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

38 Pages Posted: 15 May 2003

See all articles by Jody Hoffer Gittell

Jody Hoffer Gittell

Brandeis University - The Heller School for Social Policy and Management

Andrew von Nordenflycht

Simon Fraser University (SFU) - Beedie School of Business; Massachusetts Institute of Technology (MIT) - Sloan School of Management

Thomas A. Kochan

Massachusetts Institute of Technology (MIT) - Sloan School of Management

Date Written: March 2003

Abstract

We 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 test them with 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. We 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.

Keywords: Labor Relations, Major U.S. Airlines

Suggested Citation

Gittell, Jody Hoffer and von Nordenflycht, Andrew and Kochan, Thomas A., Mutual Gains or Zero Sum? Labor Relations and Firm Performance in the Airline Industry (March 2003). Available at SSRN: https://ssrn.com/abstract=395447 or http://dx.doi.org/10.2139/ssrn.395447

Jody Hoffer Gittell

Brandeis University - The Heller School for Social Policy and Management ( email )

P.O. Box 549110/MS 035
415 South Street
Waltham, MA 02454
United States

Andrew Von Nordenflycht

Simon Fraser University (SFU) - Beedie School of Business ( email )

8888 University Drive
Burnaby, British Colombia V5A 1S6
Canada

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

100 Main Street
E62-416
Cambridge, MA 02142
United States

Thomas A. Kochan (Contact Author)

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

E52-583
Cambridge, MA 02142
United States
617-253-6689 (Phone)
617-253-7696 (Fax)

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