade there has been an increasing contribution to industrial relations emanating from the boundaries of other disciplines: principally economics, organizational behaviour and business strategy. Among economists, and to a lesser extent, business strategists, there has been a growing concern about the relationship between macro-economic performance across several countries and labour market institutions. This has manifested itself in discussion of how specific wage bargaining structures influence unemployment and inflation. In these discussions industrial relations specialists appear to lag behind their economist colleagues, tending to favour analysis of the intrinsic relations between employers and employees. An important advantage, however, of these studies in employee relations has been in their ability to explain the conduct of an industrial relations system. This has not led to any consensus and few of the studies conducted in the past decade have investigated the strategic behaviour of both employers and employees. None have attempted to examine the macroeconomic implications of behaviourial changes and wage bargaining. This thesis builds on work already in train in a number of disciplines: principally industrial relations, business strategy, organizational behaviour and labour economics. Cognisant of the work in these areas, the study develops a theory which explains how perceived and actual increases in international competition influence the choice which employers and employees make and which eventually shape their institutions. By departing from the traditional theoretical constructs used in industrial relations, our "new" theory provides a basis for cross-country comparisons of macro-economic effects of labour relations behaviour. From our theory we devise testable propositions and draw a wide variety of time series data over a period of some twenty years, from seventeen O.E.C.D. economies to test these. These data, which lend themselves to econometric analysis, are augmented by qualitative evidence from case studies. Findings support our theory. The thesis makes three distinct contributions. Firstly, it suggests a "new" theoretical approach to the study of industrial relations which combines work from several disciplines. In this regard, it contributes a theory which explains labour market changes by recourse to macro-economic performance. Secondly, it makes a contribution, albeit modest, to policy, suggesting that some current Western policies for labour relations are inadequate since they do not clearly show employers and employees the actual implications of macro-economic performance. Thirdly, the thesis highlights some of the shortcomings of econometric studies which focus on a relatively narrow set of variables at the exclusion of qualitative data which is difficult to quantify.