The performance of economic institutions in a dynamic environment: air transport and telecommunications in Germany and Britain

Detailed case study material illustrates why the performance of two British national champions (British Airways and British Telecom respectively) was superior to that of their German counterparts (Lufthansa and Deutsche Telekom): beyond just the effects of privatisation, both the airline and telecommunications industries have been characterised by substantial technological and market change which has altered the parameters of competitive strategy. Under these new dynamic environmental conditions, the British institutional structure has out-performed the denser network of relationships within Germany. This paper seeks to develop a theory of Anglo-Saxon competitive advantage that is not predicated only on the allocative efficiency of free markets, but precisely on the notions of adaptive efficiency or dynamic efficiency of non-market organisational activities. In other words, the hypothesis is that under specified types of industry conditions, the adaptive or dynamic efficiency of Anglo-Saxon firms may be superior to that of firms in Northern Europe's industry-coordination economies. -- Eine Analyse von umfangreichem Fallstudienmaterial läßt erkennen, warum Leistungsfähigkeit und tatsächlich erzieltes Ergebnis der beiden britischen Spitzenunternehmen British Airways und British Telecom besser waren im Vergleich zu den entsprechenden deutschen Unternehmen Lufthansa und Deutsche Telekom: Neben den quasi automatisch auftretenden Wirkungen jeder Privatisierung waren die Luftfahrt- und Telekommunikationsbranchen durch tiefgreifende Änderungen der Technologien und der Märkte gekennzeichnet, wodurch die Kenngrößen für eine wettbewerbsorientierte Strategie geändert wurden. Unter diesen neuentstandenen, dynamisierten Umfeldbedingungen erwies sich die Institutionenstruktur Großbritanniens als dem dichteren Beziehungsnetzwerk in Deutschland überlegen. In diesem Papier sollen Elemente für eine Theorie über diesen angelsächsischen Wettbewerbsvorteil entwickelt werden, die nicht nur auf der Allokationseffizienz von freien Märkten basieren, sondern genau auf die Wahrnehmungen einer Anpassungseffizienz oder dynamischen Effizienz von nichtmarktlichen Aktivitäten unterschiedlicher Organisationen bezogen sind. In anderen Worten, es geht um die Hypothese, daß bei bestimmten, in einer Branche gerade herrschenden Bedingungskonstellationen, die Anpassungs- oder Reaktionseffizienz von angelsächsischen Unternehmen derjenigen von Unternehmen in den branchenkoordinierten Volkswirtschaften des nördlichen Europas überlegen ist.

The Emerging Anglo-American Model: Convergence in Industrial Relations Institutions?

The Thatcher and Reagan administrations led a shift towards more market oriented regulation of economies in the Anglo-American countries, including efforts to reduce the power of organized labor. In this paper, we examine the development of employment and labor law in six Anglo-American countries (the U.S., Canada, the U.K., Ireland, Australia, and New Zealand) from the Thatcher/Reagan era to the present. At the outset of the Thatcher/Reagan era, the employment and labor law systems in these countries could be divided into three pairings: the Wagner Act model based industrial relations systems of the United States and Canada; the voluntarist system of collective bargaining and strong unions in the United Kingdom and Ireland; and the highly centralized, legalistic Award systems of Australia and New Zealand. Indeed, such a historical perspective contradicts the idea that there has been a longstanding Anglo-American model of liberal market economic ordering as has sometimes been suggested, e.g. in the varieties of capitalism literature. However, looking at the current state of the employment relations systems in these six countries, we argue that there has been growing convergence in two major areas. There has been a convergence in the area of labour rights toward private ordering of employment relations and away from the idea of work and employment being a matter subject to public ordering. By private ordering, we mean the idea that work and employment terms and conditions are primarily determined at the level of the individual organization, whether through collective bargaining between unions and employers at the organizational level, through individual negotiations, or through unilateral employer establishment of the terms and conditions of employment. The shift away from public ordering of work and employment is most dramatic in the cases of Australia and New Zealand, where the publicly established system of centralized Awards has given way to organizational level ordering of employment relations through workplace or individual level agreements. In the United Kingdom, the shift to greater private ordering is most evident in the breakdown of multi-employer collective bargaining, the weakening of industry wide standards enforced by strong unions, and the growth of nonunion representation at the enterprise level. By contrast, the much lesser degree of change in the labour rights area in North America reflects the historical situation that the Wagner Act model was from the outset a model built around the idea of private ordering. When we turn to the area of employment rights, we also see a convergence across the six Anglo-American countries toward a model in which the role of employment law is to establish a basket of minimum standards that are built into the employment relationship, which can then be improved upon by the parties. Within these general trends, we do see some variation in the degree of convergence on these models of labour and employment rights regulation across the Anglo-American countries. The strongest degree of similarity in adoption of the private ordering in labour rights and the minimum standards basket in employment rights is found in four of the countries: Canada, the United Kingdom, New Zealand and, with recent legislative changes, Australia. Each of these countries has adopted labour laws that favour organizational level economic ordering, but with reasonably substantial protections of trade union organizing and bargaining rights, and a set of minimum employment standards that includes similar sets of minimum wage, basic leave entitlements and unfair dismissal protections. The first outlier in this study is Ireland. The Irish employment relations system stands out as the only one that has continued to have a significant degree of central coordination and public ordering of employment relations. Although there is substantial coordination at the central level, at the organizational level, the Irish system resembles the other Anglo-American countries much more closely, suggesting that it has the potential to evolve in a similar direction. The other outlier is the United States. Structurally its system is similar to the other Anglo-American countries in emphasizing private ordering in labour law and the role of employment law as being to establish a minimum basket of basic standards. However, where the United States diverges from the other countries is that its system has involved a general favouring of the interests of employers over those of employees and organized labour in the implementation of the model

Switching Systems: Technological Change, Competition, and Privatisation

"New technology and expanding service capabilities are leading both to substantial competition in the telecommunications industry, and also to the demise of public ownership. The case of Deutsche Telekom illustrates that although public sector status failed to provide sufficient strategic or organisational flexibility in a dynamic market this was less due to the public sector institutions of industrial relations themselves, than to the interaction of institutions with political decisions, which reduced Telekom’s ability to restructure itself in an increasingly competitive environment. Nevertheless, the privatisation of Telekom also highlights the central co-ordinating role of the public sector’s hierarchical Personalräte works council structure. The strategic challenges for unions inherent in the decentralised private sector works council system illuminate the importance of unions providing interworks council co-ordination, in addition to the usually emphasised co-ordination between union and works council—an ability central to unions retaining their influence under conditions of increasing decentralisation." (author's abstract)"Neue Technologien und erweiterte Leistungsangebote führen zu beträchtlichem Wettbewerb in der Telekommunikationsbranche und zu einem Rückgang der öffentlichen Beteiligung an den Telekommunikationsunternehmen. Der Fall der Deutschen Telekom veranschaulicht, daß der öffentliche Status keine in einem dynamischen Markt ausreichende strategische oder organisatorische Flexibilität zuließ, daß dies aber weniger den Institutionen der Arbeitsbeziehungen im öffentlichen Sektor per se angelastet werden kann, sondern auf ein Zusammenspiel von Institutionen und politischen Entscheidungen zurückgeführt werden muß – ein Zusammenspiel, das die Fähigkeit der Telekom einschränkte, sich in einer Umwelt zunehmenden Wettbewerbs zu restrukturieren. Die Telekom-Privatisierung erhellt darüber hinaus die bedeutende Koordinationsfunktion, die den Personalräten als den hierarchisch organisierten Personalvertretungen im öffentlichen Sektor zukommt. Umgekehrt weisen die strategischen Probleme, die sich für die Gewerkschaften aus dem dezentralisierten Personalvertretungssystem durch Betriebsräte im Privatsektor ergeben, auf die Bedeutung einer besonderen Form der Koordination: Über die häufig betonte Koordination zwischen Gewerkschaft und Betriebsrat hinaus müssen Gewerkschaften eine Koordination zwischen den Betriebsräten selbst herstellen, wenn sie ihren Einfluß unter den Bedingungen verstärkter Dezentralisierung aufrechterhalten wollen." (Autorenreferat

Institutional Determinants of Deregulation and Restructuring in Telecommunications: Britain, Germany, and United States Compared

Virtually all countries are undergoing deregulation and privatisation of their telecommunications sectors. Yet despite the globalisation of markets, technological borrowing, and great similarities in public sector legacies across countries, the outcomes of deregulation and restructuring are not converging to a single point. Rather, the differences in national and sub-national industrial relations institutions have allowed key stakeholders to shape new market rules, or re-regulate the market in ways that privilege some actors more than others. The new rules, in turn, more or less constrain managerial prerogative and lead to substantially different outcomes for key stakeholders, including firms, unions, workers, managers, and consumers. This article uses evidence from British Telecom, Deutsche Telekom, AT&T, and the Regional Bell Operating Companies in the United States to elaborate this thesis

Deregulation and Restructuring in Telecommunications Services in the United States and Germany

[Excerpt] Because of the slower pace of reform, however, Telekom also stands to learn from the mistakes made in the United States, where deregulation has led to increased inequality among consumers and workers. For consumers, the restructuring has benefited businesses because they no longer pay rates that subsidize universal residential service. Both business and high-end retail customers can take advantage of falling prices for long-distance calling, high-speed networks, or enhanced features such as voice messaging. For lower-income consumers, however, the basic costs of local service have risen, and these consumers are less likely to be able to take advantage of new products or enhanced features, even if they are less costly than before (Keefe and Boroff 1994, p. 318). For labor, restructuring has not only displaced employees and reduced union strength, but it has also created more unequal labor market conditions both within and between union and nonunion segments. To the extent that Germany wishes to preserve equality for consumers and workers, this chapter provides an analysis of how inequality in U.S. outcomes has occurred

Switching Systems: Technological Change, Privatisation and Work Organisation

New technology and expanding service capabilities are leading both to substantial competition in the telecommunications industry, and also to the demise of public ownership. The case of Deutsche Telekom illustrates that although public sector status failed to provide sufficient strategic or organisational flexibility in a dynamic market this was less due to the public sector institutions of industrial relations themselves, than to the interaction of institutions with political decisions, which reduced Telekom’s ability to restructure itself in an increasingly competitive environment. Nevertheless, the privatisation of Telekom also highlights the central co-ordinating role of the public sector’s hierarchical Personalräte works council structure. The strategic challenges for unions inherent in the decentralised private sector works council system illuminate the importance of unions providing interworks council co-ordination, in addition to the usually emphasised co-ordination between union and works council—an ability central to unions retaining their influence under conditions of increasing decentralisation