Edited by Keith Townsend and Adrian Wilkinson
Chapter 14: Governance, Finance and Employment Relations
Geoffrey Wood INTRODUCTION This chapter provides an introduction to different ways of conceptualizing the employment relationship from an institutionalist starting point. Such approaches assume that employment relations will assume similar features in specific contexts: however, what defines context, and the manner in which relations evolve over time are the subject of intense debate. After an assessment of convergence accounts, this chapter reviews rational hierarchical accounts, an approach that is dominant within the institutionalist economics and finance literature, and more relationship-orientated accounts from a more heterodox socio-economic starting point. This is followed by a review of more recent accounts that explore institutional diversity and change. In each case, the specific implications for understanding employment relations are evaluated. CONVERGENCE APPROACHES Both within and beyond the field of industrial relations, there have been numerous predictions of convergence in rules and practice governing work and employment relations. A common strand in the undeniably diverse literature on globalization suggested that firms will naturally drift to adopting similar practices, owing to increases in global trade – and competition – and homogenization of markets and consumer taste (Hansmann and Kraakman, 2004). Meanwhile, during the heyday of neoliberalism, its proponents argued that countries will naturally converge onto a heavily deregulated model, characterized by highly competitive labour markets (Hansmann and Kraakman, 2004). In turn, these governance changes will enable firms to make the most efficient and economical usage of labour; meanwhile in perfectly operating labour markets, individuals will be incentivized to independently obtain the skills most valued by companies. Being a...
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