How National Institutions Limit Turnaround Strategies and Human Resource Management: A Comparative Study in the Airline Industry

Abstract

The influence of national institutions, particularly employee representation, on managers’ turnaround strategies remains largely unexplored in the literature. Therefore, this paper assesses the pressures that affected two European airline companies, British Airways (BA) and Iberia, and their turnaround responses in a context of economic crisis and austerity, particularly from the perspective of strategic human resource management (SHRM). Our case studies show that when national institutions grant a number of rights to employee representatives, an innovative HRM strategy enables the recovery strategy required to deal with internal sources of decline. In contrast, when national institutions provide fewer rights to employee representatives, there is room for company HRM strategy to challenge or resist institutional pressures. Our research focuses particularly on how coercive pressures exerted by employee representation, according to the legal framework governing labor relations, affect turnaround strategies.