Cross-cultural industrial relations: An empirical examination

Int. J. Value Based Management Vol. 3, No. 2, 1990

Cross-Cultural Industrial Relations: An Empirical Examination Sorab G. Sadri School of Economics Asia Pacific International University Hong Kong Francisca Lukose Centre for Research into Education and Development of Organisations Malaysia

Abstract This paper is born out of research conducted in Hong Kong, Malaysia, and India between 1987 and 1990. It is an attempt to empirically test and extend the scope of a model formulated in England in 1977. The original model postulated that managerial behavior towards industrial relations issues, on an organizational or micro level, could be predicted if the managerial style could be properly predicated within the matrix of the model. The present study uses the model to see if similar prediction (or in any case, generalization) can be made on a macro level. The findings reveal that a certain degree of generalization can be empirically sustained in so far as the style of managers in the three countries is concerned. To that extent the paper is a contribution to the corpus of thought on the subject of managerial beliefs and provides valuable insight for the student of human resources management especially in the area of industrial relations and corporate policy. INTRODUCTION

This paper is a theoretical contribution to the subject of auditing industrial relations and is based on separate yet similar research conducted in Hong Kong, India, and Malaysia between 1987 and 1990. This paper is based on a model posited in 1977 and tested in Britain. The model was retested in Nigeria to examine its validity for developing free market economies. Both of these were intensive case studies and documented by Sadri and Williamson (1988 a and b). This paper does not take an ideological position but posits a model that has been tested and whose findings are discussed. It presents us with a device to gauge the health of an industrial relations system. Having tested it in quite varied economies, we generalize from the particular to claim that the model could be applied to any mixed economy. We examine the concept of the industrial relations audit from a cross-cultural perspective in Asia, as part of a larger study into changing

2

S.G. Sadri, F. Lukose

strategies of union and management in response to structural and institutional change. This paper argues that management adopts a style in keeping with its objectives and ideological persuasion. If this style can be properly identified, it could give management theorists considerable insight into why particular organizations behave the way they do, and help them to understand and cope with structural and institutional change which is spreading throughout the region. The style of management is a series of consistent policies adopted over a long period of time. If the style is identified, it could help the students of an organization as well as the trade union leader in ascertaining the future policies to be adopted by the management. Hence the audit on one h a n d aids the understanding of why organizations behave the way they do, and on the other h a n d enables the management theorists to foresee the future course of events emanating from management actions. This paper is divided into three parts. The first deals with the theoretical framework behind the development of the concept of the audit. The second posits the audit itself and the methodological basis for testing it. The third records the evidence from three Asian economies that share a c o m m o n colonial heritage: Hong Kong, Malaysia, and India. RESEARCH

METHODOLOGY

This paper is founded on an investigation that has taken several years to complete and has covered three economies in Asia. Questionnaires were distributed among middle-management personnel studying for post-graduate qualifications in business management in each of these economies. Hence, it could be said that the responses were based on "informed perception." Since the respondents h a d ample time to read and c o m m e n t and since the participation in the exercise was purely voluntary, it could be held that responses were fairly reliable. Thereafter, a selected 5% of the respondents (in each economy) were interviewed at length to ascertain and cross-check the results culled from the questionnaires. To that extent, the sample was stratified and a builtin bias can therefore be found in this investigation. Furthermore, the investigation took account of one major metropolitan area in Malaysia (Kuala Lumpur) and one in India (Greater Delhi). Hence, the responses may be seen as particularized, and not necessarily representative of the whole of Malaysia and India, respectively. In the case of Malaysia, 300 responses to questionnaires distributed to professional middle-level managers in Kuala L u m p u r between January 1989 and March 1990 were analyzed. In the case of India, 500 responses to questionnaires distributed in Greater Delhi between January and August 1989 were analyzed. In the case of Hong Kong, 800 responses to questionnaires distributed between January and August 1989 were analyzed. The studies in all three economies (Malaysia, India, and Hong

Cross-Cultural Industrial Relations: An Empirical Examination

3

Kong) were restricted to management responses in medium-scale enterprises. A medium-scale enterprise was defined as one that had the staff strength of more than 50 but less than 2,000 employees on its payroll. Ownership of the enterprise was intentionally not taken into account, and, therefore, the research could be seen as having transcended several different types of corporate cultures. P A R T I: T H E T H E O R E T I C A L B A S I S F O R T H E I N V E S T I G A T I O N

The Contingency School of Management has during the last decade or so taken the open systems perspective to a new realm of acceptability. This research has adopted the open systems approach to management as well. This was primarily to permit all sorts of responses to be considered. Over the years a number of attempts have been made to define "industrial relations" as distinct from other areas such as h u m a n resources and personnel management. A further attempt at such semantic distinctions will not be made here except to state simply that industrial relations is concerned with the relationship between management representing the holders of capital and trade unions representing the holders of labor power regarding employment, nonemployment, and conditions of work arising out of and in the course of employment in a given work environment (Sadri 1978). In essence, the quality of a company's industrial relations could be judged by considering whether the existing framework of policies and practices assists or hinders the achievement of corporate objectives. If this premise were to be accepted, the aims of an industrial relations policy could be seen as having to anticipate and regulate conflicts arising out of and in the course of employment, in order to enable parties to achieve their objectives whilst enabling the organization to fulfill its tasks. An audit then could be visualized as highlighting whether these aims were being met. In particular an audit could therefore be expected to: (a) identify whether conflict exists; (b) measure the extent to which existing procedures and practices are able to cope with conflicts; (c) highlight the various interests of the parties involved; and (d) gauge the extent to which existing practices detract from the achievement of departmental and/or company goals. The hypothesis is that the function of industrial relations is to anticipate and regulate conflict to aid in achieving the objectives of all parties. This is an approach based on a consensus theory (Dahrendorf 1959) instead of a conflict theory (Hyman 1972). The industrial relations audit

4

X G. Sadri, F. Lukose

becomes an ongoing exercise in a free market economy. This does not ipso facto assume that all conflict is endemic and must be contained. It only assumes that conflict that hinders the achievement of company objectives must be anticipated and regulated by industrial relations. Few top managers fail to see the necessity of periodic internal and/ or external audits of financial resources of the enterprise. But when it comes to industrial relations, this necessity is somehow not realized and they are reluctant to ruffle any feathers by instituting an audit. However, their inertia could be explained by the fact that they do not wish to "rock the boat" and put up unsurmountable obstacles to change. The obtainment, preservation, and expenditure of the h u m a n resources would appear to be an equally important responsibility of management interested in the long-term viability of an enterprise. A generalized, superficial personnel audit, our research indicated, was often used in order to examine the many operative areas of personnel activity. However, a systematic and methodical audit was rarely if ever carried out from within the company. Our research further revealed the need on the part of those responsible for corporate strategy periodically to review and monitor the state of industrial relations, especially in the light of institutional and structural changes taking place throughout Asia. The audit developed (and tested) herein in designed to achieve just this.

Justification for Sample Used Britain is a core capitalist economy in terms of the Wallersteinian Schema modified by Sadri (1986) and used by Sadri and Williamson (1988a). Because of the colonial legacy, it has had considerable influence on industrial relations and business policy in the three economies under investigation. It is, therefore, logical that an audit developed in Britain should be tested in these three economies. Malaysia is a semiperipheral economy while India is a peripheral capitalist economy. Hong Kong is an economy in a state of colonial subjugation but with enough economic potential to be characterized as being neo-colonial. By having successfully tested the audit in these three economies (which have some commonality: capitalism and links with British imperialism), this paper opines that the audit is not only a useful theoretical concept but also a utilitarian empirical device in studying developing free market economies. Furthermore, the sample was conveniently selected as the distribution of questionnaires on campuses in the three economies made for a built-in bias to this investigation. P A R T II: T H E C O N C E P T U A L I Z A T I O N

OF THE AUDIT

There are a n u m b e r of key components associated with an Industrial Relations Audit and, very briefly, these are:

Cross-Cultural Industrial Relations: An Empirical Examination

5

1. The Corporate Policy of the company or organization. What is the task of the organization and what are its corporate objectives? This is the basic b e n c h m a r k for the purpose of any evaluation that an audit may decide to undertake. 2. The Industrial Relations Policy. If in existence, what is the aim of the policy and is it clearly translated into responsibility for those concerned with its maintenance? The notion of accountability vis-a-vis responsibility gains importance as the flow of authority begins to decentralize and delegation of power increases. 3. The Environment facing the organization. This can be broken down into management-encouraged and union-encouraged environment. External environmental influences are identified by means of openended interviews while the internal environmental influences are identified by means of the questionnaire. It is accepted that factors within the company's internal environment will be clearly influenced by external factors and the company behavior will be influenced by stimuli from both internal and external sources. 4. Attitudes and Styles of the parties that are associated with industrial relations. These could have an external source (e.g., union policy) and an internal source (attitudes of managers, employees, and elected union representatives). The parties involved in industrial relations would, no doubt, share certain objectives (e.g., that the organization should survive). They may disagree on others (e.g., what constitutes an acceptable wage rate). The initial 1977 Britain investigation revealed that middle-management personnel (both line and staff) view their organization in a number of ways. In particular their view might be either unitary or pluralistic. This is not a polarization of respondent behavior but a mere categorization of the heads under which they can be studied. Some characteristics of each are given below:

The Unitary Views: (a) All employees strive jointly towards a commonly held objective. (b) Profit, full production, top quality, extensive market, etc. are seen as c o m m o n goals. (c) Every employee knows and accepts his place. (d) There are no factions. (e) There are no rival leaders: there is one leader and there is unquestioned loyalty to him. (f) Morale and success depend heavily on personal relationships, i.e., there is more emphasis on individualism than on collectivism.

6

S.G. Sadri, F. Lukose The Pluralistic Views:

(a) By definition an organization is an amalgam, but in the final analysis, it has separate interests contained within itself. (b) The best that can be done is to recognize that differences exist and provide channels (or procedures) for its expression, diffusion, or accommodation. (c) There are rival sources of leadership. (d) The degree of common purpose is limited. (e) The interests of each group are potentially divergent. These differing views are the opposite ends of a continuum and any manager could find himself nearer to one rather than to the other, depending on his particular position and his intrinsic assumptions. In addition, however, industrial relations is concerned with the distribution of power and authority within an organization and the extent to which management is able to manage the affairs of the organization via unilateral as well as mutually agreed means. This dimension is, therefore, concerned with the extent to which control is exercised unilaterally (autocratic) or on the basis of mutual agreement (democratic). The investigators emphasize that no management is wholly unitarist or pluralistic, nor is it possible to have a wholly autocratic or democratic management. Moreover, these attitudes change with top-management thinking and, therefore, should be viewed only as a short-run phenomenon which needs to be constantly updated. These terms merely signify a tendency towards the direction described by the definition, arrived at by observing past management behavior and present (stated and unstated) objectives. The initial investigation revealed that this combination of managerial assumption and controls gives rise to the following matrix which depicts four possible styles of Industrial Relations Management. AUTOCRATIC reactive

paternalistic

PLURALISTIC

UNITARIST

proactive

participative DEMOCRATIC

Cross-Cultural Industrial Relations: An Empirical Examination

7

The paper further opines that one could posit four emanating managerial styles from the above matrix. These styles are indicative of the managerial philosophy, its corporate ideology, and its executive work beliefs. These styles also indicate a pattern of consistent behavior which is in keeping with the "corporate system" and could be seen as a guide to future action. Briefly these styles could be described as follows: 1. Paternalistic Style. This might be described as benevolent despotism and is normally associated with an absence of union recognition (although not necessarily an absence of union members). Management takes the initiative, and the terms and conditions of employment reflect the general concern for the well-being of the employees with the added advantage that the company normally creates a favorable position in relation to the relatives of its staff. 2. Reactive Style. In this case, unions generally take the initiative and management mounts a series of rearguard actions designed to preserve what is magically "the fight to manage." The approach to negotiations is on a "win/lose" basis and this philosophy might be described as "fire fighting." The concept of an industrial relations audit would be somewhat alien to this culture despite the situation in fact demanding it. Management and unions operate on a zero-sum game basis. 3. Proactive Style. This might also be called the predictive style where management accepts conflict but regards this as having virtues providing it is channelled in constructive directions. This type of organization is generally sophisticated in its approach, believing in a forwardlooking philosophy which is generally associated with a clearly defined corporate policy. Negotiations are based on the aim for all parties to optimize their varying interests. This sort of philosophy might be called "fire prevention," i.e., where the management and the unions arrive at an equilibrium saddle-point. 4. Participative Style. In this approach, there is a commonality of purpose based on open and joint management. This should not be confused with participative mechanisms such as Joint Consultative Committees, Works Councils, or Elected Employee Directors which (in many cases as in Britain and India) may simply reflect political expediency rather than a true participative philosophy. In reality, very few organizations will be found in this sector due to the difficulty of achieving a comm o n purpose within the organization. In addition to considering the attitudes and styles of management, it was also found necessary to examine the aspirations of employees. Certainly, clues do and did emerge from areas within the audit on specific issues. It might well be argued that sufficient information concerning employee attitudes could emerge only from a consideration of the nature of conflict within the organization and the behaviors of the parties surrounding this. The style of industrial relations could be a good indicator of the philosophy of conflict, since this is but a subset of the overall corporate philosophy and value system.

8

S.G. Sadri, F. Lukose P A R T III: T H E E M P I R I C A L E V I D E N C E

It is contended that management behavior presents itself such that it can be delineated into one of the four categories, each of which (when repeated over time) produces a style. The union similarly responds (over a period of time) to the management behavior, which it, hopefully, has analyzed.

Britain In the case of Britain (where the audit was first tested), it was found that company objectives were never formally stated. At all levels, the management took the existing communications system for granted and did little about improving it. The evidence could be summarized thus: (a) Poor communications. Co) N o n d y n a m i c outlook to change. (c) Large n u m b e r of"families" work for the company. The respondents frequently said, "we take care of the staff, .... ours is a family," "there are no disputes," "we (union and management) agree on most matters," etc. Given poor communications and paternalism, and based on indepth interviews, the audit concluded that a low trust relationship existed. The worker respondents helped to enforce the validity of the conclusion. (d) On the union front, the leaders were openly promanagement. The industrial relations department and the trade union were always "prepared to talk" and they "spoke the same language." The policy on change cited by all was that "we do not change, we evolve." While it could be argued that the respondents gave us a response that they thought might put them in a good light if it went back to management, our cross-checking of responses and in-depth interviews discounted that potential considerably. In the company we investigated, the management was clearly unitary in its behavior and paternalistic in its style. The union gave up its "conflict" role and became incorporated with the management. There appeared to be a labor aristocracy and embourgeoisiment of the workers. Every m e m b e r of the workforce (whom we interviewed) wanted to invest in shares and stocks. There also appeared to be a great divide between the leadership and the rank and file of the union. The rank and file exhibited a low morale and a mistrust of their leaders.

Cross-Cultural Industrial Relations: An Empirical Examination

9

After the audit had been completed, the findings were discussed in confidence with the top management and the investigation was found to be valid in its observations. This gave the incentive to extend the audit to other free market economies as well as to attempt a macro study in each case in the hope that this paper could hazard a generalization from the particular without commiting either the fallacy of composition or the fallacy of accident.

Hong Kong It is well-documented fact in the literature on economic development that Hong Kong has all the characteristics of a highly dependent economy. However, the extreme short-run planning required due to a predestined historical event (1997) forced the workers to think very selfishly for themselves, and the degree of unioniztion was, not surprisingly, low. Trade unions in Hong Kong can be grouped into four main factions: The Federation of Trade Unions, the Trade Union Council, the Federation of Labour Unions, and a group of independent trade unions. In 1980, there were 357 unions with only 380,000+ members, but in 1986, while the n u m b e r of unions increased to 403, the membership was reduced to 367,000. The nonconflict orientation of the Chinese, coupled with a strong degree of skill transferability, massive job availability, and a low degree of class consciousness, contributed to a low degree of union support. Out of 800 responses analysed, 608 had a nonunionized workforce. 380 of the respondents worked in industrial organizations of one sort or another and 212 worked in service organizations like banks, hotels, and amusement parlors. For an economy that approximates to full employment and where the majority of the businesses are labor-intensive enterprises, the low level of unionization is remarkable. In general, employers were seen to have a resistant attitude towards the establishment of trade unions. Hence, a number of organizations are named employee associations. In addition, the efficacy of the industrial relations division of the Hong Kong Labour Department as well as the Labour Tribunal in resolving disputes has gradually overshadowed a major role of the unions. As in India, the industrial relations system depends on adjudication rather than arbitration, but unlike India, the unions are not very politicized and the level of class consciousness is very low. As a result, trade unions appear to participate in social welfare activities. The governmental action appears salutary with two seats in the Legislative Council being created for trade union representatives. The elevation of a trade union to the level of a constituency and the incorporation of trade unions into the draft Basic Law is as much a protection against the eventual supremacy of the Mainland Chinese system as it is an intent to give the workers a say in matters in Hong Kong prior to 1997.

10

S. G. Sadri, F. Lukose

The managements in organizations in Hong Kong, by and large, were found to depend on personal loyalty, family connections, and, on occasions, plain duress, to carry out their tasks. In this they are perceived by the respondents to be paternalistic and unitary. It is interesting to note that 160 of the respondents felt that their organizations were unitary but autocratic. The level of communications was low in most cases and only 7 out of the 55 interviewed managers could clearly state their c o m p a n y objectives. Many managers stated that the company objectives were seldom spelled out even to middle-level management personnel and what management said were the objectives were in fact what they perceived the objectives to be and what "sounded" good to the public. Respondents felt that objectives were seldom in consonance with reality and a random sample of 25 companies taken by the investigators confirmed this contention. When the low degree of unionization and a lower degree of workingclass consciousness are seen in conjunction with a paternalistic style of industrial relations, a unitary form of management, and low levels of communication, we have the scenario of a dependent neo-colonial society. The fact that Hong Kong is affluent is perhaps attributable more to its dependence on the capitalist world economy and on the entrepot facilities it offers to international finance capital than to a developed infrastructure. Any serious student of the Hong Kong business scene will concur with the opinion that Hong Kong is a mix of Oriental culture and Western industrial efficiency. The economy is said to be booming and Hong Kong (even after the 1987 stock market crash and the turbulence of 1989) is a major financial center in Asia. Amidst the rather impressive record, the investigation revealed that working-class consciousness is very low as is the degree of unionization. The industrial relations audit under such circumstances tells us what the statistics do not: that behind this great surge of economic progress is a muzzled workforce that is reluctant to collectively express dissatisfaction. The attitude of managements (covered in this survey) contributes to this in a very significant way. With the recent events in China, the nearness of 1997, and the fall in property prices, it is inevitable that there will be an increase in the brain drain and employer-employee attitudes may change markedly in the near future.

Malaysia Unlike Hong Kong, Malaysia is bountifully endowed in factor resources. It has, consequently, a very developed industrial infrastructure which lends itself easily to the engine of economic growth. Like all third world countries, Malaysia too has its share of political unrest, but it

Cross-Cultural Industrial Relations: An Empirical Examination

11

seems to have done little to adversely affect its economic development. The secondary sector is more developed than the tertiary sector. There has been a quick pace of economic growth in Malaysia and there has been a suggestion that the economy is well on its way to compete with the four dragons by becoming a fifth one. In many ways, Malaysia can be seen as having a greater level of economic development and a higher quality of life than enjoyed in either Hong Kong or Taiwan. Table 1, extended from the Mid-term Reviews of the Fourth Malaysia Plan 1981-85 and the Fifth Malaysia Plan 1988-90, tells the development story quite lucidly. The National Economic Policy (NEP) has indeed affected different people in different ways. Clearly, the NEP appears to be primarily redistributive and, it would seem, economic growth has been taken for granted. The recession of 1985-86 showed the error of this assumption. This notwithstanding, Mahathir's administration since 1981 has shown a clear commitment to more rapid growth, industrialization, and modernization. Emphasis on high export rate growth has had its effect on a low wage level. In the interest of international competition, unions have been weakened through adjudication. Greater governmental control over trade union movement and the conduct of industrial relations in general supplemented by more discretionary powers in the hands of Ministers and the Registrar of Trade Unions has been the norm under the present regime. Mills (1971) and Wu Min Aun (1982) echo this point. The Trade Union A m e n d m e n t Act (1980) and the Industrial Relations (Amendment) Act (1980) made this imbalance of power legally possible. It is in the climate of this free market capitalism in the periphery that this empirical evidence was collected. TABLE 1 Incidence of Poverty as a % of Population

Peninsular Malaysia Bumiputra Chinese India Others Sabah Bumiputra Chinese Others Sarawak Bumiputra Chinese Others

1976

1984

1987

46.4 17.4 27.3 33.8

25.8 7.8 10.1 22.0

23.8 7.1 9.7 24.3

82.9 5.7 11.4

39.2 6.2 12.4

41.9 6.3 5.0

85.9 14.0 0.1

41.6 9.3 4.0

33.2 6.7 0

12

S. G. Sadri, F. Lukose

Multinationalism is the characteristic feature of Malaysia since it is here that we find a unique cross-cultural dimension of managerial behavior. The three main ethnic groups that form the Malaysian society are the Malay, the Chinese, and the Indian. The 300 responses to questionnaires distributed in this country were equally distributed between the three ethnic groups. Responses were then cross-referenced by the investigators. The investigators received a cross-cultural sample from within a single economy and particularly from a single city within it: Kuala Lumpur. This methodical bias was recognized by the investigators. This ethnic distribution of responses was desired chiefly because the pilot study showed the existence of different value systems and cultural beliefs that could, perhaps, explain why management controlled by the three ethnic groups behaved differently. Each ethnic group behavior in industrial relations, on the basis of the investigation's findings, could now be briefly discussed. The Malays were observed as being relatively more mild in their approach to the industrial relations issues than were the Chinese or the Indians. The Malay manager had a low level of class consciousness, by and large, and was motivated by ideas that appeared to be ethical and altruistic. The work ethic was subsumed by the religious ethic and the attitude to day-to-day affairs was very laid back. The behavior of an overwhelming majority of Malay managers was one of autocracy and the emanating style was paternalistic. By and large, they had very good employer-employee relations. The attitude to conflict was however a reactive one. This can be explained by the fact that pluralism is accepted and reckoned with in day-to-day affairs. This shows that the style changes when a particular stimulus enters the behavioral calculus generating a pattern of predictable responses. The Chinese managers were seen by the respondents as being autocratic, profit-oriented, and unitarist in character. They were anti-union and resented all challenge to their authority. They, by and large, were seen to be very good at operating through "networks" which very often implied an acceptance of nepotism. They paid lip service to free trade but their quest for monopolization of power and control was clear from their day-to-day behavior. The main motivating factor was maximizing net total profits and everything else was secondary to that. The level of consciousness was once again low and in their day-to-day management they adopted the paternalistic style. The trust relations with the union were low and the subordinates operated from situation to situation, always eager to change jobs for a better deal. This can be easily seen as being in conformity with the matrix given earlier in this paper. The Indian manager (in Malaysia) was found to be, in comparison, more class conscious than his Malay and Chinese counterparts. He accepted pluralistic behavior and reacted to situations rather than planned for them. He was seen to be autocratic and chauvinistic in behavior and did not make an effort to hide this behind any facade. He

Cross-Cultural Industrial Relations: An Empirical Examination

13

placed a high value on education and was concerned about being seen as being "a fair person." His style was, therefore, understandably reactive. Being the minority ethnic group in Malaysia and having been given the shortest end of the stick through life may have been a dominating factor that influenced such behavior. The employer-employee relations were smooth and the manager was seen as a confomist rather than an instigator of change. The employees were loyal to the management who they saw as being forced by situations to do a good job rather poorly. The one feature, therefore, that was common to all three ethnic groups was the need to be seen as being democratic but acting in a very autocratic manner. The emanating behavior was paternalistic and the style was reactive. This autocracy was underpinned by religious conviction in the case of the Malay, by color and race in the case of the Chinese, and by geophysical origin in the case of the Indian. The typical Malaysian manager (if there is anything like that) could be seen as a polite but arrogant autocrat who was most concerned about putting across an image of being democratic and pluralistic. The least antiunion was the Indian manager, but this tolerance may have been more due to his own background than to any development of social awareness per se. The most anti-union was the Chinese manager who saw in the union a diminution of his own profit, authority, and power, and reacted by resisting it. The employer-employee relations were by and large nonconfrontationist and conciliation played a dominant role in diffusing industrial conflict. By and large, the investigation revealed that the Malaysian manager was more articulate than the Hong Kong manager and more politically ambivalent than the Indian manager.

India India is a land of contradictions. It is the seventh largest industrial producer in the world and the majority of Indians live in poverty. Corruption, as in most third world countries, is a way of life and can be assumed away. The Industrial Disputes Act 1947 does not help to redress this imbalance from spilling into the industrial relations arena. Micronationalism alongside of macro-racism in a predominantly Hindu country seems (for the time, at any rate) to have posed a threat to secularism but the signs are that it will pass. In spite of a secular constitution and a democratic character, the sheer weight of numbers has contributed to political power being vested in the hands of the Hindus. India no doubt has had Muslim and Sikh Presidents, a Parsi Field Marshal, and a Christian Minister at the Central Government level. The above notwithstanding, the three states of Bihar, Madhya Pradesh and Uttar Pradesh are among the most ideologically backward and yet hold the largest share of seats in Parliament. The current elections have showed beyond doubt that the party that controls these states

14

S. G. Sadri, F. Lukose

controls the government. When faced with such a government and an adjudicated system of industrial relations, notions like voluntarism and collective bargaining seem somewhat out of place. The conversion of Union Leaders into subcontractors at the Tata Engineering and Locomotive C o m p a n y in Jamshedpur, the abject politicization of unions by the right wing factions in the Rohtas group of Industries in Dalmianager, and the prolonged strike in the Textile Mills of Maharastra point unmistakably to the fact that state hooliganism accompanied by police corruption seem to control the engines of economic growth. The government is out-and-out capitalist but pays lip service to socialism when it suits them and to fetch votes. It is in this climate of discontent that this empirical exercise was undertaken. From the 500 responses received and analyzed from the Greater Delhi region, it was found that this paper could not speak in general terms but rather in terms of a narrow goephysical region. Saying anything more would be inaccurate as the sample can hardly be seen as representative of Indian managers. In the case of India, the degree of union activity was found to be very high when compared to Britain, Malaysia, and Hong Kong. Working-class consciousness was relatively low, although the degree of unionization was high. There was a novel factor in India that could be best described as a peculiar form of "spiritual" consciousness which transcended all sociologically identifiable facets of reality. In spite of its autocratic style, unions worked closely with management, which was forced to appear democratic. In the case of India, there was an overwhelming evidence of the existence of the twin forces of micro-nationalism and macro-racism. The swing towards the ideological right was, therefore, as expected. Inherently, management, it was found, wished to be autocratic and often took arbitrary decisions, but sporadically strong union pressure made this increasingly difficult. Many times the union leaders had simply to be bought over. Unions were politically motivated and politics was subsumed to issues relating to custom, belief, and tradition. Hence from an ideological position, both the management and the union could be seen as being altruistic, closed-minded, and contradevelopmental. Attitudes were very inward-looking and there was an overwhelming resistance to change. The attitude on the part of management to industrial relations issues was seen as being paternalistic due to a sense of "false pride" among the top echelons of management. Reality, however, dictated that unions be consulted and decisions taken after workers' views were accounted for. Union activity was politicized to the point that efficiency was adversely affected. Trust relations between management and unions were low but pragmatism d e m a n d e d that communications were maintained at a higher level. Class antagonism was articulated and understood. The unions were, therefore, participants in the decision-making

Cross-Cultural Industrial Relations: An Empirical Examination

15

process not by choice but by design. Hence, like most aspects of Indian sociological behavior, industrial relations was a collage of contradictions. For instance, bipartite collective bargaining was a rarity since the state invariably intervened. As there was a high degree of legislated industrial relations, conflicts were usually resolved by adjudication rather than by conciliation. Many a time, the two parties in a dispute would have a case in the Industrial Court concurrently with a case in the Civil Court. This made adjudication difficult and litigation possible. The general behavior of management towards industrial relations could be seen as being paternalistic in character but reactive in form. The crux of the problem for the investigation then was to ascertain how management behavior was perceived by the union. This was done through interviews and the investigators concluded that unions assumed the worst scenario and planned against it. Hence, the unions assumed the management to be reactive in its industrial relations style. Interviews seemed to confirm the evidence of networking of a different type altogether than found among the Chinese managers in Hong Kong and Malaysia. Here, the links between management (organized capital) and the government (state) played a very prominent part in crystalizing managerial style. The semblance between the class that controlled the means of production and the class that controlled the means of government disappeared. This was not because they were so very different but because they were the same. The question of semblance was, therefore, academic. CONCLUSION

Besides being tied to Britain by a colonial legacy, all the three Asian economies have three things in common: they are all peripheral to the capitalist world economy and have a high degree of government involvement in industrial relations and a relatively low level of trade union consciousness. But they have differences. Politically, Hong Kong is still a colony. One possible reason why the Hong Kong Dollar is pegged at such an artificially low rate with the U.S. Dollar is that a repegging at the appropriate rate would render the Pound Sterling relatively weak, and Mrs. Thatcher could never allow that to happen. Malaysia is ruled by a benevolent autocrat and is not a republic owing to the various feudalmonarchic elements that mark its uniqueness. India is politically volatile and governed by a group that has not changed ideologically since 1947. Only the personalities have changed. On a political plane, therefore, the three economies are different from each other. Management in Hong Kong, Malaysia, and India was found to be very paternalistic in character, and the industrial relations style was a reactive one. This was also evidenced in the micro-study conducted in Britain. Perhaps it is the British industrial-legal system which, when

16

S. G. Sadri, F. Lukose

transposed into a neo-colonial structure, generates such a response from management in the periphery. Institutionally, in all three economies there is a resistance to too much democracy, an emphasis on high growth rates, and a dependent trade relationship with the core economies. This does not imply that they are static societies but that institutional and structural change is spasmodic and the development process follows a stop-go pattern. The state is an active sector within the macro-economic calculus, and policies change as the personalities at the helm of affairs change. To that extent, they are representative samples of free market capitalism in the Asian periphery. Hence, the audit has been carried out in three not very similar economies in various stages of capitalist economic development. In examining the evidence from Britain, Hong Kong, Malaysia, and India, this paper concludes that the audit is a very useful tool for researchers who wish to investigate the industrial relations system of these economies and gives valuable insight into the business sector's hopes, attitudes, and behavior. This is a more scientific and rigorous investigation than m a n y of the recent studies on similar subjects, like the one by Zepp and M c D o n a l d (1988), which are eclectic, narrow, and scientifically biased Benthamian-Utilitarian views of management. The investigators are convinced that, armed with such information, the managements themselves could perceive their situation better and hopefully make sounder industrial relations decisions. In addition, the unions could plan their own strategies better and be better equipped to deal with management on day-to-day matters, particularly in regard to mangement policies concerning labor. In conclusion, industrial relations audits as used in these studies could contribute to a more mature, efficient, and meaningful industrial relations system. What these case studies do not prove is that all behavior must conform to the model. And, because a model by definition is an abstraction from reality, it could only be used as a guide to action. What these case studies have shown is that the audit is useful, plausible, effective, and even necessary both for management and labor on one h a n d and for researchers on business policy on the other to understand industrial relations. In a changing world, this assumes an added importance.

The authors acknowledge their debt to Ms. Caroline Williamson, of the University of Reading, Ms. Gael McDonald and Dr. Peter Shephard of the Asia Pacific International University who took part in a part of the research on which this paper is based. Prof. C. P. Srimali of the Management Development Insitute helped the investigators with the research in India and this debt is duly acknowledged.

Cross-Cultural Industrial Relations: An Empirical Examination

17

References

Anderson, B. R. 1981. Professional Personnel Management9 USA: Prentice Hall. Argyris, C. 1957. Personality and Organization9 New York: Harper and Row. 9 1974. "Personality Versus Organisation." Organisational Dynamics 3.2 August9 Ashenfelter, O., and H. G. Johnson 9 19699 "Bargaining Theory, Trade Unions and Industrial Strike Activity." American Economic Review. Baing, S., and H. Clegg. 1974. "A Strategy of Industrial Relations Research in Great Britain9 British Journal of Industrial Relations 12.1 March. Banaji, J. 1984. "Accumulation and Exploitability: Wage Determination and Pay Conflict." Mimeo. Bombay. Blackburn, R., ed. 1975. Ideology in Social Science. London: Fontana Collins. Blain, N. J., and J. Gennard. 1973. "Industrial Relations Theory: A Critical Review9 British Journal of Industrial Relations 7.3 November 9 Brown, P. 1974. "New Wine in Old Bottles9 British Journal of Industrial Relations 11.3 November. Brown, W. 1980. Exploitation in Management99A Description of the Glacier Metal Company. London: Heinemann. Burns, T., and G. M. Stalker9 1955. "The Management of Innovation 9 Report From Research 8. London: Butterworth. Cyert, R. M., and J. G. March. 1963.A Behavioral Theory of the Firm. New York: Prentice Hall. Dahrendorf, R. 19599 Class and Class Conflict in Industrial Society. London: Routledge and Kegan Paul. Dunlop, J. T., ed. 1966. Wage Determination Under Trade Unions. New York: Macmillan 9

S. G. Sadri, F. Lukose

18

Durbin, A. J. 1985. Contemporary Applied Management. Texas: Business Publications Inc.

Economic and Political Weekly. 1988-89. Several issues9 India. Etzioni, A. 1972. A Comparative Analysis of Complex Organisations. London: The Free Press, Collier Macmillan 9 Ferner, A. 1985. "Political Constraints and Management Strategies9 Brit-

ish Journal of Industrial Relations 239 Fox, A. 19669 Research Paper No. 3. England: Royal Commission of Labour and Trade Unions. 9 1971. A Sociology of Work in Industry. London: Collier-Macmillan 9 9 19749Man Mismanagement9 London: Hutchinson 9 Goodrich, C. L. 19209The Frontier of Control. London: Bell9 Greenwood, W. T., ed. 1967. Business Policy: A Management Audit Approach. New York: Macmillan 9 Hicks, J. R. 1932. The Theory of Wages9 London: Macmillan 9 H y m a n R. 19729Strikes9 London: Fontana. --.

1973. "Industrial Conflict in a Political Economy 9 The Socialist

Register9 England. Jacques, E. 1951. "The Changing Culture of a Factory--A Study of Authority and Participation in an Industrial Setting9 Mimeo. London: Tavistock Publications 9 Jomo, K. S. 1989. Beyond 1990." Considerationsfor a New National Development Strategy. Kuala Lumpur: Institute of Advanced Studies, U of Malaya. Knight, K. 1976. "Taking Stock of Organisational Research 9 Personnel

Management 8.7 July. Koontz, H., O'Donnell, and H. Weihrich. 19849 Management9 Tokyo: McGraw Hill9 Margerison, C. J. 19699 "What Do We Mean by Industrial Relations."

British Journal of Industrial Relations 7.2 July9

Cross-Cultural Industrial Relations: An Empirical Examination

19

McGregor, D. 1960. The Human Side of Enterprise. New York: McGraw Hill. Miller, E. O. 1961. "The Personnel Audit: Gateway to the Future." The Personnel Journal September. Mills, C. W. 1951. White Collar. New York: Oxford UP. --.

1956. The Power Elite. New York: Oxford UP. . 1959. The Sociological Imagination. New York: Oxford UP.

Mouzelis, N. 1975. Organisation and Bureaucracy. London: Routledge and Kegan Paul. Nichols, T. 1969. Ownership, Control and Ideology. London: Allen and Unwin. Pickle, H. B., and R. L. Abrahamson. 1986. Introduction to Business. USA: Scott Foreman and Co. Poole, M., et al. 1982. "Managerial Attitudes and Behaviour in Industrial Relations: Evidence from a National Survey." British Journal of Industrial Relations 20.3 November. Purcell, J. 1983. "The Management of Industrial Relations in the Mode m Corporation: Agenda for Research." British Journal of Industrial Relations 21.1 March. Rice, A. K. 1958. Productivity and Social Organisations: The Ahmedabad Experiment. London: Tavistock Publications. Ross, A. M. 1947. "The Trade Union as a Wage Fixing Institution." American Economic Review September. . 1948. Trade Union Wage Policy. Berkeley: U of California P. Rustamji, R. F. 1967. The Law Of Industrial Disputes in India. Bombay: Asia Book House. Sadri, S. G. 1977. "Industrial Relations Audit." Unpublished M. Sc. thesis, L o n d o n School of Economics and Political Science. . 1978. "A Critique of the Theory of Industrial Relations." Indian Journal of Labour Economics 21.3 October.

20

S. G. Sadri, F. Lukose

. 1986. "Management and Industrial Relations Strategies of the Multinational Corporations in Developing Countries." Ph.D. Thesis, U of London. Sadri, S. G., and C. J. Williamson. 1988a. "Towards a Specific Theory of Industrial Relations." Macau: Occasional paper, U of East Asia. . 1988b. "Auditing Industrial Relations in Free Market Economies." Proceedings of the Tenth International Symposium on Asian Studies 5. Hong Kong: Asian Research Service. Sadri, S. G., C. J. Williamson, G. McDonald, and P. C. Shephard. 1990. "Auditing Industrial Relations." MDI Management Journal. Haryana (forthcoming). Sayles, L. R. 1958. The Behaviour of Industrial Work Groups. New York: John Wiley and Sons. Schacht, R. 1958. Alienation. London: George Allen and Unwin. Thurley, K. E. 1975. "The Treatment of Management in Industrial Relations." Occasional paper, London School of Economics. Thurley, K. E., and S. Wood, eds. 1983. Industrial Relations and Management Strategy. London: Cambridge UP. Wu Min Aun. 1982. The Industrial Relations Law of Malaysia, Setangor: Longman. Zepp, R. A., and G. M. McDonald. 1988. "Ethical Perceptions of Hong Kong Chinese Business Managers." The International Journal of Business Ethics 7.