Management Under DifferingLabour Market andEmployment Systems

EditorsGiinter Dlugos, Wolfgang Dorow, Klaus Weiermairin collaboration with Frank C. Danesy

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Walter de Gruyter • Berlin • New York 1988

Contents

Contributors XIXIntroduction XXI

A. The Future of the Working SocietyThe Future of the Working Society 3Friedrich FurstenbergAbstract 31. The Image of a "Working Society" 32. Indicators of Structural Change 43. Alternative Interpretation Patterns 64. Perspectives for Management 8References 10

Labour as Factor of Production or Yardstick for Distribution 11Reinhard BlumAbstract 11Introduction 111. Production and Distribution in Traditional Economic Theory 12

1.1 Mercantilism, Labourism, and Capitalism 121.2 Socialism, Social Liberalism, and Democracy 131.3 From Microeconomics to Macroeconomic Revolution 14

2. New Theoretical Foundations for an Old Paradigm 152.1 New Capitalism by Counter-Revolution 152.2 In Search of Microfoundations of Macroeconomics 152.3 From Political Economy to Economic Theory of Policy 16

3. New Theories for Man Instead of a New Man for Theories 173.1 Bad Fruits ofTraditional Economic Thinking 173.2 Arrogance of Knowledge by "Strange Slopes" of Logic 19

4. Liberalism or Economic Liberalism as Ruling Paradigm 214.1 "Ultimate Economic Truths" or Arrogance of Knowledge 214.2 Social Costs of Man 214.3 Right Ways as "Third Ways" and Right Decisions on the Way 224.4 Public Wealth Through Markets and Democracy 23

References 24

B. Theoretical Approaches to the Analysis of ManagementEmployee RelationsThe Employment Relation from the Transaction Cost Perspective 29Arnold Picot and Ekkehard WengerAbstract 291. The Transactions Cost Perspective as a Ramification of Neoclassical Economics 29

VIII Contents

2. The Employment Relation in Free Labor Markets 313. The Employment Relation under Modern Labor Law 35Appendix: Discussion 38Notes 40References 42

Asset Specificity, Governance, and the Employment Relation 45Louis PuttermanAbstract 45Introduction 451. Theories of the Firm and the Employment Relationship 462. Williamson on Asset Specificity and the 'Hold-up' Problem 483. A Comparison of Williamson's and Knight's Theories 524. Asymmetry of Risk or of Ability to Bear It? 545. Teams, Quasi-Rents, Profit-Sharing, and Control 56Notes 59References 61

An Evolutionary View on Changes in Employment Relationships:The Evolution of Organizational Control in the United States 63Udo Staber and Howard AldrichAbstract 631. Introduction 632. The Concept of Organizational Form 64

2.1 Labor Process 642.2 Labor Markets 65

3. An Evolutionary Framework 663.1 Four Basic Processes 663.2 Environmental Characteristics 67

4. The Evolution of Labor Control Structures 684.1 Handicraft to Factory Production 694.2 The Rise of Large Firms 704.3 The Rise of Managed Labor Markets 714.4 A Decade of Change: After the "Oil Shock" 73

5. Conclusion 75References 76

X-Efficiency, Managerial Discretion, and the Natureof Employment-Relations: A Game-Theoretical Approach 79Harvey Leibenstein and Klaus WeiermairAbstract 791. Introduction 792. Comparative Management Systems: A Game and Convention Theoretical Analysis . . . 803. Comparative Employment Relations and Management Systems: An Organisation

Theory Perspective 844. Norms, Conventions, and Motivational Consequences 88

Contents IX

5. Summary and Conclusions 90Notes 91References 92

Management from an Institutional/Biological Perspective 95Hoyt N. Wheeler1. Introduction 952. What Is "Management"? 953. "Human Nature" and Management 97

3.1 Does Human Nature Exist? 983.2 Relevance of Human Nature 100

4. Management Response to Varying Conditions and Constraints 1025. Conclusions 104References 105

The Analysis of the Employer Employee Relationship from the Perspectiveof the Business Politics Approach 107Gtinter Dlugos, Wolfgang Dorow, and Frank C. DanesyAbstract 1071. The Enterprise and its Members 1072. Employers and Employees as Opponents in Individual and Collective Exchange Rela-

tionships 1083. Non-Conflictive and Conflictive Interaction 1104. The Two Causes of Conflict-Emergence 1105. The Revision of Primary Goals vs. the Handling of Conflict 1126. The Two Basic Methods of Conflict Handling 1137. The Determinants of Employer Discretion 115Notes 116References * 117

C. Management and Labour Market Systems

Work Ethics in Transition 121Burkhard StrumpelAbstract 121Introduction 1211. Hypotheses 1222. Findings 1233. Interpretation 1274. Consequences 129References 132

The Inflexibility of Labour Market Related Institutions -Some Observations for Germany 133Norbert WalterAbstract 133

Contents

1. Introductory Remarks 1332. Causes of Unemployment 1343. The Trends in the German Labour Market 1354. Excessively High Wage Costs-At the Root of the Employment Problem 1365. CarteUzed Labour Market 137References 142

Social Boundaries of Labor Markets '. . . 143Giinter EndruweitAbstract 1431. Markets and Labor Markets 1432. The Stuttgart Labor Market as an Example 1443. Inadequacies of the Traditional Labor Market Concept 1444. A Social Science Concept of Labor Market 145

4.1 Local Labor Markets 1464.2 Interlocal Labor Markets 146

4.2.1 Labor Markets with Migration Mobility 1464.2.2 Labor Markets with Commutation Mobility 147

5. Management's Chances in the Definition of Labor Markets 148Notes 150References 151

Labour Market Rigidities: Economic Analysis of Alternative WorkSchedules Including Overtime Restrictions 153Morley Gunderson and Klaus WeiermairAbstract 1531. Introduction 1532. Economic Determinats of Hours of Work Schedules 1543. Non Wage Quasi-Fixed Labour Costs 1564. Fixed Time and Money Costs for Workers 1585. Voluntary Overtime 1586. Restrictions on Overtime to Create Employment 1597. Efficiency Rationale for Some Labour Market Rigidities 162References 163

The Impact of Environmental Trends on the Legitimacy of Trade Unions inCanada 165Daniel OndrackAbstract 165Introduction 1651. Legislative Trends 1672. Sophistication of Personnel Management 1693. Quality of Work Life 1714. Substitution of Technology for Labour 1725. International Competition 1736. The Outlook for Union Legitimacy 174References 175

Contents XI

The Role of Management in a Political Conception of Industrial Relations atthe Level of the Enterprise 177Roy J. AdamsAbstract 1771. Introduction 1772. The Enterprise as Polity 178

2.1 Autocracy 1782.2 Constitutionalism 1802.3 Democracy 182

3. Why the Discontinuity? 1864. Conclusion 187Notes 188References 189

Management Between "Old" and "New" Production Concepts and Its De-pendence on Factors in the System of Vocational Training and Employment . 193Margit OsterlohAbstract 1931. Introduction 1932. Technological and Market-Related Prerequisites for New Production Concepts 1943. Qualification-Related Prerequisites for the Introduction of New Production Concepts . . 1964. Factors in the Vocational Training System and Employment System Which Influence

Decisions in Favor of Old or New Production Concepts 198Notes 202References 204

The Changing Nature of Industrial Relations in the UK and its Impact onManagement Behaviour 207Mick MarchingtonAbstract 2071. Introduction 2072. The National Context 2083. Macho Management 2104. The Corporate Context 2125. Variations in Management Style ' 2146. Conclusions 218References 219

Trends in the Development of Industrial Democracy in Greece and TheirImpact on Management Discretion 221Andreas NikolopoulosAbstract 2211. Introduction 2212. Typical Features 2213. Relations in the Field of Companies 223

3.1 Legal Settlements 2233.2 Factors Which Determine Bargaining Behaviour 224

XII Contents

3.3 Criticism 2254. Limitations in the Management's Bargaining Ability 2255. Politics for the Settlement of Conflicts 228Notes 229References 230

Future Trends in the Greek Labour Market 233Athanasios N. StathopoulosAbstract 2331. Introduction 2332. The Greek Labour Market as a Demographic Problem Before and After World War II . . 234

2.1 Historical Evolution of the Greek Labour Force Profile 2342.2 Main Factors Contributing to the Changes in the Labour Force Profile 236

2.2.1 Industrialization of Greece 2362.2.2 Tourist Development 2362.2.3 Development of Merchant Marine 2372.2.4 Emigration and Repatriation 2372.2.5 Evolution of Education 238

3. The Present Situation in the Labour Market 2383.1 Problematic Redistribution of Income to the Labour Force 2383.2 The General Change of the Climate in the Private Sector 2413.3 The Increase of the Production Cost and Increase of Unemployment 2423.4 The Promotion of Small Industry 2423.5 The Continuous Pressures Exercised by the Labour Force 242

4. The Perspective in the Labour Market 2434.1 First Alternative 2434.2 Second Alternative 244

5. Conclusions 245References 245

Employment Policy in the USSR - Limitations on Enterprises' Personnel andWage Policies 247Hans-Erich GramatzkiAbstract 2471. Introductory Remarks 2472. Central Planning and Enterprise Powers 2493. Central Planning and Regulation of Labor and Wages 2504. The Soviet Labor Market 2525. Enterprise Labor and Wage Policy 2546. Reforms and Experiments 2557. Concluding Remarks 258References 258

The Development of the Labour Market in Poland - Restrictions forManagement 261Jerzy KortanAbstract 261References 271

Contents XIII

The Changing Industrial Relations Scene in Japan and its Impact onManagerial Behavior 273Robert M. Marsh and Hiroshi MannariAbstract 2731. The Japanese Economy in the 1970s and Early 1980s 2732. Managerial Response 2743. Data and Methods 2754. Management Discretion Concerning the Size of the Work Force 2765. Causes of Changes in Factory Size Between 1976 and 1983 2786. Managerial Decisions Concerning Technology and Size 2827. Does Unionization Constrain Managerial Decisions Concerning Technology and Size? . 2848. Conclusion 285Notes 286References 286

The Flexibility of Labor Market in Japan 289Minoru MurataAbstract 289Notes 296References 297

D. Management and Employment Systems

Employee Participation by Codetermination, Labor Law, and CollectiveBargaining 301Hans G. NutzingerAbstract 3011. Introduction 3012. Limitations of Managerial Discretion by Means of Employee Participation in the Federal

Republic? 3023. Some Basic Theoretical Problems 3034. Attempts at Empirical Evaluations of Employee Participation in West Germany 3055. Participation and Managerial Discretion in the Federal Republic of Germany 3076. Concluding Remarks 310Notes 311References 311

Predicting Austrian Leader Behavior from a Measure of Behavioral Intent:A Cross-Cultural Replication 313Wolf Bohnisch, James W. Ragan, Gerhard Reber, and Arthur G.JagoAbstract 3131. Introduction 3132. Method 3153. Results 3164. Discussion 318References 321

XTV Contents

The Changing Face of Personnel Management 323

Wolfgang H. Staehle

Abstract 3231. Leadership in the 1990s-Leadership in a Post-Materialistic Society? 3232. Is Personnel Management a Skill that Can Be Taught and Learned? 3263. Why Should Personnel Management Take Account of a Change in Values? 3274. Recent Trends in Management Research and Practice 3295. Conclusion 333References 333

P a r t - T i m e L a b o r : C a u s e s a n d C o n s e q u e n c e s f o r M a n a g e r i a l D i s c r e t i o n . . . . 3 3 5Klaus WeiermairAbstract 3351. Introduction 3352. Development and Prevalence of Part-Time Employment 3363. The Evolution of Part-Time Employment as a Labor Supply Phenomenon 3394. Output Changes and the Derived Demand for Part-Time Labor 3415. Part-Time Labor in Production and Work Organization: Employer Perspectives 3426. Part-Time Labor, Employment System, and Managerial Discretion 344Notes 348References 348

T h e A d j u s t m e n t o f W o r k e r s a n d H o u r s t o C h a n g e s i n P r o d u c t D e m a n d . . . . 3 5 1Kornelius KraftAbstract 351

1. Introduction 3512. Explanations of Adjustment Costs 3523. Empiricallnvestigation 355

3.1 The Partial Adjustment Approach 3553.2 Data, Specification, and Estimation 3563.3 Results 360

4. Conclusions 360Notes 361References 361

Educational Expansion, Change in Organizational Structures, andManagerial Discretion 363Wolfgang RippeAbstract 3631. Definition of the Problem 3632. Notes on the Explanation of the Term "Managerial Discretion" and on Its Aspects . . . . 3643. Change in Managerial Discretion by Way of Education Induced Change in Organiza-

tional Structures? 3653.1 Existing Hypotheses 3653.2 Educational Expansion and Change in the Configuration of Organizations 3663.3 Educational Expansion and Centralization of Organizational Structures 370

Contents XV

3.4 Educational Expansion, Formalization, and Standardization of OrganizationalStructures 371

3.5 Interim Balance 3724. Change in Managerial Discretion Without Education Induced Change in Organizational

Structures? 3735. Conclusion, Limitations, and Outlook 377Notes 379References 379

Anti-Discrimination Legislation and Its Impact on the EmploymentRelationship: The Case of Affirmative Action and Equal Pay 383H. T. WilsonAbstract 3831. Discretion and the Manager's Non-Economic Functions 3832. Differential Gendering in the Workplace: The Impact of Affirmative Action Legislation 3873. Differential Gendering in the Workplace: The Impact of Equal Pay Legislation 3904. Conclusion 394References 394

Employee Severance - Regulations and Procedures 397Walter A. OechslerAbstract 397

1. Employee Separation Procedures 397

1.1 Ordinary Dismissal (§ 622 BGB) 3981.2 Extraordinary Dismissal (§ 626 BGB) 3981.3 Limited Contracts (§ 620 BGB) and Resignations (§ 305 BGB) 398

2. Regulations for the Protection of Employees in the Dismissal Process 3992.1 General Protection Principles for Employees 399

2.1.1 Ordinary Dismissals (§ 1 KSchG) 3992.1.2 Mass Dismissals (§ 17 KSchG) and Takeovers (§ 613a BGB) 401

2.2 Special Protection Regulations for Certain Groups of Employees 4012.2.1 Workers'Representatives (§ 15 KSchG) 4012.2.2 Other Groups 401

2.3 Participation of Workers' Representatives in the Dismissal Process 4012.3.1 Participation in the Process of Ordinary and Extraordinary Dismissals

(§§ 102,103 BetrVG) 4012.3.2 Participation in the Process of Mass Dismissal (§§ 111,112,112aBetrVG) . . 403

2.4 Claims for Further Employment 4032.4.1 Companies with Workers'Representatives (§ 102 BetrVG) 4032.4.2 Companies without Workers'Representatives 403

3. Empirical Findings ». 4033.1 Frequency of Dismissals 4033.2 Reaction of the Worker's Representatives 4073.3 Further Employment after Dismissals 4073.4 Compensation Payments 408

4. Theoretical Assumptions 409References 409

XVI Contents

Measures for the Activation of Employees in Poland and the Limitations ofThese Measures 411Leslaw MartanAbstract 4111. The Labour Market in the Eighties 4112. Central Interference in Labour and Wage Processes 4133. Final Remarks 416References 417Regulations 418

Forms of Employment and Payment Under Conditions of ManpowerShortage in Poland 419Ber HausAbstract 4191. The Labour Market and Employment Situation in Industrial Enterprises 4192. Forms of Employment in State-Owned Industry 4213. Payment Methods in Manufacturing Industry 423

The Impact of Increased Utilisation of Microelectronics on Employment,Production Process, and Job Organisat ion-The Japanese Viewpoint 427Yoshiaki TakahashiAbstract 4271. The Fundamental Characteristics of Microelectronic Technology 4272. The Impact of Increased Utilisation of Microelectronics in Enterprises 4293. The Measures Taken for Spared Workers 4314. The Impact of the Utilisation of Microelectronics on Job Structure 4345. Microelectronisation and the Labour Union 436References 438

E. Comparisons and Possibilities in the Development of LabourMarket and Employment Systems

A Comparative Analysis of Worker Participation in the United States andEurope 443Bikki JaggiAbstract 443Introduction 4431. Historical Perspective of Worker Participation in US Industries 4442. Worker Participation in US Industries Through Collective Bargaining 4453. Emergence of Participative Management 446

3.1 Nature of Participative Management 4463.2 Critical Evaluation of Participative Management 446

4. Comparison of US Participative System With Plant-Level Worker Participation inEurope 4474.1 Worker Participation through Works Councils in Europe 447

Contents XVII

4.2 Divergence in US and European Approaches to Worker Participation 4484.2.1 Divergence in the Nature of Worker Participation 4484.2.2 Divergence in the Goals of Worker Participation 4494.2.3 Divergence in the Scope of Worker Participation 450

5. US Experience With Worker Participation at the Board-Level 4505.1 Board-Level Worker Participation in Europe 4505.2 Relevance of European Type Board-Level Participation to US Industries 451

6. Environments and Worker Participation 4526.1 Impact of US Environment on Worker Participation Approach 4526.2 Impact of European Environments on Worker Participation 452

7. Conclusion 453References 454

Potential Constraints Upon Management Action as a Function of NationalWork Meanings and Patterns-Germany, Japan, and the USA 455George W. EnglandAbstract 4551. Introduction 4552. The Meaning of Working Study 456

2.1 Samples 4562.2 Work Centrality 4572.3 Societal Norms About Working 4612.4 Work Goals 4632.5 Work Meaning Patterns 464

3. Summary 467Notes 467References 468

Chances for Flexibility in Cooperation Between Company Management andWorks Councils 469Ernst ZanderAbstract 469References 475

Reconciling Efficiency and Equity in the Employment Relationship 477John CrispoAbstract 4771. The Competitive Challenge 4772. The Employment Relationship 4783. Employer Responses to These Developments 4804. Lessons to Be Learned 4815. Conclusion 483

Index 485