Workplace structure and governance What can we learn from comparative

workplace data?

Antoine Rebérioux, University Paris Diderot, LADYSS With John Forth (NIESR)

17 September 2016

Waseda University, INCAS project mid-term meeting

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Comparative analysis and micro-data

• Comparative analysis usually rests on aggregate-data and comparison between high-range or mid-range institutions

• Some evident limitations:

Similar institutions may have different implications

Apparently dissimilar institutions may play equivalent functional roles

Workplaces usually out of sight Employment: individual experience is at the workplace level…

Corporate governance: what’s going on at the company level has some impact at the workplace level

Use of micro-data as a complementary approach for ICC

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Comparative analysis and micro-data

• Organizational heterogeneity : large dispersion in wage, productivity, etc. accross workplaces

• Arguably, liberalization process has increased this diversity (see Jackson, 2016)

• Within-country organizational variance :

Challenge for ICC

Challenge to understand institutional change: firms may react differently to similar national or trans-national institutional pressures.

See Jackson and Miyajima (2007)

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Comparative analysis and micro-data

• Micro-data are much of the time hardly comparable

National surveys : different samples and different questions…

Survey-based studies of multiple countries (e.g. ECS, ESS): restrictive in scope

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WERS and REPONSE

• Rich and representative data on workplaces and their employees in 2004 and 2011

• Face-to-face interviews with workplace manager responsible for employment relations: MQ

• Self-completion surveys of random samples of employees in those workplaces: EQ

Linked employer-employee data

• Questionnaires not harmonised, but many comparable data items on a wide range of issues: CG, labour organization, skill development, pay determination, job satisfaction, etc.

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• In each country, sample representative of the private sector, excluding agriculture and workplaces with less than 11 employees

• In 2011, our data account for:

75% of all private sector employment

55% of all employment

• Short panel 2004-2011

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Published resources

• Translated questionnaires in English and French 2011 Management Questionnaire (MQ)

2011 Employee Questionnaire (SEQ)

• Stata syntax to compile a comparative dataset 2004 and 2011

MQ & SEQ

• http://www.niesr.ac.uk/projects/employment-relations-britain-and-france

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• Chapters on unions, ILM, work organization, job quality and the recession

• Chapter II (with John Forth, NIESR): workplace structure and governance

Bring some results + potential of the combined database

At this stage, not so much use of the dynamic dimension (panel)

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1. Workplace size

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Workplace employment size (2011)

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• Mean size : 48 employees in GB, as compared to 53 in France.

• Not explained by industry composition (larger % of manufacturing plants in FR)

• Standard Deviation: 1,7 in GB and 1,1 in France

More heterogneity in Britain: something we found in a number of occasions…

Distribution of workplaces by size, in 2011

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0

5

10

15

20

25

30

35

40

45

50

11-19 20-49 50-99 100-249 250-499 500 or more

GB FR

The GB population has a larger share of workplaces in the 11-19 band.

Use of subcontracting

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Nature of product markets

• Less restrictive product market regulation in GB OECD PMR (2013): FR=1.47, DE=1.29, IT=1.26, UK=1.08

• Less market dominance in GB 75% of workplaces with market share of <25%, c.f. 63% in FR

• Broader geographical focus in GB 47% of single-independent workplaces have national / international market,

c.f. 29% in FR

So workplaces in GB are less likely to be operating in small localized monopolies than is the case in FR

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Nature of product markets

• In more competitive economies, one expects to see higher levels of entry and exit in the population of workplaces (creative destruction).

• Younger age profile in GB

35% of workplaces <10 years old, c.f. 15% in FR

If we control for market share, geographical focus and age, we are able to account for all of the difference in average workplace size

• Results coherent with what we can have expected from a conventional description of Britain and France (LME / CME)

• Size effect = ‘Beneficial constraint’ in industrial and employment relations ?

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2. Workplace autonomy

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Britain France

Independent (A) 41% 41%

Dependent

Franchise (B) 4% 4%

Included in a larger organization (C) 55% 55%

Overall business structure

• Independent workplace:

the workplace is not a site or a division of a multi-site firm

The workplace is not an affiliate of another company…

• Yet one important difference regarding dependent workplaces (B and C categories) :

Dependent workplaces have much greater autonomy vis à vis the upper organization in Britain

30% have autonomy over pay in GB, c.f. 15% in France

87% have autonomy over employment in GB, c.f. 30% in France

The share of non-independent workplace is the same in the two countries, but the consequences of dependence are completely different

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Institutional isomorphism ?

• Consistent with other studies pointing to the strong degree of hierarchy in French businesses (see e.g. Gallie, 1978; Maurice, Sellier, Sylvestre, 1979)

• Less autonomy in FR => more (coercive) institutional isomorphism (see Jackson, 2016, p.11)

• 6% of workplaces belong to an employers’ association in GB, against 52% in FR. Stronger ties to external networks in FR = more mimetic and normative isomorphism

Less inter-firm diversity in France

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Chapter 4 (Role of ILMs)

• HRM strategies :

In France, clear dualization between ILM-oriented workplaces (with high-tenure / high-wage pattern) and ELM-oriented workplaces

In Britain, no such systemic pattern. More dispersion…

• Individual outcomes : greater dispersion in Britain regarding wage, working hours or tenure.

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3. Ownership structure and governance

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Stock market listing

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• Share of workplaces belonging to a company listed on a stock exchange:

13% in GB, representing 21% of employment

14% in France, representing 28% of employment

• Different styles of stock market listing:

Britain: direct listing, of large and medium-sized firms

France: indirect listing, through business groups

Decrease in the two countries since 2005 (financial crisis)

Stock market listing

• Sizable literature that investigates the implications of stock market listing on business conduct (investment style, HRM, etc.)

Shareholder-value based management

• Our combined database offers the opportunity to test the relationship between stock market and management style in the two countries

• One indicator of a shareholder-value based management system that has been proposed in the literature is a more pervasive approach to (ex ante) target setting.

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Listing and target-setting

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Ownership structure

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Britain France

2004 2011 2005 2011

% of family-owned:

All workplaces 40 34 49 44

Those belonging to listed companies 6 7 23 25

% of foreign-owned:

All workplaces 17 15 9 8

Those belonging to listed companies 25 36 24 25

• Information through direct questioning / covers listed and non-listed firms

Ownership and employment

• Theoretical and empirical support for the idea that ownership impacts various aspects of the employment relations

• Family ownership: family firms have a longer time horizon than widely held companies

Family owners see their firm as an asset to pass on to their descendants (Anderson and Reeb, 2003)

Listed family firms are ‘shielded’ from short-run stock market fluctuations

• Bassanini, Breda, Caroli and Rebérioux (2013) : wage discount in family firms, in France. But with more job security => compensating wage differential mechanism.

• Te Velde (2002): wage premium in foreign-owned companies, in Britain.

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Ownership and wages

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Ownership and wages

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• Strong ‘commonality’: family ownership has the same implication in the two countries

• Major difference: composition effect

• How to explain this composition / selection effect ? Macro-institutions, cultural specificities that explain the greater importance of family ownership in France ?

Summary

• Micro data: corroborates some ‘conventional’ expectations (e.g. size) but reveals new elements (e.g. importance of stock market listing in the French economy)

• Allows observing / comparing variance around the mean… Institutional isomorphism

• Shows that commonalities and dissimilarities tend to overlap

Apparent similarities with distinct implications: dependence to a larger organization

Dissimilarities with similar consequences (family ownership)

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