Investment under company-level pacts before and during the Great Recession

authored by: Lutz Bellmann, Hans Dieter Gerner, Olaf Hübler
Abstract: Company-level pacts between the management and the works council are often preferred in comparison to agreements between employers’ association and unions because the former negotiating partners are better informed about the economic situation of a company and have fewer goal conflicts than the latter. Moreover, these company-level pacts might reduce the ‘hold-up’ problems which arise once specialized investment is made. Therefore, this article investigates whether such agreements affect firm-level investment. Based on the IAB Establishment Panel Survey 2001–2010 the study indicates that the adoption of a company-level pact leads to a higher investment rate than in other firms driven by reinvestment. However, the Great Recession has damped this positive influence. From the econometric analysis the article does not detect any increase in investment during the negotiation phase. After the expiration of a company-level pact, lower reinvestment and a small increase in net investment take place.
Organisation(s): Faculty of Economics and Management
External Organisation(s): Institute for Employment Research (IAB) of the Federal Employment Agency
Type: Article
Journal: Economic and industrial democracy
Volume: 36
Pages: 501-522
No. of pages: 22
ISSN: 0143-831X
Publication date: 08.2015
Publication status: Published
Peer reviewed: Yes
ASJC Scopus subject areas: General Business,Management and Accounting, Strategy and Management, Organizational Behavior and Human Resource Management, Management of Technology and Innovation
Sustainable Development Goals: SDG 8 - Decent Work and Economic Growth, SDG 9 - Industry, Innovation, and Infrastructure
Electronic version(s): https://doi.org/10.1177/0143831X13511999 (Access: Closed)
https://doi.org/10.15488/2325 (Access: Open)