Strategic integration and employee relations: the impact of managerial styles

Patrick Gunnigle, Thomas Turner and Michael Morley

University of Limerick, Limerick, Ireland
Introduction An emphasis on the strategic importance of employee relations considerations in achieving broad business objectives is seen as a key characteristic of contemporary developments in management approaches to employee relations (Beaumont, 1995; Kochan, 1980; Kochan et al., 1986; Walton et al., 1994). Strategic integration implies that employee relations considerations are a major factor in strategic decision making, with a strong emphasis on developing employee relations policies which are integrated with, and mutually complementary to business strategy. Thus a strategic employee relations approach is characterised by the integration of employee relations considerations into the business plan to facilitate the establishment and maintenance of competitive advantage. Such policies need not necessarily be employee-centred, but may be either hard or soft, depending on the chosen route to competitive advantage. In contrast, the traditional pluralistadversarial approach is seen as largely reactive in nature. Consequently, employee relations considerations are not a concern of strategic decision makers, but rather an operational issue only given priority when problems arise. It is plausible, therefore, to suggest that strategic integration may be associated with particular management approaches or styles in employee relations. In this paper, we explore this possibility using a survey of greenfield companies in Ireland. Strategic integration and employee relations Strategic integration, as a dimension of management approaches to employee relations, refers to the extent to which employee relations considerations impact on strategic decision making. The increased integration of employee relations considerations into strategic decision making is a recurrent theme in contemporary analyses of change in employee relations management (Beaumont, 1993; Beer et al., 1984; Brewster, 1994; Kochan et al., 1986; Schuster, 1985; Walton, 1985). However, despite its widespread prominence in the literature, there have been few attempts to empirically investigate strategic integration in employee relations. Consequently, the nature and extent of strategic integration of employee relations considerations into top-level management decision making remains unclear. This is most probably related to

Strategic integration and employee relations 115

Received December 1996 Accepted January 1998

Employee Relations, Vol. 20 No. 2, 1998, pp. 115-131, MCB University Press, 0142-5455

Employee Relations 20,2 116

the inherent difficulties in identifying acceptable indicators of strategic integration. Such difficulties arise, in turn, from the fact that the imputed rationality, which one needs to associate with the concept of strategy in order to observe and measure it in any concrete manner, is questionable. Arguably, preferred managerial style will act as a key determinant of the level of strategic integration of employee relations considerations. To this end, two generic management styles in employee relations may be identified, namely individualism and collectivism (see Purcell, 1987). High levels of collectivism are integral to the traditional pluralist model, considered characteristic of Irish employee relations (Brewster, 1994; Brewster and Hegewisch, 1994; Hillery, 1994; Roche, 1994; Roche and Turner, 1994). However, looking at the broader literature, a pervasive theme is that firms locating at greenfield sites are likely to adopt an increasingly individualist focus in employee relations (Beaumont, 1985, 1986, 1995; Beaumont and Townley, 1985; Kochan et al., 1986; McKersie, 1996). It is further argued that increased individualism presents a significant challenge to collectivism, and, particularly, to trade unions (Beaumont, 1991; Brewster and Holt-Larsen, 1992; Gunnigle, 1995). Thus, findings on the levels of collectivism and individualism are important indicators of change in employee relations (Beaumont, 1985; 1992). In particular, the literature suggests that employee relations styles which equate to what has been termed soft HRM are characterised by high levels of strategic integration and high levels of individualism (Beaumont, 1985, 1992, 1995; Beer et al., 1984; Keenoy, 1990). Drawing on such literature, it is possible to hypothesise that management styles in employee relations which incorporate high levels of individualism will be positively associated with high levels of strategic integration (see, for example, Foulkes, 1980, 1981; Garbarino, 1984; Kochan et al., 1986). Alternatively, the traditional pluralist employee relations model is viewed as being essentially reactive, with the result that employee relations considerations are not a concern of strategic decision makers. Based on this literature, it is possible to identify a second hypothesis which states that high levels of collectivism will be positively associated with low levels of strategic integration. Employee relations in greenfield sites A recurrent theme in the extant literature is the suggestion that firms locating at greenfield sites are likely to adopt an increasingly strategic and individualist focus in employee relations (Beaumont, 1985, 1986, 1995; Beaumont and Townley, 1985; Kochan et al., 1986; McKersie, 1996). Based on the premise that greenfield sites allow managements considerable discretion when it comes to deciding on appropriate employee relations styles, policies and practices, it is suggested that if more strategic approaches to employee relations are being adopted, the evidence should be most obvious in greenfield sites. This paper is based on a study of all greenfield site firms established in the manufacturing and internationally-traded services sectors in the Republic of

Ireland in the period 1987-1992. Greenfield sites were defined as locations where an organisation establishes a new facility in a start up mode incorporating design of plant and recruitment of a new workforce. The study excluded firms with less than 100 employees. This work was undertaken over a two year period from 1993-1995. The empirical aspect of the research was based on three inter-related and sequential components, namely: (1) qualitative interviews with senior management; (2) statistical analysis of a questionnaire based survey completed by managerial respondents; (3) presentation and analysis of key research findings to three expert panels of actors in the employee relations arena. Table I outlines the principal activity and country of origin of the 53 greenfield firms studied and highlights the dominance of US-owned firms and hightechnology companies in the study population. Ireland is considered a particularly appropriate testing site for evaluating the impact of different explanatory factors on management approaches to employee relations. Its industrial structure is characterised by a heavy reliance on inward investment, particularly from the USA. Indeed, Ireland is one of the most profitable foreign locations for US firms, achieving an average return on investment considerably higher than the European Union (EU) average. The

Strategic integration and employee relations 117

Irish Electrical and instrument engineering Office/data processing equip./ machinery Mechanical engineering: motor parts/vehicles other Rubber and plastics Textiles, clothing Food and drink Transport and communications Chemicals and pharmaceuticals Software Information/data processing services Paper, printing and publishing Other services Total

US

European

Japan

Other

Total

1 0 0 0 0 3 2 2 0 1 0 1 1 11

6 6 1 1 1 0 0 0 1 6 5 0 0 27

2 0 2 2 1 0 0 0 1 0 0 0 0 8

1 3 0 1 1 0 0 0 0 0 0 0 0 6

0 0 0 0 1 0 0 0 0 0 0 0 0 1

10 9 3 4 4 3 2 2 2 7 5 1 1 53 Table I. Greenfield establishments 1987-1992 by activity and country of origin

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Irish socio-political context also provides a stark contrast to the USA and UK which is the source of much of the literature on contemporary developments in employee relations. In particular, Irelands employee relations system is characterised by constitutional support for the individuals right to join associations or unions, a widespread acceptance of the legitimacy of a strong trade union role in society, and the absence of any major political party advocating a diminished role for trade unions (Gunnigle et al., 1994). Measures of strategic integration, collectivism and individualism Strategic decision-making is a notoriously difficult area for researchers to analyse accurately. Researchers often develop proxy indicators of strategic integration. This is a useful approach but requires the identification of an adequate range of robust indicators. Alternatively, researchers may rely on qualitative/intuitive analyses, particularly those focusing on the process of strategic decision making. To achieve this goal, variables measuring a range of indicators regarded as indicative of strategic integration in employee relations were developed as follows: Impact on location: assesses the impact of employee relations considerations on location decisions of greenfield-site facilities. Formal strategy development: addresses the capacity to engage in business strategy and whether such capacity follows through into a capacity to formulate personnel and employee relations strategy. Role of personnel/employee relations function: assesses the incidence and role of a specialist personnel/employee relations function. Impact on business pol icy: measures the impact of personnel and employee relations considerations on business policy decisions at establishment level. Such indicators are useful in so far as they lend themselves to empirical investigation. However, they are obviously limited in their ability to precisely measure the actual level of strategic integration in employee relations. Given these caveats, it is suggested that the study findings on strategic integration should be viewed as a broad guide rather than a precise measure of the extent and direction of strategic consideration afforded to employee relations issues in greenfield-site companies. The choice of variables and the construction of scales was heavily influenced by the theoretical literature on strategic integration in employee relations (see for example, Beaumont, 1985, 1993; Beaumont and Townley, 1985; Kochan et al., 1986; Kochan and Osterman, 1994; Marchington, 1990; Roche and Turner, 1994; Tyson et al., 1994; Walton et al., 1994). In contrast to strategic integration, measures of collectivism and individualism in employee relations are relatively well established (see, for example, Purcell, 1987). A comprehensive set of measures of collectivism and individualism in employee relations is developed from the extant literature and summarised in Table II.

Measures of collectivism Trade union presence: measured through an analysis of levels of trade union recognition and trade union density Pattern of trade union organisation: measured though an examination of the nature of trade union recognition and impact of trade unions on workplace employee relations Role of trade unions and other employee representative bodies: measured though an examination of role of trade unions and other employee representative bodies in management-employee communications/interactions Employer association membership and utilisation: measured through an examination of the extent to which greenfield companies are in membership of employer associations and of the patterns of utilisation of employer association services Sophistication of the employment and socialisation system: measured through an evaluation of the degree of sophistication and relative emphasis on individualism in the management of human resource flows Communications: based on an analysis of the level, nature and sophistication of management-employee communications Performance-related pay: measured through an analysis of the incidence of performancerelated pay systems and the utilisation of formal performance appraisals to aid performance-related pay decisions among manual/operative grades Employee involvement: measured through an analysis of the extent to which management utilises explicit techniques to facilitate employee involvement in decision-making Employee autonomy: measured through an analysis of the extent to which management seek to facilitate/promote employee autonomy

Strategic integration and employee relations 119

Measures of individualism

Table II. Measures of collectivism These indicators were combined to construct overall composite measures of both collectivism and and individualism in individualism employee relations

Findings The evidence from Table III suggests that levels of strategic integration in Irish greenfield sites are just below the mid point of the range with the composite indicator receiving a mean score of 1.91 (SD = 0.69). However, there is considerable variation in the four constituent measures which comprise the overall composite measure. The highest scoring indicator (mean = 2.23, SD = 0.87) was that measuring the incidence and role of the specialist personnel/employee relations function. The second highest scoring variable was that measuring the level of formal strategy development (mean = 2.08, SD = 0.76)). This variable measures the extent of sophistication in the development of formal mission statements, corporate strategy and personnel/employee relations strategy, and addresses the capacity of greenfield companies to engage in business strategy, and whether such capacity facilitates a more specific capacity to engage in personnel and employee relations strategy (see Roche and Turner, 1994). In contrast, the lowest scoring variable (mean = 1.74, SD = 0.65) was that measuring the impact of personnel and employee relations considerations on major business-policy decisions. The variable measuring the impact of employee relations on the decisions of where to locate a new

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Variables LOCAT IRINTEG IRIMPACT IRFUNC STRAT

Variable description Measures impact of employee relations on location decision of greenfield site facility Measures sophistication in formal strategy development Measures impact of personnel/employee relations on business policy decision Measures role and impact of specialist personnel/employee relations function Composite measure of strategic integration based on a combination of the four variables outlined above (LOCAT + IRINTEG + IRIMPACT + IRFUNC) and minor re-coding to aggregate the scores on a low-mediumhigh scale (1-3)

Mean

Std. Dev.

Alpha

1.87 2.08 1.74 2.23

0.59 0.76 0.65 0.87

N/A 0.75 (N = 3) N/A 0.88 (N = 5)

Table III. Levels of strategic integration (scaled from low (1) to high (3))a

1.91

0.69

0.69 (N=4)

Note: a Further details on the methods used to translate the study findings into reasonable indicators of strategic integration in employee relations management are outlined in Appendix 1

greenfield-site facility also scored below the average (mean=1.87, SD = 0.59). The standard deviation scores are quite high indicating considerable disparity in the levels of strategic integration in the study population. The relationships between the study findings on strategic integration and levels of individualism and collectivism are outlined in Tables IV to VII below. These summary tables address the two hypotheses outlined above concerning the relationship between strategic integration and the dimensions of individualism and collectivism. A number of important trends emerge from Table IV. Firstly, there appears to be a positive relationship between an individualist focus in employee relations
Individualism 2 (Medium)

1 (Low) Strategic integration 1 (Low) 23% (12) Low strat. integ./ low individ. 6% (3) 0 High strat. integ./ low individ.

3 (High)

6% (3)

0 Low strat. integ./ high individ. 9% (5) 9% (5) High strat. integ./ high individ.

2 (Medium) Table IV. Individualism and strategic integration in employee relations 3 (High)

38% (20) 9% (5)

Measures of strategic integration locat irinteg irimpact irfunc Strat

autohi 0.17 (ns) 0.26 (ns) 0.41* 0.22 (ns) 0.32*

Measures of individualism briefhi employhi involhi 0.36 (ns) 0.52*** 0.49*** 0.50*** 0.63*** 0.47*** 0.58*** 0.48*** 0.47*** 0.69*** 0.44* 0.38* 0.48*** 0.57*** 0.59***

prphi 0.26 (ns) 0.25 (ns) 0.17 (ns) 0.19 (ns) 0.31*

Indiv. 0.44** 0.53*** 0.54*** 0.49*** 0.67***

Strategic integration and employee relations 121

Notes: * = p < 0.05; **p = < 0.01; ***p = < 0.001; ns = not significant Individualism axis Authohi = level of employee autonomy Briefi = level of employee briefing Employhi = sophistication of employment and socialisation system Involhi = level of employee involvement Prphi = incidence of individual performancerelated pay systems Indiv. = composite measure of individualism Strategic integration axis Locat = impact of employee relations on location Irinteg = level of formal strategy development Irimpact = impact of employee relations on business-policy decisions Irfunc = role of personnel/ER function Table V. Individualism and strategic integration: Bivariate correlations

Strat = composite measure of level of strategic integration

styles and levels of strategic integration. All of the companies characterised by high levels of individualism in employee relations have either high or medium levels of strategic integration. Similarly, all of the companies characterised by high levels of strategic integration in employee relations have either high or medium levels of individualism. There was no evidence of a negative relationship between strategic integration and individualism in any of the 53 greenfield companies studied: as can be seen from Table IV there were no companies in the high strategic integration/low individualism or low strategic integration-high individualism categories. Table V outlines the strength of relationships between the overall (composite) and constituent indicators of individualism and strategic integration. Our first hypothesis suggested that management styles in employee relations which incorporate high levels of individualism will be positively associated with high levels of strategic integration (Foulkes, 1980, 1981; Kochan et al., 1986). The research findings presented above strongly support this hypothesis. There is a positive relationship between all measures of individualism and strategic integration. This relationship is particularly strong when one considers the overall composite indicator (strat) and also the variable which measures the level of sophistication of the employment and socialisation system (employhi). These findings clearly suggest that management styles which are

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characterised by a strong strategic focus are also most likely to adopt a strong individualist focus and pay particular attention to the development of comprehensive employee relations systems and practices. This finding is also interesting insofar as it indicates that if, as much of the literature suggests, there is a trend towards an increasing strategic focus in employee relations, this may lead to increasingly individualist management styles in employee relations and a concomitant diminution in collectivism. Turning specifically to the links between collectivism and levels of strategic integration, Table VI summarises the overall findings on the relationship between these two dimensions. Low, medium and high levels of collectivism are tabulated with low, medium and high levels of strategic integration. Each company is located in the matrix in terms of both of these dimensions. Seven out of the total of ten companies characterised by high levels of strategic integration had low levels of collectivism. This finding suggests that where companies integrate employee relations considerations into strategic decisionmaking, this is most likely to be associated with management styles characterised by low levels of collectivism and, more particularly, low levels of trade union recognition and density. Similarly, only two of the 15 companies (13 per cent) characterised by high levels of collectivism in employee relations could be categorised as having high levels of strategic integration. These findings indicate an extremely weak or a negative relationship between levels of strategic integration and collectivism. As in our previous analysis, it is useful to look at the strength of the relationships between collectivism and strategic integration. Table VII outlines the relationship between the overall (composite) and constituent indicators of collectivism and strategic integration. This data helps to illustrate the strength and direction of the relationship between collectivism and levels of strategic integration in the greenfield-site companies studied. The second hypothesis states that high levels of collectivism will be associated with low levels of strategic integration. The findings presented in Tables VI and VII clearly support this hypothesis. There is a negative

1 (Low) Strategic integration 1 (Low) 6% (3) Low strat. integ./ low collectivism 32% (17) 13% (7) High strat. integ./ low collectivism

Collectivism 2 (Medium)

3 (High)

9% (5)

13% (7) Low strat. integ./ high collectivism 11% (6) 4% (2) High strat. integ./ high collectivism

Table VI. Collectivism and strategic integration in employee relations

2 (Medium) 3 (High)

9% (5) 2% (1)

Measures of strategic integration locat irinteg irimpact irfunc Strat

presence 0.32* 0.43** 0.16 (ns) 0.29* 0.41**

Measures of collectivism unionorg comm emporg 0.07 (ns) 0.32* 0.09 (ns) 0.14 (ns) 0.20 (ns) 0.33* 0.55*** 0.30* 0.18 (ns) 0.46*** 0.9 (ns) 0.17 (ns) 0.13 (ns) 0.14 (ns) 0.17 (ns)

Collect 0.29 (ns) 0.38*** 0.14 (ns) 0.24 (ns) 0.33*

Strategic integration and employee relations 123

Notes: * = p < 0.05; ** = p < 0.01; *** = p <0.001; ns = not significant Collectivism axis Strategic integration axis Presence = Trade union presence See Table V Unionorg = Patterns of trade union organisation Comm = Role of trade unions/other employee Emporg = Membership/utilisation of Collect = Composite measure of collectivism

Table VII. Collectivism and strategic integration: bivariate correlations

relationship between all measures of collectivism and strategic integration, although the correlation coefficients are not significant in a number of cases. However, on the critical measure of trade union recognition and density (presence) we find a significant inverse relationship with almost all measures of strategic integration. This finding confirms our earlier conclusions on the relationship between strategic integration and collectivism. In particular, it is evident that the greater the strategic consideration afforded to employee relations issues, the greater the likelihood that this will be associated with individualist employee relations styles which exclude trade union recognition. Explaining variations in strategic integration In addition to examining the management approaches to employee relations on the dimensions of strategic integration, collectivism and individualism, the earlier discussion alluded to the importance of identifying the main factors explaining variations in the extent of strategic integration in employee relations. There exists an extensive literature on explanatory factors impacting on variation in patterns of employee relations management. Such factors included structural variables, such as changes in product and labour markets, and internal factors, such as workforce profile and business strategies (Beaumont, 1985; Beaumont and Harris, 1995; Kochan et al., 1986; McKersie and Hunter, 1973). A range of other factors have been advanced to explain

Employee Relations 20,2 124

variations in management styles in employee relations in greenfield sites, namely: size, technology, labour costs, performance and sector (Beaumont, 1985; Beaumont and Harris, 1995; Roche and Turner, 1994; Turner, 1994). A factor considered particularly influential in explaining variations in employee relations styles is company ownership (Beaumont, 1985). This is based on the rationale that revealed managerial preferences on management styles in employee relations will most significantly be exposed in greenfield sites, and that the actual styles chosen will closely reflect underlying managerial values associated with country of ownership (Beaumont, 1985; Beaumont and Townley, 1985; Poole, 1986; Rollinson, 1993; Whitaker, 1986). To evaluate the main explanatory factors impacting upon variations in levels of strategic integration in employee relations a range of independent variables was identified and constructed based on the extant literature (see, for example, Kochan et al., 1986). The main variables were grouped into five factors: (1) structural variables size, workforce profile; (2) sectoral variables industrial sector, activity, technology; (3) economic variables labour costs, performance; (4) market variables market growth, market share, level of product/service diversity; and (5) ownership. A summary of the rationale for the selection of these variables and the methodology employed in their construction is presented in Appendix 2. The objective of this analysis is to identify the factors which explain variation in levels of strategic integration in employee relations while controlling for factors such as sector, economic performance and ownership. Table VIII outlines the relationships between the independent variables and levels of strategic integration. In equation 1, strategic integration was regressed on all the independent variables. Here we find that company size (beta = 0.36***), level of technological complexity (beta = 0.27**) and US ownership (beta = 0.47***) are positively related to strategic integration. The impact of size is not surprising and concurs with much of the small-firm literature which suggests that smaller firms afford little strategic consideration to employee relations issues (Curran, 1986; Curran and Stanworth, 1981a, b; McMahon, 1994). Location in high-technology sectors has also been identified with more strategic approaches to employee relations. The only independent variable which had a significant negative impact (beta = 0.3**) on strategic integration was that measuring the location of a companys main market(s). This finding suggests that the more international a companys market is, the greater the likelihood that it will adopt a strategic approach to employee relations, and vice versa. This finding is largely unsurprising and in line with the business strategy literature, even though a recent Irish study did not find any significant

Dependent variable: strategic integration (standardised beta co-efficients reported) Independent variables Structural Size Manual Gender Temporary Sectoral Sector Activity Hi/Lo tech Economic Labcosts Perform Market Market Diverse Matrix Ownership US Irish European Constanta Collectivism Individualism R(2) F ratio N DW 0.50 14.0*** 53 2.30 Equation 1 Equation 2

Strategic integration and employee relations 125

0.36** 0.18 (ns) 0.10 (ns) 0.09 (ns)

0.06 (ns) 0.16 (ns) 0.18 (ns) 0.16 (ns)

0.06 (ns) 0.08 (ns) 0.27**

0.22* (ns) 0.09 (ns) 0.13 (ns)

0.15 (ns) 0.02 (ns)

0.19 (ns) 0.12 (ns)

0.30** 0.12 (ns) 0.04 (ns)

0.16 (ns) 0.26** 0.12 (ns)

0.47** 0.13 (ns) 0.00 (ns) 1.00***

0.15 (ns) 0.14 (ns) 0.01 (ns) 0.8** 0.03 (ns) 0.67*** 0.52 20.0*** 53 2.10 Table VIII. Determinants of strategic integration in employee relations (OLS regression: stepwise method)

Notes: * = p < 0.05; ** = p < 0.01; *** = p < 0.001; ns = not significant; a Ownership was entered as a dummy variable with the Asian-coded companies taking the value of the constant. The coefficient reported for the constant is the unstandardised coefficient (B)

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relationship between market location and employee relations practices (Flood and Turner, 1994). In equation 2, strategic integration was regressed on all the independent variables, together with individualism and collectivism. Equation 2 indicates that the most significant and positive influence on levels of strategic integration is individualism (beta = 0.67***), accounting for 85 per cent of the reported variance in strategic integration. It is likely that the impact of the US-ownership dummy variable in equation 1 is replaced by individualism in equation 2, since US companies are characterised by higher levels of individualism and strategic integration when compared with indigenous or other foreign-owned companies. While it is unclear as to the direction of causality, the most important implication of this finding is that companies adopting individualist employee relations styles are most likely to do so in a conscious and strategic vein. It is also likely that the converse of this conclusion also holds; namely, that companies whose employee relations styles are more collectivist in character are also more likely to have developed these styles in a less strategic and more reactive fashion. It is difficult to conclude definitively on the direction of causality in the relationship between levels of individualism and strategic integration. It may be that greater strategic consideration of employee relations leads to managements adopting more individualist employee relations styles. Alternatively, it might be suggested that a management desire for more individualist and less collectivist styles leads to a greater strategic emphasis on developing policies and practices which help to develop and sustain this approach (Beer et al., 1984; Fiorito et al., 1987; Foulkes, 1980; Walton, 1985). Based on the qualitative data gathered in this study, it appears likely that the relationship between individualism and strategic integration as dimensions of management styles is an iterative and dynamic one. What is perhaps more important, however, is the positive relationship between levels of strategic integration and individualism. More in-depth qualitative research is required to investigate the precise nature of such relationships. The only other independent variable exerting a significant impact on levels of strategic integration in equation 2 was sector. Here, presence in the manufacturing sector was negatively associated with levels of strategic integration (beta = 0.22*). However, as only nine of the 53 greenfield companies operated in the services sector, one must be somewhat circumspect in interpreting the significance of this finding. Leaving aside this important caveat, this finding confirms our earlier conclusions on the positive relationship between levels of individualism and strategic integration. Companies in the services sector were characterised by low levels of collectivism and high or medium levels of individualism. The most common category of service-sector companies was that which comprised those in the information/data processing sector. These were typically non-union and adopted other ideal-typical characteristics of high individualism, most particularly the use of performance-related pay systems based on individual performance appraisals among all employee grades.

Conclusions This paper has attempted to examine the nature and extent of strategic integration in employee relations and its relationship to different managerial styles as a means of contributing to the debate on changing management approaches to employee relations. Based on the research evidence, a number of conclusions may be presented. Firstly, it appears that levels of strategic integration in greenfield companies tend towards the middle of the range. To identify the nature of strategic integration in employee relations two specific hypotheses were tested as follows: H1: high levels of individualism will be positively associated with high levels of strategic integration; and H2: high levels of collectivism will be associated with low levels of strategic integration. The major conclusions in relation to these hypotheses are as follows: (1) Levels of individualism are positively correlated with levels of strategic integration: the findings presented in this paper indicate a strong positive relationship between individualism and the integration of employee relations considerations into strategic decision-making. These findings clearly indicate that management styles which incorporate a strong strategic focus are most likely to be associated with a distinct individualist employee relations orientation. This evidence suggests that we can accept the first hypothesis outlined above, which suggests that management styles in employee relations which incorporate high levels of individualism will be positively associated with high levels of strategic integration (Foulkes, 1980, 1981; Kochan et al., 1986). (2) Levels of collectivism are negatively correlated with levels of strategic integration: the study findings indicate that high levels of integration of employee relations considerations into strategic decisions are likely to be associated with low levels of collectivism in employee relations, and vice versa, although the relationship is weaker than in the previous hypothesis and is only significant at the 0.05 level. These findings indicate that while there is some support for the second hypothesis outlined above, namely that management styles in employee relations which incorporate high levels of collectivism will be associated with low levels of strategic integration, the evidence is less convincing. In addition to these conclusions, it is also clear that there are variations in the strength of relationships between strategic integration and levels of individualism and collectivism respectively. The strongest relationship exists between strategic integration and individualism where there is a positive relationship between all measures of individualism and strategic integration. The strength of the inverse relationship between collectivism and strategic integration is not as pronounced. However, on the critical issue of trade union

Strategic integration and employee relations 127

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recognition and density there is a clear and significant inverse relationship with almost all measures of strategic integration. In relation to explanatory factors, the preceding analysis indicates that company ownership and specifically US ownership is the most significant variable, positively impacting on levels of strategic integration. Strategic integration was also positively associated with size, and location in advanced industrial sectors. The only factor which impacted negatively on levels of strategic integration was market location in predominantly indigenous/local markets. In this study, company ownership was used as a proxy variable to analyse the impact of managerial values on variations in management styles in employee relations. This approach is based on the expectation that the actual employee relations styles chosen in greenfield sites reflect underlying managerial values associated with country of ownership (Beaumont, 1985, 1986, 1993; Beaumont and Townley, 1985; Poole, 1986; Whitaker, 1986). The findings presented in this study clearly point to the significance of US ownership. In particular, it is apparent that US companies are most likely to avoid trade union recognition and also to adopt a more strategic and individualist approach to employee relations management.
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Curran, J. and Stanworth, J. (1981b), Size of workplace and attitudes to employee relations in the printing and electronics industries, British Journal of Industrial Relations, Vol. 19, March, pp. 14-25. Flood, P. and Turner, T. (1994), Human resource strategy and the non-union phenomenon, Employee Relations, Vol. 23 No. 3, pp. 55-66. Fiorito, J., Lowman, C. and Nelson, F.D. (1987), The impact of human resource policies on union organizing, Employee Relations, Vol. 26, Spring, pp. 113-26. Foulkes, F.K. (1980), Personnel Policies in Large Non-Union Companies, Prentice-Hall, Englewood Cliffs, NJ. Foulkes, F.K. (1981), How top non-union companies manage employees, Harvard Business Review, September-October, pp. 90-6. Garbarino, J.W. (1984), Unionism without unions: the new employee relations?, Employee Relations, (US), Vol. 23, Winter, pp. 40-51. Gunnigle, P. (1995), Collectivism and the management of employee relations in greenfield sites, Human Resource Management Journal, Vol. 5 No. 3, pp. 24-40. Gunnigle, P., Flood, P., Morley, M. and Turner, T. (1994), Continuity and Change in Irish Employee Relations, Oak Tree Press, Dublin. Hillery, B. (1994) The institutions of employee relations, in Murphy, T.V. and Roche, W.K. (Eds) Irish Employee Relations in Practice, Oak Tree Press, Dublin. Keenoy, T. (1990), HRM: A case of the wolf in sheeps clothing?, Personnel Review, Vol. 19 No. 2, pp. 3-9. Kochan, T.A. (1980), Collective Bargaining and Employee Relations, Irwin, Homewood, IL. Kochan, T.A., Katz, H.C. and McKersie, R.B. (1986), The Transformation of American Employee Relations, Basic Books, New York, NY. Kochan, T.A. and Osterman, P. (1994), The Mutual Gains Enterprise, Harvard Business School Press, Cambridge, MA. Marchington, M. (1990), Analysing the links between product markets and the management of employee relations, Journal of Management Studies, Vol. 27 No. 2, pp. 111-32. McKersie, R.B. (1996), Labour-Management Partnerships: The U.S. Experience and Implications for Ireland, paper Presented at the Fourth Annual John Lovett Memorial Lecture, University of Limerick, March. McKersie, R.B. and Hunter, L.C. (1973), Pay, Productivity and Collective Bargaining, Macmillan, London. McMahon, J. (1994) Employee relations in small firms, in Gunnigle, P., Flood, P., Morley, M. and Turner, P., Continuity and Change in Irish Employee Relations, Oak Tree Press, Dublin. Poole, M. (1986), Managerial strategies and styles in employee relations: a comparative analysis, Journal of General Management, Vol. 12 No. 1, pp. 40-53. Purcell, J. (1987), Mapping management styles in employee relations, Journal of Management Studies, Vol. 24 No. 5, pp. 533-48. Roche, W.K. (1994), The trend of unionisation, in Murphy, T.V. and Roche W.K. (Eds), Irish Employee Relations in Practice, Oak Tree Press, Dublin. Roche, W.K. and Turner, T. (1994), Testing alternative models of human resource policy effects on trade union recognition in the Republic of Ireland, International Journal of Human Resource Management, Vol 5 No. 3, pp. 721-53. Rollinson, D. (1993), Understanding Employee Relations: A Behavioural Approach, AddisonWesley, Wokingham. Turner, T. (1994), Unionisation and human resource management in Irish companies, Industrial Relations Journal, Vol. 25 No. 1, pp. 39-51.

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Schuster, M. (1985), Models of co-operation and change in union settings, Employee Relations (US) (Fall), pp. 294-382. Tyson, S., Witcher, M. and Doherty, N. (1994), Different Routes to Excellence, Human Resource Research Centre, Cranfield University School of Management. Whitaker, Alan. 1986. Managerial strategy and employee relations: a case study of plant relocation, Journal of Management Studies, Vol. 23 No. 6, pp. 657-78. Walton, R.E. (1985), From control to commitment in the workplace, Harvard Business Review, MarchApril, pp. 77-84. Walton, R.E., Cutcher-Gershenfeld, J.E. and McKersie, R.B. (1994), Strategic Negotiations: A Theory and Change in Labor-Management Relations, Harvard Business School Press, Boston, MA. Appendix 1. Variables used to construct measures of strategic integration Variable 1: Impact on location decision: measures impact of employee relations considerations on location and was constructed on basis of study findings on the critical factors impacting on location decision of greenfield facility. Findings were coded on a 13 scale as follows: 1 (low: employee relations considerations not a significant factor impacting on location decision); 2 (medium: employee relations considerations one of number of factors significantly impacting on location decision); and 3 (high: employee relations considerations among the most significant factors impacting upon the location decision). Variable 2: Formal strategy development: measures sophistication of formal strategy development. Based on incidence of (i) formal mission statement; (ii) formal corporate strategy; and (iii) formal personnel/employee relations (P/IR) strategy. Results were scored 0 and 1 and an overall measure of strategy integration was constructed by aggregating results on each indicator and scoring them on a 1-3 scale as follows: 1 (low: no formal strategy); 2 (medium: formal corporate strategy and mission statement but no written P/IR strategy); and 3 (high: formal mission statement, corporate strategy and P/IR strategy). Variable 3: Strategic impact: measures impact of personnel/employee relations (P/IR) considerations on business-policy decisions scored on a 1-3 scale as follows: 1 (low: P/IR considerations have little/no impact on business-policy decisions); 2 (medium: P/IR considerations have considerable impact on business-policy decisions) and 3 (high: P/IR considerations have a significant impact on business-policy decisions). Variable 4: Personnel/employee relations (P/IR) function: measures the role of specialist P/IR function. It was based on five key indicators: (i) incidence of specialist P/IR function; (ii) scale of P/IR function; (iii) participation of senior P/IR specialist in top management team; (iv) involvement of P/IR function in corporate strategy; and (v) translation of P/IR strategy into work programmes and deadlines for P/IR function. Each indicator was scored 0 and 1 and results aggregated to provide an overall measure on a 1-3 scale as follows: (low: no specialist P/IR function); 2 (medium: P/IR function but small scale; no/little involvement in strategy) and 3 (high: significant P/IR function; major role in top team and strategy development). Composite indicator of strategic integration: a composite measure of strategic integration was then developed based on a combination of the four variables outlined above and minor re-coding to aggregate the scores on a low-medium-high scale (1-3). Appendix 2. Constructs of independent variables Structural variables: Size: small (100 employees) versus medium/large (100 employees). Temporary: proportion of employees in temporary employment relative to total. Gender: proportion of male employees to total. Manual: proportion of manual employee to total.

Sectoral variables: Sector: manufacturing versus service sector. Activity: companies were divided into two industry groups: Advanced (Office/Data processing machinery; Mechanical, electrical and instrument engineering; Chemical and Pharmaceuticals; Software; Professional/Information services) and Traditional (Food/drink; Textiles/Clothing; Paper/Printing; Transport/other services). Technology: this variable was based on technological complexity of production or service process with companies classified as either low technological complexity, medium technological complexity or high technological complexity. Economic variables: Performance: this variable was based on an assessment of the establishments financial performance. Labour costs: this variable was based on relative labour costs as a percentage of total costs. Market variables: Market: this variable was based on whether the major market for the establishments products/services was either national/local or international. Diverse: here companies were divided into two categories as follows: core (producing one main product or service) and Diverse (producing diverse range of products or services). Matrix: this variable is based on the portfolio analysis matrix model developed by the Boston Consulting Group which classifies establishment performance on two criteria, namely market share and market growth. Ownership variables: Ownership was entered as a dummy variable in all equations with the Asian coded companies taking the value of the constant (the coefficient reported for the constant is the unstandardised coefficient ).

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