Strategic Investment and International Outsourcing in Unionised Oligopoly

Leahy, Dermot; Montagna, Catia

doi:10.2139/ssrn.1965974

Cited by 3 publications

(2 citation statements)

References 37 publications

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“…Company A’s decision to integrate an outbound transport workforce exemplifies how a firm’s governance structure can impact a worker’s industry classification and thus, representative union rights. Initially, engaging market firms to perform outbound transport requirements (2015c), it was Company A’s decision to integrate which incited increased union “aggressiveness” (an attribute often associated with outsourcing) (Leahy and Montagna, 2012: p. 261) and subsequently greater labour costs. Integration saw delivery “drivers” previously engaged by specialist road transport companies, thus underpinned by the wages and conditions of the Road Transport and Distribution Award 2010 (primarily represented by the TWU) (2017 b), transfer to the retail industry, underpinned by the General Retail Industry Award 2010 ( Fair Work Commission , 2018a ) , an industry commonly represented by the SDA (2015e; 2011).…”

Section: Case – Company Amentioning

confidence: 99%

Labour economy: do unions really influence sourcing decisions?

Boccalatte

2019

JMH

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Purpose This article aims to uncover the influence employment relations, and more specifically union avoidance has on the decision to outsource road transport. Employment Relations literature often attributes outsourcing decision to decollectivist strategies, minimising the influence unions have in their workplaces or to labour cost reduction objectives. These explanations, however, fail to explain why some firms do not outsource when their sourcing structure incurs greater union involvement or industrial relation. Design/methodology/approach The author examines two case studies. Company A and Company B, while operating in a similar environment, selling similar products and offering a similar home delivery service have adopted different governance structures for their outbound transport function; Company A has integrated while Company B has outsourced. Was union avoidance or transaction cost reductions central to their respective decisions? Findings Company A did not integrate in an effort to circumvent union intervention or reduce costs. Company A’s integration, on the contrary, increased the firm’s dealings with unions, as well as regulatory compliance and transaction costs. Company B’s decision to outsource yielded similar results. While not experiencing an increase in union intervention, the firm failed to reduce the density of unionised labour and by maintaining ownership of delivery vehicles, saw a rise in costs. Originality/value Union avoidance is not an explanatory factor in the sourcing decision, nor is it possible to explain through transaction cost economics. Explication for outcomes lies in value enhancement. Companies are willing to incur higher employment relations and transport costs if the result is higher value capture.

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Section: Case – Company Amentioning

confidence: 99%

Labour economy: do unions really influence sourcing decisions?

Boccalatte

2019

JMH

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“…Zhao () and Ishida and Matsushima () derive ambiguous effects of FDIs on welfare. Cao and Mukherjee () consider inward FDI and find that they decrease domestic welfare if the multinational firm is sufficiently technologically superior to the domestic firm (see also Leahy and Montagna, ). Other works deal with the effects of union power on inward FDI and how labour market institutions may change in response to FDI (see Naylor and Santoni, ; Vlassis, ; Vlassis and Mamakis, ).…”

Section: Introductionmentioning

confidence: 99%

Flexibility in Wage Setting Under the Threat of Relocation

Goeddeke

Haucap

Herr

et al. 2017

Labour

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. The working papers published in the Series constitute work in progress circulated to stimulate discussion and critical comments. Views expressed represent exclusively the authors' own opinions and do not necessarily reflect those of the editor. Terms of use: Documents in AbstractRelocation of production to countries with low labour cost have induced increased labour market flexibility, which has been praised as a silver bullet for economic growth and low unemployment. Within a unionised oligopoly framework, in which a multi-national firm has the option to relocate its production to a foreign country, we analyse the welfare implications of both centralised and flexible wage setting regimes. For very low foreign wages, wage flexibility leads to higher welfare than a rigid centralised regime. In contrast, for "intermediate" wage levels in the foreign country, an industry-wide uniform wage leads to higher social welfare than flexible wages.JEL Classification: F23, J51, L13.

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