Flexibility and Fairness in Liberal Market Economies: The Comparative Impact of the Legal Environment and High‐Performance Work Systems

This paper compares management flexibility in employment decision making in the United States and Canada through a cross‐national survey of organizations in representative jurisdictions in each country, Pennsylvania and Ontario, respectively, that investigates the impact of differences in their legal environments. The results indicate that, compared to their Ontario counterparts, organizations in Pennsylvania have a higher degree of flexibility in employment outcomes, such as higher dismissal and discipline rates, yet do not experience any greater flexibility or simplicity in management hiring and firing decisions. One explanation for this result may lie in the finding that organizations in Pennsylvania experience greater legal pressures on decision making, reflecting the generally more intense conflict in the employment law system in the United States. By contrast, high‐performance work systems, which some have looked to as a possible management‐driven mechanism for enhancing fairness in employment, had more modest effects.