Search results

Internationalization of organizations has been a threat for (national) industrial relations. This study compares three cases to test the influence of works councils on decision-making in multinational companies (MNCs), going through reorganizations. The authors argue it is important to take account of internal factors in the subsidiary, namely the power capabilities and interests of the actors involved. They study these by looking at the network partners of works councils and aligned interests of local management and works council. The findings show that aligned interests form an important prerequisite for positive management attitude, trust and informal relations, positively affecting reorganizations in subsidiaries of MNCs.

AbstractGerman and Dutch law grant works councils (WoCs) a significant role in company affairs, accompanied by the obligation to act in the organization's overall interest. However, is this sufficient to ensure meaningful WoC involvement in practical organizational decision‐making? We use the well‐emphasized concept of trust from the voluntary employment voice literature as a foundation for exploring how managerial goodwill translates into employment relations regimes with strict mandatory employee voice elements. We take two cases of strict employee voice systems as our litmus test: Germany and the Netherlands. Through structural equation modeling, we unravel the direct and indirect effects on employee representatives' assessment of employee voice effectiveness, considering factors such as legislation, interpersonal relationships between WoC and management team, and union involvement. Trust is positioned as a central mediator. Utilizing unique survey data from 2014 that includes responses from German and Dutch works councilors, the results indicate that legal information rights alone do not solely promote WoC involvement in both countries. Trust also plays a vital role, demonstrating a direct positive effect on having a say and acting as a mediator for timely information provision, goal sharing, organizational support, unity within the WoC (in the Netherlands), and union involvement (mainly in Germany). These cross‐country differences are attributed to variations within Rhineland capitalism, where German relations are primarily characterized by a strong capital‐labor divide, and Dutch relations predominantly emphasize consensus‐seeking.

Researchers still struggle with unravelling the internal interaction processes between management and employees (and their representatives). In empirical studies explaining the effects of works councils, the multidimensional nature of the works council–management team relationship is therefore largely ignored. By utilising a unique questionnaire among works councillors, this article examines the (potential) inner workings of this black box, by developing a construct aimed to capture the essence of these forms of social interaction. The authors find that behavioural aspects of cooperation, power, communication, goal sharing and trust significantly affect the relationship between works council and management. The authors also test their construct via a model that seeks to explain the influence of works councils on company decision-making. Their results indicate that despite a few noticeable cross-country differences, their black box construct is the most important factor in explaining this influence both in Germany and the Netherlands, revealing that a good relationship with management is imperative.