This paper aims to evaluate the institutional complementarity thesis, which anticipates that the institutional context of the firm will have a considerable influence on the choice and success of employment relations strategies. Focusing on two liberal market economies, the paper presents analysis of secondary data from the US airline industry and primary data from UK civil aviation to assess the power of the institutional context on employment relations.
Secondary data were drawn from trade journals, newspaper reports and other civil aviation information sources such as the Civil Aviation Authority database. Primary data collection involved interviews with airline management, officials at the British Air Line Pilots Association, and pilots. A large‐scale questionnaire survey of pilots was also conducted.
In both liberal market economies airlines have adopted a range of employment relations strategies, which demonstrates the robustness of strategic management choice. Moreover, in both the UK and the USA, airlines with institutionally complementary employment relations strategies performed less well over a range of measures than their counterparts with employment relation strategies more closely aligned with coordinated market economies.
The findings identify best practice in the management of people in the airline industry and build a business case for cooperating with employees and their trade unions.
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