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Unions and firm innovation in China: Synergy or strife?

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  • Fang, Tony
  • Ge, Ying

Abstract

The ‘monopoly face’ of unions suggests that the rent-seeking activities of unions discourage research and development investment and that the collective bargaining rules may restrict management flexibility, thus deterring innovations. On the other hand, the arrival of unions in the workplace may ‘shock’ the management into adopting more systematic rather than ad hoc management practices and that such innovative workplace practices may enhance an organization's ability to introduce new products and/or new processes. Further, the ‘voice face’ of unions argues that the independent ‘questioning’ of the management deliberations by the unions can also lead to better, more creative and, hence, more productive solutions. This paper investigates the link between unions and firm innovations in China. Different from their counterparts in advanced economies, Chinese unions are found to encourage firm innovations and R&D investment.

Suggested Citation

  • Fang, Tony & Ge, Ying, 2012. "Unions and firm innovation in China: Synergy or strife?," China Economic Review, Elsevier, vol. 23(1), pages 170-180.
    • Handle: RePEc:eee:chieco:v:23:y:2012:i:1:p:170-180
    DOI: 10.1016/j.chieco.2011.09.001
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    Citations

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    Cited by:

    1. Tony Fang & Ying Ge & Youqing Fan, 2019. "Unions and the productivity performance of multinational enterprises: evidence from China," Asian Business & Management, Palgrave Macmillan, vol. 18(4), pages 281-300, September.
    2. Fang, Tony & Ge, Ying, 2013. "Chinese Unions and Enterprises Performance," IZA Discussion Papers 7870, Institute of Labor Economics (IZA).
    3. Vinod Mishra & Russell Smyth, 2014. "Technological Change and Wages in China: Evidence from Matched Employer–Employee Data," Review of Development Economics, Wiley Blackwell, vol. 18(1), pages 123-138, February.
    4. Qiao, Peng-hua & Ju, Xiao-feng & Fung, Hung-Gay, 2014. "Industry association networks, innovations, and firm performance in Chinese small and medium-sized enterprises," China Economic Review, Elsevier, vol. 29(C), pages 213-228.
    5. Dong, Zhiqiang & Luo, Zijun & Wei, Xiahai, 2016. "Social insurance with Chinese characteristics: The role of communist party in private firms," China Economic Review, Elsevier, vol. 37(C), pages 40-51.
    6. Li, Jianqiang & Shan, Yaowen & Tian, Gary & Hao, Xiangchao, 2020. "Labor cost, government intervention, and corporate innovation: Evidence from China," Journal of Corporate Finance, Elsevier, vol. 64(C).
    7. Sizhong Sun & Sajid Anwar, 2018. "Product innovation in China’s food processing industries," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 42(3), pages 492-507, July.
    8. Antonioli, Davide & Mazzanti, Massimiliano, 2017. "Towards a green economy through innovations: The role of trade union involvement," Ecological Economics, Elsevier, vol. 131(C), pages 286-299.
    9. Laroche, Patrice, 2020. "Unions, Collective Bargaining and Firm Performance," GLO Discussion Paper Series 728, Global Labor Organization (GLO).
    10. Berton, Fabio & Dughera, Stefano & Ricci, Andrea, 2021. "Are Unions Detrimental to Innovation? Theory and Evidence," IZA Discussion Papers 14102, Institute of Labor Economics (IZA).
    11. Balsmeier, Benjamin, 2017. "Unions, collective relations laws and R&D investment in emerging and developing countries," Research Policy, Elsevier, vol. 46(1), pages 292-304.
    12. Jiang, Xiandeng & Yang, Jin & Yang, Wei & Zhang, Jian, 2021. "Do employees’ voices matter? Unionization and corporate environmental responsibility," International Review of Economics & Finance, Elsevier, vol. 76(C), pages 1265-1281.
    13. Mei Xue & Yu Zhou & Zhouhao Liu, 2022. "The Effect of Labor Protection on Firms’ Operational Efficiency: Evidence from China’s Labor Contract Law Implementation," Sustainability, MDPI, vol. 14(9), pages 1-17, May.

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    More about this item

    Keywords

    Unions; Innovation; China;
    All these keywords.

    JEL classification:

    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • J5 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining

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