The Effects of Trust on the Preference for Decentralized Bargaining

This article looks into the question of whether trust between works councillors and managers affects their preferences for plant-level negotiations compared with industry-wide or multiemployer bargaining. The main hypothesis is that when a high degree of mutual trust exists, both parties are more likely to show a preference toward the plant level. When the level of trust is low, the bargaining parties rely more on supraplant-level bargaining and collective bargaining power. This article uses data from a survey of 1,000 German companies of at least 100 employees, including 1,000 personnel managers and 1,000 works councillors, that is, those persons responsible for negotiating working conditions at the plant level. Logistic regression analyses show that trust has no significant effect on the managers’ preference for decentralized bargaining, whereas it can be found to affect the works councillors. The authors finally discuss the question of why the effect of trust is different for the bargaining parties.