Firm Performance and Employee Relations

Abstract

As outlined in the introductory chapter, the link between employee relations (ER) and performance in overseas subsidiaries of MNCs is more complex than that for indigenous firms. The preceding chapter has shown that ER patterns in MNCs’ international operations will be the outcome of a complex interaction between home-country, host-country and dominance effects. In turn, the results of this interplay — that is, the actual ER approaches adopted in subsidiaries — will influence subsidiary performance. Therefore, it is necessary to examine the theoretical aspects and the empirical evidence on the associations between measures of firm performance and different ER approaches. This entails a discussion of the effects on performance of the main voice structures in Germany and the United Kingdom. It also requires consideration of the effects of US-style direct voice approaches (which have been dubbed best practice) on firm performance. More specifically, it is necessary to examine the literature relating to trade unions, JCCs, works councils, high-involvement systems (HISs) and partnership models. This examination will be located within the framework set out in Chapter 5. In this framework, ‘voice’ provides an overarching concept to integrate these discrete literatures.