Industrial Relations Climate and Company Effectiveness

Abstract

An empirical study is reported which examines the relationships between industrial relations climate and variables reflecting the state of the firm's performance, industrial relations structure, and overall effectiveness in 28 manufacturing companies. In addition to reporting the patterns of association between each of these aspects, multivariate analyses are employed in order to (i) ascertain the direct and indirect influences of industrial relations climate and other variables under study on company effectiveness, and (ii) examine the assumptions about the direction of causality between industrial relations climate and effectiveness. The results highlight the relationships between the above variables and emphasise the importance of conceptualising industrial relations climate in such a way that can adequately reflect the attitudes and behaviour of industrial relations actors. Path analysis suggests that the pattern of causality is not a simple one but involves reciprocal and feedback relationships. However, the mprovement to the explanatory power of company effectiveness by including the notion of industrial relations limate in research, is clearly demonstrated.