Structural and Market Predictors of Corporate Labor Relations Strategies

Abstract

The authors develop a model predicting which of three broad labor-relations strategies—union avoidance, union-management collaboration, or a mixed strategy combining elements of union avoidance and collaboration—a company will adopt. A multinomial logit estimation using data on 58 large unionized manufacturing corporations confirms that market pressures and structural characteristics of the company are important predictors of strategy choice. Specifically, the worse the market conditions (as gauged by import penetration and industry employment), the more likely executives will choose union avoidance over collaboration and mixed strategies. Collaboration is more likely to be chosen the greater the percent of plants unionized and the higher the ratio of cost of goods to sales. The choice of the mixed strategy is more likely the higher the labor intensity, capital investment, and number of plants.