Workers' Preferences in Concession Bargaining

Prior to recent contract negotiations, members of a very large United Steelworkers of America local union were asked to fill out a contract questionnaire regarding their preferences for various benefits and their willingness to strike to avoid making concessions. This paper reports the survey results and compares the members' pre-contractual preferences with the actual negotiated settlement.     

Influences on Sino-Western joint venture negotiations

This paper attempts to increase the reader's knowledge of the influences present when negotiating in China. The current environment of Sino-Western joint venture (JV) negotiations is examined, and negotiating suggestions resulting from this examination are presented. The paper, the result of the author's research in China in 1987–1989, posits that the major influences on Sino-Western JV negotiations are the ideological and theoretical foundations for such JVs, their history, the problems they experience, and the political, economic, governmental, and cultural contexts of negotiations. The paper's importance lies in two areas: it contributes to the literature on the international transfer of capital and technology, and it provides valuable information to Western firms and individuals who consider entering into JV negotiations in China.     

In Whose Interest? A First Look at National Survey Data on Interest‐Based Bargaining in Labor Relations

The first national survey data on interest‐based bargaining (IBB) in labor relations reveal broad awareness of IBB, contrasting union and management views, and variation by negotiator experience and gender. A majority of negotiators are aware of IBB, and approximately one‐third of management negotiators and nearly one‐half of union negotiators report using IBB in prior negotiations. An exploratory analysis of the relationships between IBB preferences and contract outcomes suggests that the process is producing more than a simple “mutual gains” pattern of outcomes. Based on these initial results, two hypotheses are suggested as the focus for future studies of the diffusion and sustainability of IBB in collective bargaining.     

The relevance of political affinity for the initial acquisition premium in cross‐border acquisitions

Research summary : In the context of economic nationalism, we investigate the relevance of political affinity between countries to the initial acquisition premium offered in cross‐border acquisitions. Political affinity is defined as the similarity of national interests in global affairs. We argue that political affinity affects how foreign acquirers anticipate their bargaining position in their negotiations with domestic target firms. With decreasing political affinity, the host government becomes increasingly likely to intervene against foreign firms in an acquisition deal. Consequently, foreign acquirers need to provide a more lucrative initial offer to dissuade target firms from leveraging government intervention to oppose the acquisition. Our prediction is supported by strong evidence that political affinity, as revealed by UN general assembly voting patterns, leads to lower initial acquisition premiums. Managerial summary : Media reports suggest that politics plays an important role in international business transactions. However, we still know very little about how bilateral political relations affect corporate decision‐making. In this article, we analyze the influence of the quality of bilateral political relations on the bidding behavior of foreign acquirers in cross‐border acquisitions. We argue that the host government is more likely to intervene against the foreign acquirer during deal negotiations if the quality of bilateral political relations is poor. A lower political affinity between countries therefore decreases the bargaining power of the acquirer and pushes up the initial bid premium the acquirer has to offer to the local target. Our empirical results confirm our argument. Copyright © 2015 John Wiley & Sons, Ltd.     

Strategy implementation: A comparison of face-to-face negotiations in the peoples republic of China and the United States

Crucial to every business alliance are the face-to-face negotiations that occur during the formulation and maintenance of the commercial relationship. Our study of American and Chinese businesspeople in simulated intracultural negotiations suggests both similarities and differences in style. For example, negotiators in both cultures were more successful when taking a problem-solving approach. Alternatively, the Chinese negotiators tended to ask many more questions and to interrupt one another more frequently than their American counterparts. Such subtle differences in style may cause problems in Sino-American negotiations, which may, in turn, sour otherwise fruitful commercial alliances.     

Bargaining Theory Meets Interest‐Based Negotiations: A Case Study1

This is a case study of the 2005 national contract negotiations between Kaiser Permanente and the Coalition of Kaiser Permanente Unions. Given the scale and complexity of these negotiations, their successful completion provides an exemplar for collective bargaining in this country. In 1997 Kaiser Permanente and the Coalition of Kaiser Permanente Unions formed a labor management partnership, and negotiations were structured around the principles of interest‐based negotiation (IBN). Drawing on direct observation of all parts of the bargaining process, interviews with individuals from Kaiser and the Coalition of Unions, and surveys we conducted after bargaining was completed, we conclude that the parties employed a mix of interest‐based and traditional negotiation processes across an array of integrative and distributive issues. We find that IBN techniques were used extensively and successfully to reach mutually satisfying agreements when the parties shared interests. When interests were in greater conflict, the parties resorted to more traditional, positional tactics to reach resolution. Strong intraorganizational conflicts limited the use of IBN and favored the use of more traditional positional bargaining. While a high level of trust enabled and supported the use of IBN, tensions that developed limited the use of IBN and required surfacing and release before either IBN or more traditional positional processes could proceed effectively. The use of IBN tools helped the parties apply the principles underlying the partnership in which these negotiations were embedded. We conclude that IBN served as a way of applying or operationalizing integrative bargaining and affected the process dynamics in ways the Walton and McKersie theory predicted. As such we see IBN as techniques that neither displace nor render obsolete other aspects of bargaining theory or practice but that show considerable promise for helping collective bargaining to address the complex issues and challenges found in contemporary employment relationships.     

Labor Contract Duration,Indexation, and Wage Adjustment: Interdependence and Inflation Propagation Mechanisms

We study simultaneously the three main outcomes of collective bargaining negotiations, namely indexation, non‐indexed wage adjustment, and contract duration. The wage adjustment equation accommodates varying degrees of wage indexation in the current and previous contracts. The elasticity of indexation, a latent variable, deals with both the incidence and intensity of wage indexation and links consistently with the wage equation. Duration, which may change between contracts, is shown to depend on indexed and non‐indexed wage adjustment, obviating the need for expected inflation in the empirical duration equations of earlier work. Complex intra‐ and inter‐contract inflation propagation mechanisms involve expected inflation and inflation uncertainty in an essential way. The model accounts for the secular doubling of contract duration and dramatic decrease in indexation and non‐contingent wage adjustment.     

Negotiating Amalgamations: Territorial and Political Consolidation and Administrative Reform in Public-Sector Service Unions in the UK

Since 1990 there has been a series of union amalgamations among Britain's public-sector unions. This study examines three amalgamations and one aborted amalgamation. Each was initiated by union leaders reacting to government-sponsored reforms of the public sector, and all involved unions with either defensive or consolidatory merger motivations. The complex negotiations are presented as resolving issues of political, democratic and administrative concerns. It is argued that the balance of power on critical constitutional issues lay with the leaders of the consolidatory unions, particularly the dominant activist groups within such unions. As a consequence, success in amalgamation negotiations lay in satisfying such group's interests in sustaining the existing political ethos and democratic system, while securing agreement on the desired administrative reforms.     

The Role of Arbitrator Uncertainty in Negotiation Impasses

This article utilizes a unique data set to explore whether uncertainty about arbitration influences the likelihood that negotiators will use it. We use experimental data on decisions made by arbitrators in hypothetical scenarios to calculate a measure of uncertainty for each arbitrator. These data are matched to field data on contract negotiations involving this same set of arbitrators. We find that the greater the uncertainty about the arbitrator, the lower the probability of impasse.     

Capacity flexibility allocation in an outsourced supply chain with reservation

We consider a contract manufacturer that serves a limited number of outsourcers (customers) on a single capacitated production line. The outsourcers have different levels of demand uncertainty and the contract manufacturer faces the question how to allocate the contractual capacity flexibility in an optimal way. The contractual capacity flexibility is a contract parameter that sets the amount of demand the contract manufacturer is obliged to accept from the outsourcers. We develop a hierarchical model that consists of two decision levels. At the tactical level, the contract manufacturer allocates the capacity flexibility to the different outsourcers by maximizing the expected profit. Offering more flexibility to the more uncertain outsourcer generates higher expected revenue, but also increases the expected penalty costs. The allocated capacity flexibilities (determined at the tactical level) are input parameters to the lower decision level, where the operational planning decisions are made and actual demands are observed. We perform a numerical study by solving the two-level hierarchical planning problem iteratively. We first solve the higher level problem, which has been formulated as an integer program, and then perform a simulation study, where we solve a mathematical programming model in a rolling horizon setting to measure the operational performance of the system. The simulation results reveal that when the acceptance decision is made (given the allocated capacity flexibility decision), priority is given to the less uncertain outsourcer, whereas when the orders are placed, priority is given to the most uncertain outsourcer. Our insights are helpful for contract manufacturers when having contract negotiations with the outsourcers. Moreover, we show that hierarchical integration and anticipation are required, especially for cases with high penalty cost and tight capacities.     

近年来厄瓜多尔石油政策演变及风险服务合同要点

自2007年左翼政府上台执政以来,厄瓜多尔的石油资源国有化政策经过临时措施、法理准备和合同变更三个阶段,历时四年,现已完成服务合同谈判.厄政府通过颁布新宪法规定国家对石油等不可再生资源享有唯一管辖权,国家从这些资源的开发利用上获得的收益不能低于任何参与开发的合同者;通过修改石油法,规定风险服务合同为该国主要使用的石油合同模式,建立以每桶服务费率为基础的服务费支付机制,以法律条文形式规定原石油合同转换为服务合同的谈判截止日期;政府利用签订服务合同限定了承包商的收入,彻底消除油价上涨带给承包商的超额收入,同时要求承包商自担所有风险.综合考虑厄石油政策的变更规律,认为其石油政策环境进入一个相对稳定期.在厄发展的石油公司应在把握机会的同时,清醒认识和评估政策风险.     

Toward Flexible Industrial Relations? Neo-Liberalism,Democracy, and Labor Reform in Latin America

Neo-liberal economic reforms have placed significant pressure on traditional industrial relations systems throughout Latin American. In this context, most countries have revised their basic labor legislation. Yet, despite similar economic pressures, countries have moved in varying directions in revising their labor laws, and industrial relations systems remain highly diverse. This paper focuses on democratization, institutional legacies, the role of organized labor, and the political negotiations surrounding labor law changes to help explain this diversity.     

The Politics of Social Pacts

The paper develops an analytical framework for the politics of negotiated voluntary wage restraint in the context of social pacts. It argues that, in contrast to earlier political exchanges, tripartite negotiations on wage restraint under restrictive economic policies are not based on a political exchange whereby governments had to compensate trade unions for wage restraint. Rather, governments can threaten trade unions with tight monetary policy and trade unions can either engage in negotiated adjustment or suffer restrictions. Social pacts are therefore an instrument of adjustment by governments to a new economic environment, and not a tool of economic policy.     

Final Offer Arbitration: Better Theory Than Practice

The theory of final offer arbitration promises more than its actual performance delivers, based on admittedly limited experience. There is no showing that fewer negotiations reach impasse than would occur under conventional arbitration. There is evidence, however, that final offer arbitration does tend to produce awards less equitable than warranted by the positions and strengths of the parties, particularly when there are multiple issues at impasse and when arbitrators may select only one overall package or another. This tendency is built-in to the process, since the whole point of final offer arbitration is deterrence, with little or no concern for getting a good settlement through arbitration. “Bad” awards cannot fail to generate irritation and to have a corrosive effect on responsible contract administration. It is possible that such awards, and their effects, will be accepted as the necessary price of a final offer selection system. What seems more likely, however, is that the system will be modified along the lines of those in Eugene and Michigan. Those modifications can be expected to have two effects. First, they will make it more likely that the parties will be able to reach their own agreement by encouraging mediation and further negotiations, even after arbitration has been invoked. Second, they will increase the possibility of an acceptable arbitrated settlement by allowing the arbitrator greater flexibility in making an award. By doing these things, however, the deterrent effect of final offer selection will be substantially weakened, and what will be left will be a useful form of mediation-arbitration but not a substitute for the strike which contains an equivalent incentive to negotiate.     

WTO negotiations on agriculture and the distributional impacts for US rice farm households

The policies of wealthy countries have proven the most difficult to reform in the WTO Doha Round negotiations. Considerable emphasis has been placed on developing country impacts, but a gap in the literature remains on the stakes for rich country farmers despite the large role these countries play in global agricultural protection. The research here considers the particular case of US rice households and their sensitivity to Japanese market access reform. Using an applied general equilibrium model with multiple farm households we highlight the distributional impacts among these producers. We argue that concessions to Japan on market access make domestic reforms in rice a difficult political sale in the US since the wealthiest producers bear the largest losses. Improving our understanding of the distributional impacts and political realities of the richest countries is critical to informing the negotiating process because the gains to the world’s poor can only be realized with creative policy redress in these rich nations.     

Models of Union Wage Determination: What Have We Learned Since Dunlop and Ross?

This study surveys the development and current status of models of union wage determination since Dunlop and Ross first wrote on the subject in the 1940s. To start, I identify eight empirical dimensions of the union wage effect that models have endeavored to explain and predict. A number of alternative theoretical models are then examined, starting with Dunlop's "economic" and Ross' "political" models and extending to the plethora of models and extensions found in the modern-day literature. Examples include standard monopoly, efficient contract, and bargaining models, as well as offshoots such as median voter, insider-outsider, property rights, and principal-agent models. The article then examines the extent to which these various models generate hypotheses and insights apropos to explaining the eight major empirical dimensions of the union wage effect. The conclusion summarizes what has been learned, the major shortcomings of this literature, and steps for further progress.     

Uniting in the letter but breaching in the spirit: Contract flexibility and interfirm collaboration based on the Contracts as Reference Points Theory

Contracts are generally assumed to be farsighted and effective in governing ex post trading behaviors. However, we know little about why not all the ex post trading behaviors can be contractible under conditions of contract flexibility. Drawing on Contracts as Reference Points Theory, this study focuses on contract flexibility which is viewed as an essential ingredient for success in long-term oriented Eastern cultures. We examine the trade-off between uncertainty coping and opportunism induced by contract flexibility, which is conceptualized as a reference-dependence decision problem. Using the dyadic survey data of supplier and buyer relationships, we find that contract flexibility facilitates uncertainty coping. The positive effect of contract flexibility on uncertainty coping is enhanced by buyer political ties and supplier power. The effect of contract flexibility on opportunism is mitigated by supplier power. Moreover, uncertainty coping increases relationship performance, whereas opportunism inhibits relationship performance.     

Communication standards and the politics of protectionism: The case of colour television systems

The author discusses the political processes and negotiations involved in the selection of a colour television standard for Europe in the 1960s. The French government's strategy in favour of its own system (SECAM) is examined, as well as the current economic status of the French colour television industry. The article explores the question of the selection and protection by a government of a ‘national champion’ product, and the strategies involved.     

The AMS in agricultural trade negotiations: a review

This article reviews the role of the Aggregate Measure of Support (AMS) in the agricultural trade negotiations of the Uruguay Round. Contrary to expectations at the start of these negotiations, the AMS only occupies a subsidiary position in the final agreement. In order to explain this, first an economic analysis is presented of the Producer Subsidy Equivalent (PSE), the basic AMS concept in the GATT discussions. Secondly, the political AMS debate is described and analysed, using information from unpublished GATT documents. Although the PSE concept is based on simple assumptions, its measurement already meets a number of difficult problems (policy coverage, product coverage, external reference prices, currency). Once these are solved, the concept may offer a brief insight into actual governmental support in agriculture. However, the calculations do not provide a sound measure of the trade distortions caused by agricultural policies. Mainly for that reason, the idea of a pure aggregated approach—based on the AMS—proved unsuccessful in the negotiations. Instead, the Contracting Parties accepted the framework of making binding agreements on three separate areas: internal support, market access and export support. While important and very specific commitments were made in the areas of agricultural imports and exports, the AMS has only found application in the internal support area.     

Job Safety and Contract Workers in the Petrochemical Industry

The legal rules for assigning liability for the costs of accidents penalize petrochemical plants that exercise direct control over contract employees. Evidence from diverse sources indicates that these liability rules lead plant management to give primary responsibility for the safety training and supervision of contract employees to contractors. However, analysis of the determinants of accidents suggests that host plants offer more effective safety training and supervision than do contractors. It follows that accident rates in the petrochemical industry would be reduced if liability rules were altered so that host plants had greater incentives to take primary responsibility for the safety training and supervision of contract workers.