Employee association in Japanese family and non-family SMEs

Purpose - This study aims to investigate the nature of employee associations (EAs) and whether the EAs function as a collective voice similar to enterprise unions in Japanese small- and medium-sized enterprises by clarifying the differences in the determinants and effects between EAs and unions. Design/methodology/approach - The authors analyze 2,440 Japanese small- and medium-sized firms for determinants of unions and EAs. Using the bivariate probit model, the authors examine whether EAs complement (a way station to unionization) or substitute for (dampening the desire for unionization) traditional unionization. Furthermore, the effects of EAs and unions on voluntary employee turnover rates are compared. Findings - The authors' findings regarding EAs are as follows: (1) although owner-managers are averse to both unions and EAs, owner-managers are not as averse to EAs as to unions; (2) EAs reduce the turnover rate to the same extent as unions do and (3) EAs are voice institutions that are less affected by the influence of unions. Research limitations/implications - The limitations of this study are as follows: (1) the dataset is slightly outdated; (2) due to the absence of panel data, the authors could not capture unobserved time-invariant factors that are the primary sources of endogeneity and (3) to overcome this vulnerability, the authors were able to control for the characteristics of management but not for the characteristics of employees because of a lack of information. Originality/value - This study clarifies that non-union employee representation (NER) has the unique feature of being neither complementary nor substitutive to unions in Japan's industrial relations. EAs are organized not for union avoidance by employers, but voluntarily by employees without the aim of unionization. The associations have the same function as unions in reducing the turnover rate by resolving employees' grievances as entities independent from management.