“Compared with the ‘Market-Outsider’ Model of Corporate Governance, the ‘Relational- Insider’ Model Is Associated with Superior Employment Relations”. Evaluate This Statement with Reference to at Least Two Countries
“Compared with the ‘market-outsider’ model of corporate governance, the ‘relational- insider’ model is associated with superior employment relations”. Evaluate this statement with reference to at least two countries.
There are many different ways to categorize national systems of corporate governance. Gospel and Pendleton argued in their book, Corporate Governance and Labour Management that national systems of corporate governance can be divided into two different models (Gospel and Pendleton, 2005:7). They are the ‘relational-insider’ model and the ‘market-outsider’ model (Gospel and Pendleton, 2005:7). Gospel and Pendleton argued that different corporate governance systems would influence management behaviour and decision-making (2005:17). As a result, different labour management outcomes will lead employment relations to vary between the ‘relational- insider ‘model and the ‘market-outsider’ model. It has been argued that the ‘relational-insider’ model has an adverse consequence on employment relations by placing shareholders’ interests above the interests of all other stakeholders and focusing on short-term returns (Gospel and Pendleton, 2005:15). By contrast, in the ‘relational-insider‘ model companies pay more attention to employees’ interests and focus on long-term profit. Thus, some researches argue that the ‘relational- insider model is associated superior employment relations compared with the ‘market-outsider’ model. For instance, Frick argues that some ‘relational- insider’ model countries like Japan and Germany have more in-house training and longer job tenures (1997:215-63, cited in Gospel and Pendleton 2003:568). In contrast, Bacon and Berry argue that employment relations between the ‘relational-insider’ model and the ‘market –outsider ‘ model are negligible in some cases (2003, cited in Pendleton and Gospel, 2005:71). For instance, the likelihood of reducing employee numbers is similar between two models (Pendleton and Gospel, 2005:71). This
There are many different ways to categorize national systems of corporate governance. Gospel and Pendleton argued in their book, Corporate Governance and Labour Management that national systems of corporate governance can be divided into two different models (Gospel and Pendleton, 2005:7). They are the ‘relational-insider’ model and the ‘market-outsider’ model (Gospel and Pendleton, 2005:7). Gospel and Pendleton argued that different corporate governance systems would influence management behaviour and decision-making (2005:17). As a result, different labour management outcomes will lead employment relations to vary between the ‘relational- insider ‘model and the ‘market-outsider’ model. It has been argued that the ‘relational-insider’ model has an adverse consequence on employment relations by placing shareholders’ interests above the interests of all other stakeholders and focusing on short-term returns (Gospel and Pendleton, 2005:15). By contrast, in the ‘relational-insider‘ model companies pay more attention to employees’ interests and focus on long-term profit. Thus, some researches argue that the ‘relational- insider model is associated superior employment relations compared with the ‘market-outsider’ model. For instance, Frick argues that some ‘relational- insider’ model countries like Japan and Germany have more in-house training and longer job tenures (1997:215-63, cited in Gospel and Pendleton 2003:568). In contrast, Bacon and Berry argue that employment relations between the ‘relational-insider’ model and the ‘market –outsider ‘ model are negligible in some cases (2003, cited in Pendleton and Gospel, 2005:71). For instance, the likelihood of reducing employee numbers is similar between two models (Pendleton and Gospel, 2005:71). This
Cited: by Gospel and Pendleton, 2005:123). Finally, employees are more committed to their firms in the ‘relational –insider’ model than in the ‘market-outsider ‘model Araki,T. 2005. Corporate governance ,labor, and employment relations in Japan: the future of the stakeholder model? In Gospel, H and Pendleton,A. eds . Corporate governance and labour management . Oxford ,pp.254-283. Blinder,A and Krueger,A Frick,B and Lehmann, E. 2005. Corprate governance in Germany :ownership, codetermination,and firm performance in a stakeholder Economy. In Gospel, H and Pendleton, A. eds . Corporate governance and labour management . Oxford ,pp.122-145. Gospel, H and Pendleton, A. 2005. Corporate governance and labour management : an international comparison. In Gospel, H and Pendleton,A. eds . Corporate governance and labour management . Oxford ,pp.1-32. Jackson, G ,Hopner ,M and Kurdelbusch,A. 2005.Corporate governance and employees in Germany : changing linkages ,complementarities , and Tesions. In Gospel, H and Pendleton,A. eds . Corporate governance and labour management . Oxford ,pp.84-121. Jacoby, S. 2005. Corporate governance and employees in the United States. In Gospel, H and Pendleton,A. eds . Corporate governance and labour management . Oxford ,pp.33-58. Rebick,M. 2005. The Japanese employment System : adapting to a new economic environment. Oxford : Oxford University Press.pp.53-54 Vitols,S