In this article, we ask how organizational restructuring towards a network form of service delivery challenges an established form of employment relations in Germany, that is labour–management collaboration. Building on a theoretical discussion of the marketization hypothesis, we develop a structuration perspective on the relationship between network restructuring and labour–management collaboration, which highlights the political economy of inter‐firm networks. Empirically, we focus on two major airport authorities in Germany. Our findings show how these authorities at the core of service delivery networks face a strategic trade‐off between short‐term labour cost reductions and more adversarial employment relations. Apart from coinciding with a deterioration in working conditions for service workers, the handling of this trade‐off depends on managers’ and worker representatives’ commitment to collaboration across the network. While unions and works councils initially continued with social partnership‐type practices, the more adversarial management practices for enacting the network restructuring cause a fragmentation on the workers’ side and increase the conflict potential. We conclude that the agency of management and worker representatives in the enactment of inter‐firm networks oscillates between more partnership‐like and more conflictive practices, which turn the network restructuring into a political process with divergent outcomes for employment relations.

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The article considers how (new) forms of horizontal disintegration, like onsite subcontracting, challenge and change the industrial relations institutions of the German coordinated market economy (CME). Focusing on firm-level co-determination practices, it analyses how works councils respond to strategies of onsite subcontracting and what effects their responses have for the employment system. Based on evidence from 12 case studies, it is argued that although onsite subcontracting might prompt institutional erosion, this does not pass uncontested. Rather, practices of networkoriented employee representation on the part of works councils might bring about an 'institutional completion', in this case, the institutionalisation of the network as an additional point of reference for employee representation. This may stabilise and even extend the scope of existing CME institutions through a process of 'institutional upgrading'. In some areas of the economy, however, management and works council practices are more likely to exacerbate dualisation and social inequality.

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