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Mutual Gains or Zero Sum? Labor Relations and Firm Performance in the Airline Industry

Author

Listed:
  • Jody Hoffer Gittell
  • Andrew Von Nordenflycht
  • Thomas A. Kochan

Abstract

The authors examine competing theoretical arguments regarding whether union representation, shared governance, wage levels, and two features of the quality of labor relations—workplace culture and conflict in negotiations—lead to better or worse outcomes for airlines, and they test these interpretations using a mix of historical and quantitative data from major U.S. airlines. Both the qualitative and quantitative results suggest that relational factors—conflict and workplace culture—are more important determinants of performance than the structural factors of unionization, shared governance, and wages. The authors conclude that efforts to recover from the current crisis in the airline industry that depend primarily on reductions in wages or union power will at best bring only short-term relief from immediate financial pressures. Sustained improvement in service quality and financial performance will require more fundamental improvements in the quality of labor relations.

Suggested Citation

  • Jody Hoffer Gittell & Andrew Von Nordenflycht & Thomas A. Kochan, 2004. "Mutual Gains or Zero Sum? Labor Relations and Firm Performance in the Airline Industry," ILR Review, Cornell University, ILR School, vol. 57(2), pages 163-180, January.
    • Handle: RePEc:sae:ilrrev:v:57:y:2004:i:2:p:163-180
    DOI: 10.1177/001979390405700201
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    References listed on IDEAS

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    1. Hirsch, Barry T & Macpherson, David A, 2000. "Earnings, Rents, and Competition in the Airline Labor Market," Journal of Labor Economics, University of Chicago Press, vol. 18(1), pages 125-155, January.
    2. Pierre-Yves Crémieux, 1996. "The Effect of Deregulation on Employee Earnings: Pilots, Flight Attendants, and Mechanics, 1959–1992," ILR Review, Cornell University, ILR School, vol. 49(2), pages 223-242, January.
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    4. Knez, Marc & Simester, Duncan, 2001. "Firm-Wide Incentives and Mutual Monitoring at Continental Airlines," Journal of Labor Economics, University of Chicago Press, vol. 19(4), pages 743-772, October.
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    Citations

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    Cited by:

    1. Barry Gerhart, 2005. "Human Resources and Business Performance: Findings, Unanswered Questions, and an Alternative Approach," management revue - Socio-Economic Studies, Nomos Verlagsgesellschaft mbH & Co. KG, vol. 16(2), pages 174-185.
    2. Brown Johnson, Nancy & Anderson, Jonathan R, 2004. "5. Airline Employment, Productivity, And Working Conditions Following Deregulation," Research in Transportation Economics, Elsevier, vol. 10(1), pages 79-108, January.
    3. François Belot & Timothée Waxin, 2017. "Labor Conflicts in French Workplaces: Does (the Type of) Family Control Matter?," Journal of Business Ethics, Springer, vol. 146(3), pages 591-617, December.
    4. Ahmed, Muhammad Bilal & Wasey, Ejaz & Jhanndir, Saif Ullah, 2012. "Impact Of Employee Motivation On Customer Satisfaction: Study Of Airline Industry In Pakistan," MPRA Paper 70758, University Library of Munich, Germany.
    5. Marvin B. Lieberman & Roberto Garcia‐Castro & Natarajan Balasubramanian, 2017. "Measuring value creation and appropriation in firms: The VCA model," Strategic Management Journal, Wiley Blackwell, vol. 38(6), pages 1193-1211, June.
    6. Markus Helfen & Jörg Sydow & Carsten Wirth, 2020. "Service Delivery Networks and Employment Relations at German Airports: Jeopardizing Industrial Peace on the Ground?," British Journal of Industrial Relations, London School of Economics, vol. 58(1), pages 168-198, March.
    7. Roberto Garcia-Castro & Ruth V. Aguilera, 2015. "Incremental value creation and appropriation in a world with multiple stakeholders," Strategic Management Journal, Wiley Blackwell, vol. 36(1), pages 137-147, January.
    8. Kosfeld, Michael, 2019. "The Role of Leaders in Inducing and Maintaining Cooperation: The CC Strategy," IZA Discussion Papers 12540, IZA Network @ LISER.
    9. Bourjade, Sylvain & Huc, Regis & Muller-Vibes, Catherine, 2017. "Leasing and profitability: Empirical evidence from the airline industry," Transportation Research Part A: Policy and Practice, Elsevier, vol. 97(C), pages 30-46.
    10. Amy L. Fraher & Yiannis Gabriel, 2014. "Dreaming of Flying When Grounded: Occupational Identity and Occupational Fantasies of Furloughed Airline Pilots," Journal of Management Studies, Wiley Blackwell, vol. 51(6), pages 926-951, September.
    11. Marick F. Masters & Robert R. Albright & David Eplion, 2006. "What Did Partnerships Do? Evidence from the Federal Sector," ILR Review, Cornell University, ILR School, vol. 59(3), pages 367-385, April.
    12. Marc van Essen & J. (Hans) van Oosterhout & Pursey P. M. A. R. Heugens, 2013. "Competition and Cooperation in Corporate Governance: The Effects of Labor Institutions on Blockholder Effectiveness in 23 European Countries," Organization Science, INFORMS, vol. 24(2), pages 530-551, April.
    13. Thomas Kochan & Eileen Appelbaum & Carrie Leana & Jody Hoffer Gittell, 2013. "The Human Capital Dimensions of Sustainable Investment: What Investment Analysts Need to Know," CEPR Reports and Issue Briefs 2013-07, Center for Economic and Policy Research (CEPR).
    14. Goll Irene & Rasheed Abdul A., 2011. "Environmental Jolts, Clocks, and Strategic Change in the U.S. Airline Industry: The Effects of Deregulation and the 9/11/2001 Terrorist Attacks," Business and Politics, De Gruyter, vol. 13(4), pages 1-37, December.
    15. Suparak Suriyankietkaew & Gayle Avery, 2016. "Sustainable Leadership Practices Driving Financial Performance: Empirical Evidence from Thai SMEs," Sustainability, MDPI, vol. 8(4), pages 1-14, April.

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