This paper aims to describe the different point of view in collective behavior between legal context and business context. As in business context, in which collective bargaining concerns about a monetary system, a group of farmers can use collective bargaining as a tool to deal with injustice negotiation. Nowadays, a number of goods and services produced/provided are discovered to be determinate; namely, higher or lower wage of the workers, resulted from winning or losing the collective bargaining will affect to the price of goods sold or services provided. Collective bargaining is not an obsolete idea. The way to use it advantageously is depended on how much power bargainers realize they have. The strategy of collective bargaining in both legal and business perspective may be similar in some ways; but however, the format of conducting it may be different. In conclusion, to sustain the relationship between employees and employer or buyers and seller is to maximize both parties profit. When the needs of both parties are fulfilled, the outcomes will generate benefit for the society and all stakeholders

Putthiwanit, Chutinon

Santipiriyapon, Sawitree

Munich Personal RePEc Archive

MPRA
Munich Personal RePEc Archive
A different point of view in collective
bargaining: legal perspective versus
business perspective
Chutinon Putthiwanit and Sawitree Santipiriyapon
Eastern Asia University
30 August 2012
Online at https://mpra.ub.uni-muenchen.de/40952/
MPRA Paper No. 40952, posted 30 August 2012 11:23 UTC
1 
 
 
 
 
A Different Point of View in Collective Bargaining:  
Legal Perspective versus Business Perspective 
 
Chutinon Putthiwanit
*
  
Department of International Business Management, Eastern Asia University 
Sawitree Santipiriyapon
†
 
 Department of International Business Management, Eastern Asia University 
 
Abstract 
 This paper aims to describe the different point of view in collective behavior between 
legal context and business context. As in business context, in which collective bargaining 
concerns about a monetary system, a group of farmers can use collective bargaining as a tool 
to deal with injustice negotiation. Nowadays, a number of goods and services 
produced/provided are discovered to be determinate; namely, higher or lower wage of the 
workers, resulted from winning or losing the collective bargaining will affect to the price of 
goods sold or services provided. Collective bargaining is not an obsolete idea. The way to 
use it advantageously is depended on how much power bargainers realize they have. The 
strategy of collective bargaining in both legal and business perspective may be similar in 
some ways; but however, the format of conducting it may be different. In conclusion, to 
sustain the relationship between employees and employer or buyers and seller is to maximize 
both parties profit. When the needs of both parties are fulfilled, the outcomes will generate 
benefit for the society and all stakeholders.  
Keywords Collective Bargaining, Bargaining, Business Negotiation, Legal Negotiation, 
Negotiation, Labor Law, Employment Law, Law 
JEL Classification K31, M19, M51, M54, J83 
Paper Type Academic Paper 
Paper Status Working Paper 
                                                          
**
 Corresponding Author 
†
 Head of Department of International Business Management (Thai Program) 
2 
 
The Nature of Collective Bargaining 
 In our daily life, we have to face the chance to bargain. No matter how good in 
bargaining we are; reaching an agreement is the best way to sustain the relationship with the 
antagonized party. Notwithstanding, there are various kind of bargaining depended on the 
situation we cope with, such as bargaining in business perspective (haggling with the seller), 
integrative bargaining, distributive bargaining, collective bargaining, and so on. It is dubious 
that what the differences among these bargaining are; the function and the role they play; the 
similarity in their characteristics. This is still questioning for individuals in this cradle of 
humanity.  
 Even though, there are a number of research studying in collective bargaining, for 
example, Weldon (1953) discusses about collective bargaining and its economic effects; 
Jensen (1963) criticizes the process of collective bargaining and questions its obsolescence; 
Alexander (1971) studies about conglomerate mergers and collective bargaining during year 
1948-1968; Glassman (1972) does a research on a public sector’s collective bargaining and 
attempt and to  suggest  some  brand-new  directions  for  future  research; Craypo (1975) 
explores the collective bargaining in Litton Industries and General Electric Company during 
year 1969-1971; Gilson et al. (1997) explain the theory of collective bargaining and 
including the use of it in USA and internationally; Matsa (2010) reports on the usage of debt 
ﬁnancing to improve ﬁrm’s bargaining position; De Jong (2011) studies the competition and 
the innovative intentions in Dutch enterprises where intentions correlate  with  the bargaining  
power  of  suppliers; Foster et al. (2011) explore the attitudes of New Zealander employers to 
collective bargaining and the union agents; Katchanovski et al. (2011) investigate the 
attitudes of employees towards collective bargaining in universities in USA and Canada. 
However, the academic papers examining the different point of view in collective bargaining 
in legal perspective and business perspective are still limited. As a result, the organization of 
this be paper will be arranged from: firstly, the characteristics of collective bargaining will 
explained; secondly, the collective bargaining in legal and business perspective will be 
discussed; thirdly,  the process and result of legal/business collective bargaining will be 
explored; and, finally, the conclusion of this academic paper will be discussed.  
 
The Characteristics and Core of Collective Bargaining  
 The collective bargaining emerges when both parties try to seek the maximum profit they 
may earn as a monetary or non-monetary return. Raison d'être, collective bargaining always 
has the opponent (Jensen 1963). In law, the collective bargaining represents the conflict in 
mutual agreement between worker and employer. Its necessity is that the activity of worker 
representation prevents workplace conflict as well as promotes social integration among 
workers (Gilson et al. 1997). As in business context, in which collective bargaining concerns 
about a monetary system (Weldon 1953), a group of farmers, or even people in community 
can use collective bargaining as a tool to deal with injustice negotiation or in order to protect 
the rights of the consumers. 
 
3 
 
The Impact of Collective Bargaining 
 Nowadays, a number of goods and services produced/provided are discovered to be 
determinate (Weldon 1953); namely, higher or lower wage of the workers, resulted from 
winning or losing the collective bargaining will affect to the price of goods sold or services 
provided somehow. Matsa (2010) also supports that manufacturers sometimes attempt to 
reduce the impact of bargaining on proﬁts; namely, firms increase the worker wage and 
increase the cost of product as well. That is, at any level of wages earned among workers in 
the industry, it will affect to the purchasing power (Weldon 1953). Therefore, winning or 
losing collective bargaining will have the impact of both legal act and business move. Apart 
from economic condition, collective bargaining also affects to the society since it is often a 
source of the demonstration (Weldon 1953). 
 Ipso facto, if the existence of collective bargaining is gone, some employers may take 
advantages of their employees such as providing pure condition workplace, using child labor, 
or not providing medical insurance for their workers. In business view, department stores can 
takes advantages from the farmers by asking for unreasonable price for the agricultural 
products farmers produced due to their powerful power in bargaining. Thence, farmers have 
to sell their products in very cheap price anyway since buyers will always buy in a big 
bulking. In addition, the concept of cooperatives nowadays will never occur if the injustice 
bargaining is never happened. As a result, the existence of collective bargaining affects to 
individuals as a whole and it is one of the factors in progressing worker’s rights and better 
consumers’ economic and social status. 
 
Collective Bargaining in Bidimensional Perspective 
 Due to the collective bargaining process, the negotiation will tie with tripartite group; 
namely, there are three groups of individual concerned such as workers, union, and 
employer. That is, in working atmosphere, the practice of bargaining is not fixed as dyadic 
haggling like collective bargaining in business perspective. In addition, even though activists 
nowadays try so difficultly to make the voice of consumers heard; or, union balances any  
worker's wage  to  equal  the  addition  to  output  which  the  previous  worker hired  
contributed (Weldon 1953). The imbalance power in bargaining still occurs. It is true that 
collective bargaining emerges in both legal and business form. This makes collective 
bargaining distinguishable from the other type or method of bargaining. This section will 
explain the process of bargaining in bipolar form.  
 
How collective bargaining works in legal/business form 
 Gilson et al. (1997) mention that the duty to bargain collectively does not mean that the 
agreement will be reached; because, the point of collective bargaining is that either party is 
free to decide whether the proposals made to it are satisfactory (Jensen 1963). Moreover, 
Jensen (1963) also supports that the unique characteristics of collective bargaining in legal 
context is that collective bargaining process works because the parties have a program and 
4 
 
power not a process of reasoning, nor economic analysis and persuasion. On the other hand, 
in business-related collective bargaining, unlike the legal collective bargaining, the 
agreement must be made between a group of potential buyers and sellers. Sellers hardly have 
the sole or dominating power. For example, by the roles of   suppliers   and buyers, suppliers' 
power may be limited due to buyers' more powerful position (Jensen 1963). However, the 
advantage position will be reversed if the sellers are a group of farmers and rice millers; 
namely, farmers (as sellers) can use collective bargaining power to gain higher price of their 
rice produced each ton. As a result, in business form, collective bargaining can perform in 
both buyer and seller position; whereas, the position on collective bargainers in employment 
condition (legal form) cannot be reversed. This is one big different between legal and 
business perspective. 
 
Collective Bargaining: The Tug of War 
 Collective   bargaining  performs   a fundamental    and    valuable    function which  
cannot  be  fulfilled; namely,  it performs  that  function  more  compatible with democratic 
way of regulating  employment  conditions (Jensen 1963). The bargaining power of workers’ 
union can arise from the changes in unemployment insurance system (Matsa 2010). It is quite 
difficult sometimes to determine who should be the winner or loser in this tug of war. This 
section will explain the negotiation between two parties in both legal way and economic way. 
 
Negotiation between employer and employee/ buyer and seller 
 There is another one different point between negotiating collectively between employer 
and employee and between buyer and seller; namely, employer is not allowed to implement 
his final offer of collective bargaining since it will destroy the purpose of collective 
bargaining (Gilson et al. 1997). In business perspective, a buyer rejecting the offer from a 
seller does not mean any harm for him unlike employee rejecting the offer from his employer 
that can lead to losing jobs. For example, a research by Gilson et al. (1997) mention that half 
of negotiators admitted that their employer had had impasse or implementation in the 
collective bargaining; that is, employer has more plausibility to win the negotiation. 
However, employees and unions  still can  coordinate  their  bargaining  efforts  or  
consolidate  their  bargaining  units in order to offset the collective bargaining disadvantages 
(Craypo 1975). Again, there is another question arises in our mind. Could it always be win-
win outcome among the collective bargainers? In answering this question, we have to admit 
that the concept of collective bargaining is not the same among countries. It seems wishful 
thinking but we have to realize the facts. For example, in USA, collective bargaining law 
states that worker cannot bargain with his employer since the bargaining power of employer 
is too great (Gilson et al. 1997). Thence, in this case of legal perspective, the win-win 
outcome will never occur. While, in Europe, Australia, and New Zealand, the collective 
bargaining is allowed to relief employees’ frustrated desires for control (Gilson et al. 1997). 
  
5 
 
Epilogue 
 Collective bargaining is not an obsolete idea (Jensen 1963); and, its behavior is 
influenced by the legal requirement to bargain collectively in a good faith (Foster et al. 
2011). The way to use it advantageously is depended on how much power bargainers realize 
they have. The strategy of collective bargaining in both legal and business perspective may 
be similar in some ways; but however, the format of conducting it may be different. 
Nonetheless, both legal and business collective bargaining have at least a correlation between 
them. For example, Matsa (2010) states that the negotiated wage is increasing in workers’ 
bargaining power, it also is increasing the intermediate cash flow, and is decreasing in the 
level of debt. Consequently, it affects to the whole society. Even though, there are some 
differences between legal collective bargaining and business collective bargaining. But 
however, the best way to sustain the relationship between employees and employer or buyers 
and seller is to maximize both parties profit. When the needs of both parties are fulfilled, the 
outcomes will generate benefit for the society and all stakeholders.  
 
References 
1. Alexander, K. O. (1971). Conglomerate mergers and collective bargaining. Industrial and 
Labor Relations Review, 24, 354–74. 
2. Craypo, C. (1975). Collective bargaining in the conglomerate, multinational firm: Litton's 
shutdown of royal typewriter. Industrial and Labor Relations Review, 29, 3–25. 
3. De Jong, J. P. J. (2011). Perceived competition and innovative intentions in Dutch small 
and medium-sized enterprises. International Journal of Innovation Management, 15, 
687–707. 
4. Foster, B., Rasmussen, E., Murrie, J. & Laird, I. (2011). Supportive legislation, 
unsupportive employers and collective bargaining in New Zealand. Relations 
Industrielles/Industrial Relations, 66, 192–212. 
5. Gilson, C., Dannin, E. & Wagar, T. (1997). Collective bargaining theory and the doctrine 
of implementation of final offers collide. Labor Law Journal, 48, 587–600. 
6. Glassman, A. M. (1972). Research on collective bargaining in the public sector:  New   
directions. Academy of Management Journal, 15, 375–78. 
7. Jensen, V. H. (1963). The process of collective bargaining and the question of its 
obsolence. Industrial and Labor Relations Review, 16, 546–56. 
8. Katchanovski, I., Rothman, S. & Nevitte, N. (2011). Attitudes towards faculty unions and 
collective bargaining in American and Canadian Universities. Relations 
Industrielles/Industrial Relations, 66, 349–73. 
9. Matsa, D. A. (2010). Capital structure as a strategic variable: Evidence from collective 
bargaining. Journal of Finance, 65, 1197–1232. 
10. Weldon, J. C. (1953). Discussion: Economic effects of collective bargaining. Industrial 
and Labor Relations Review, 6, 570–8. 
 
 


A different point of view in collective bargaining: legal perspective versus business perspective

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