Industrial Relations Practices Essay

This chapter seeks to review the thoughts of opposite experts on industrial dealing practices in ground owned organisations. The purpose is to ache a reference in terms of what otherwises believe and perceive in relation to industrial relation and its practices in assure owned organizations victimization gold coast as a case aim.State-Business Relations and Economic action in Ghana by Charles Ackah, Ernest Aryeetey, Joseph Ayee & international ampere Ezekiel Clottey In their executive summary, Charles Ackah, Ernest Aryeetey, Joseph Ayee & Ezekiel Clottey, talked near the fact that kinship surrounded by the recount and occupancy fraternity in Ghana had varied since indep fireence. Though each g all everyplacenment has had clean-cut dealing with assembly line and backstage orbits, civilian organizations go for generally promoted and enjoyed equit adequate rapport with the line of work sphere of influence society while military political sympathiess es pecially in the 1980s stupefy tended to kick in confrontations with the confidential sector.Their study employ a multi-disciplinary approach that include some(prenominal) qualitative and quantitative aspects of the disciplines of brassal science, scotchs, history, sociology and organisational management. They were seeking to record what constitutes strong assure-business relations, and to assess how differentiate-business relations atomic number 18 think to scotch performance, their study relied on historic institutionalist inductive theories- comparative historical analysis and path-dependence, among others.For their analysis, their study relied on both primary data, from interviews with selected perfunctory and escaped enterprises and regulatory agencies at heart Ghana, and their junior-grade data were derived from a review of statutory literature such(prenominal) as the Constitution of Ghana, Acts of Parliament, Statutes, Codes, Contracts, rules and procedure s and conventions establishing institutions.Their purpose was to contemplate the characteristics of noble and unaffixed rules and regulations goernance the boldness and operation of foreign and indigenous businesses, how these pay off evolved over clipping and how they whitethorn experience impacted scotch performance. For their quantitative sparingal analysis, their study used a panel of 256 Ghanaian manufacturing tautens over the period 1991-2002 to analyze the point to which an efficacious state-business relationship is beneficial to frugal performance.Focusing on total compute productiveness, they found out that an in force(p) State Business Relations (SBR) or a aimheaded enthronement climate correlates ordainedly with better libertine performance, possibly channe conduct via a to a greater extent than optimal allocation of resources in the economy. Concerning the work of the coronation climate indicators, their results essayed that an incompatible investing climate illustrated with firms perceptions most economic and regulatory insurance uncertainty feigning their operations and harvest-time be negatively correspond with productivity.With regards to the SBR measures, they found that social ne bothrks as indicated finished the extent to which firms or their managers have cheeseparing contacts within the organisation or bureaucracy had a statistically autocratic correlation with firm performance. Their results indicated that being considerably connected with those who aim and implement presidential term policy make ups the chances of being able to lobby to outdo some of the difficulties confronting customary business enterprises, such as the number of procedures it takes to start out licenses and permits and the number of days it takes to clear trade goods from the port.Narrative analysis of state agencies and Private Enterprises Foundations perceptions of SBRs in Ghana from 1992 to 2008 which in exchangea ble manner coincides and extends beyond the period of econometric analysis of SBRs on firm performance confirms the results discussed above. both(prenominal) state and BAs agree on a shift from a predominantly ad hoc and informal clientelistic relationship to a more formal and interactional SBRs in Ghana since 1992. Formal and regularized meetings amidst state agencies and businesses have positively impacted on firm productivity.They conclude for instance, PEFs formal protagonism enjoyment and function resulted in the use of GCNET to belt along clearing of imported goods. Business concerns of firms be channeled more often with formal by BAs to state agencies. Firms through their BAs make inputs into budget and other policy on formalized basis. Moreover, strong formal relationship amid the executive and BAs such as the investors advisory council have helped firms stay close to presidential term and bureaucracy. Overall, their findings contri neverthelesse to understandi ng that link among an in assemble(p) state business relations and economic performance.Their paper adds to the work through by Qureshi and te Velde (2007) by look into the recognise determinants of firm performance and as well as assessing the relationship between an in force(p) SBR and firm productivity in Ghana. The results of their study stress the invite for an modify milieu for the reclusive sector. Experiences from East and Southeast Asian economies have also shown that enthronization and productivity egression critically hinges on an impelling and spirited clannish sector underpinned by a sound investment climate.Promoting a sound investment climate is one of the core responsibilities of the state in both developed and growing countries to achieve rapid not bad(p) accruement and keep up harvest and exiguity fall. Markets be good tho atomic number 18 not without flaws. Thus, in order for inequalities in incomes and opportunities not to be exacerbate d by the commercializes, it is important that the some constraints that inhibit the private sector from responding in effect to commercializeplace incentives are removed, complemented with an increased effectiveness of government involvement in musical accompaniment private sector activities. unconnected from the positive effect of SBRs on economic performance, the other lesson which can be drawn from their paper is that dismantle though successive governments in Ghana have shown some trueness to back up a viable private sector that lading has, at the alike time, been undermined by governments own fear of a strong private sector acting as a countervailing force and thereby enervating their monopoly over neo-patrimonialism. Consequently, the commitment whitethorn be seen as a everyday relations hoax.An effective SBR in Ghana requires sustained formalized political commitment to policies that sees the private sector as a throttle and instigant of pro-poor growth and supp uration. In their Introduction, they pointed out a number of theoretical models which provides numerous compelling reasons why effective SBRs would stimulate economic growth and impoverishment reduction. Economic growth has been an important topic of discussion in nigh every economy for a very long time. Previous seek has found steady increases in investment and productivity to be authoritative to a state of matters long-run economic growth and poverty reduction.Experiences from East and Southeast Asian economies have also shown that investment and productivity growth critically hinge on an effective and vibrant private sector underpinned by a sound investment climate. Promoting a sound investment climate is one of the core responsibilities of the state in both developed and exploitation countries to achieve rapid cracking accumulation and sustained growth and poverty reduction. The economic reform programmes introduced in numerous developing countries during the 1980s stre ssed the need for a propitious enabling environment for the private sector.Initially there were graduate(prenominal) expectations that a package of macroeconomic reforms (getting the prices right) would admit quick dividends in terms of economic growth. There has been growing disappointment with the growth record in many developing countries. Increased globalization and trade liberalization have led to a realization of the huge potential for the private sector but has also led to a considerable shift in the relationship between the earth and private sector actors. Empirically, the size and manipulation of the private sector is cl earlyish evolving with globalization.Many high-growth nations have relied on marts to allocate resources. Markets, however, are not without flaws. And in order for inequalities in incomes and opportunities not to be exacerbated by the food markets, it is important that the many constraints that inhibit the poor from responding effectively to market in centives are removed. A well-functioning market trunk, underpinned by strong institutions, with adequate protection of apt and physical property rights, and smart interferences by the state, provides an enabling environment for businesses and individuals to initiate, deal and create value for all.This encapsulates the paramount importance of inclusive growth, i. e. , creating economic opportunities through sustainable growth and fashioning the opportunities available to all including the poor. The relationship between the state and business in forging economic growth and development has been an enduring area of research for both economists and political scientists since the Industrial variety of the seventeenth Century.Literature and research findings have emphasized both the positive and negative roles of the state in promoting markets and economic developments. By the early 1980s, many interventionist states had been judged to have failed in their quest to transportly prom ote economic development. The public sector in some states became big and specialive, while government ascendency of economic activities was counterproductive as set and subsidies favoured the urban few.Among developing countries, spell Substitution Industrialization (ISI) misallocated resources, discouraged exports and limited importation or channel of such(prenominal) needed technology (Kohli, 2000). Quite contrary to the neo-liberal economic views held by most international development agencies that state interventions in economic growth and development was counterproductive, the role of states in development and the enhancement of pro-poor growth cannot be overstated (Amsden, 1989 Wade, 1990).Notable examples of states like Japan, South Korea in the 1980s and most recently China and India in the late 1990s show the positive role states can play in promoting development and poverty reduction among developing economies. Chalmers (1982) shows that in the case of Japan the s tates big businessman to prioritize areas for economic development, support private entrepreneurs and undertake direct and corroboratory interventions in economy promoted economic development.Such developmental states positively demasculinise market incentive structures, manage conflicts, boil down risks and give direction to entrepreneurs (Kohli, 2000). Similarly, the reality Bank Report of 1997 acknowledged the important roles of both the state and market, say that an effective state is vital for the provision of goods and services that allow markets to vaunt and people to lead healthier, happier lives (World Bank 19971). In short, the state also call for to establish and maintain the institutions that encourage or allow growth-related economic activity. dapple neoliberal growth theorists officially support a minimal role for government in economic affairs, it is still the case that economic growth generally depends upon a strong government and also relies on the state to construct and organize markets (MacEvan 19992-19). Since independence in 1957, Ghana has been making heavy and unsteady progress in achieving structural change and economic translateation. straight Ghanaian governments have undertaken a number of reforms targeted at improving the investment climate and promoting private sector participation in the economy.In 1992, when the fourthly Republican Constitution was promulgated to usher in multi-party democracy, several other development policies were introduced to augment market interventions for sustainable private sector development. The country adopted and implemented neoliberal structural adjustment programmes and market reforms. Apart from pursuing a vigorous free-market economic, industrial and trade policy, it also adopted a liberalized investment policy, with the goal of attracting foreign investment as well as promoting joint ventures between foreign and local investors.Certain social, political and economic patterns of chan ge have emerged, such as, an expanding private sector and the establishment of legal and regulatory structures. Some improvements have also been attained in the provision of infrastructure, health and education, macroeconomic stability, and ongoing reforms in the financial sector. These changes, however, are unlikely to guarantee the needs of the private sector in at onces complex globalized human beings. Fundamental problems in the political and administrative system still persist despite many attempts at reform.Problems remain in relation to formalizing business operations in the country and corruption continues to be a problematic factor for doing business in Ghana. Many private companies encounter difficulties with regulations and continuing administrative inertia and corruption. A fairly high percentage of companies scaned by the World Bank and IFC Enterprise Survey in 2007 report that they expect to pay informal payments to public officials to get things done such as securin g an operating license, meeting measure obligations and securing government contract.The survey also indicates that the burden of customs procedures in Ghana is quite an cumbersome and constitutes a competitive disadvantage. Delays in customs procedures are sometimes cut into as they create opportunities for officials to request unofficial payments. Against this backdrop, the purpose of their study was to examine the efficacy or otherwise of institutional arrangements put in mall by various governments since to promote state business relations aimed at promoting economic growth and reducing poverty. The main objectives of their study were to ? ssess the political and economic factors that have either promoted or undermined the effective functioning of private sector growth in Ghana ? identify and discuss the influence of formal and informal institutions on pro-poor policy decision- making and implementation and ? examine the key determinants of state-business relations (SBRs) a nd their do on corporate performance in Ghana. Their study took a multi-disciplinary approach that includes both qualitative and quantitative aspects of the disciplines of political science, economics, and organisational management.Primary data include interviews with selected formal and informal enterprises and regulatory agencies within Ghana. Secondary data included review of statutory literature such as the Constitution of Ghana, Acts of Parliament, Statutes, codes, contracts, rules and procedures and conventions establishing institutions. Their purpose here is to examine the characteristics of formal and informal rules and regulations governing the establishment and operation of businesses, how these have evolved over time, and how they may have impacted on economic performance.For the quantitative economic analysis, the study uses micro-econometric methods ground on firm level data to investigate the linkages between measures of SBRs and firm performance. Cross-sectional and panel data regression analyses were employed to analyze how measures of effective SBRs relate to firm-level productivity. In their conceptualizing state-business relations, they highlighted that, most development theories that emerged in the early nineteenth century discussed economic and political relations among both developed and developing countries.Many theorists commented on the relations between the state and society which also comprised economic groups. While development remained the overarching focus of such studies, much of what was discussed had direct bearings on the relationship between emergent states in the developing world and how economic agents interacted. Then, the relationship between states and markets were conceived in ideological terms. Capitalists who wrote after decade Smith emphasized the importance of markets in generating wealth.Most commentators claimed markets can self-regulate. Marxists writers on the other hand introduced class relations in how stat e and markets lease with claims that dominant classes who control wealth creation in most polities fuck off the state to pass laws and institutions that favour their cause. In between these two natural positions on state and markets, many variant views were suggested to explain specific circumstances. formulaic economic theorists see the state as an important initiator and catalyst of growth and development (Martinussen, 1997220). What still remains contentious is how states are conceptualised. Martinussen (1997222) lists two major approaches and four dimensions of the state. A society-centred approach attaches much importance to societal structures and social forces that exert greater impact on what become the state such that state power, apparatus and functions derive from economic agents and social forces of societies (Poulantzas, 1978). State-centred approaches give greater autonomy to state apparatuses and state personnel who act singly of economic agents, social classes or interest groups (Clark and Dear, 1984). Myrdals point virtually discretionary powers of political leaders is shared by dialectic modernisation theorists like Jackson and Rosberg (1982) who noted that African rulers personality takes precedence over rules. State-business relations take place in such political environments where patron-client relationships make up throughout Africa (Sandbrook, 1985).In the absence of a legal framework that agrees protection of property impartial public services that at a time aid achievement and the regulation of foreign economic relations that maximises national interest, informal ties like blood relations, ethnic origins and personal access to political leadership grade the pace of SBR in many parts of Africa. More recently since the early 1980s, following the monumental role played by states in Asia to transform third world economies into developed states, many theorists have offered explanations on the role of states and markets (Johnson, 1987, Evans, 1995).Conclusions made by such scholars indirectly places emphasis on the wizard(prenominal) blend between the developmental goals of the state and the profit maximization endeavor of private sector institutions in Asia. On macroeconomic impacts, the articles revealed the factors responsible for market failure are the existence of monopoly, public goods (goods which are non-rival and non-excludable) and externalities. Others include fallible and asymmetric information and increasing returns to scale.These factors disturb the optimal allocation of resources in the economy necessitating government intervention. For example, firms in their activities generate an externality which may end up attaining other firms or individuals with the cost or benefit of doing so not reflected in the value of their transactions. Similarly, these firms in the absence of train and adequate knowledge on the importance of investing in on the table worker skills, may under- invest in th e skills and capacity of its general workers. The government or public sector is also not exempt from failures. politics failure is said to occur when government action results in a less efficient allocation of resources. As such government intervention though demand, may not be sufficient in addressing the failures in the market. This is because often, particularly in developing economies, governments lack the institutional and structural capabilities such as perfect information, practical and feasible development plans, essential logistics and structures that are required for addressing the failures which arise from the market.Also, government intervention in the market may result in crowding out which occurs when the government expands its borrowing more to finance increased expenditure or tax cuts in excess of revenue, crowding out private sector investment by representation of higher interest rates. Similarly, government intervention activities may suffer bad lobbying and re nt-seeking activities especially in countries with high records of corruption, in the end resulting in the misallocation of resources in the economy.With this background, it is clear that a SBR is extremely essential. Such a relationship provides the solution to state, market and coordination failures. In principle, business associations play a significant role in facilitating the formulation, implementation, and monitoring of economic policies and provision of feedback to the government (Hisahiro, 2005). In addition, such a relationship between the state and the private sector plays a rudimentary role in providing a bridge between the business community and political circles.Further, these relations establish communication links between the government and businesses to exchange wide-range economic information, such as on industrial development, export markets and research and development (RD). In short, by establishing networks between the state and the market, cover and practic al data on industries, markets and technologies are obtained and shared which may perform as an important information bureau for effective industrial and state policies.Harriss (2006) argues that a favorable collaboration between the state and business may have positive consequences for the growth of the economy as a whole, as long as certain mechanisms are in place which facilitate the following transparency- the flow of accurate and reliable information, both ways, between the business and government reciprocity between the business and the government credibility- such that the market is able to believe what the state actors say and high levels of trust through transparency, reciprocity and credibility.Hence, appropriate government policies, necessary for promoting economic growth in general and private sector development in particular are made accomplishable by an efficient and fruitful state business relations and dialogues. On microeconomic impacts, the article suggested that , a well-structured, organized and effective relationship between the state and the market which satisfies the conditions of transparency, reciprocity, credibility and trust enhances the productivity of the firm in so many important ways.Firstly, an effective SBR helps to reduce policy uncertainties in the economy. Expectations play a major role in the activities of firms and investors particularly when it comes to savings decisions, the sheath of investment to undertake or the type of goods to produce, the period of intersection, the quantities to be produced, the technology to be used, how and where to market what has been produced and even how pricing of the commodities should be done.All these decisions are taken based on evaluate market conditions and judge profitability. As such any uncertainty in the economy tends to affect the activities of these firms, the level of investment and consequently the level of economic activity, which translates into economic growth. The abs ence of clear policies causes these firms to operate in uncertain environments, exposing their businesses to indefensible risks and resource shortages.Dixit and Pindyck (1994) argue that uncertainty tends to have significant negative effects on investment, especially when investment involves large sunk and irreversible costs. Against this backdrop, it is quite clear that businesses which have a better and effective relationship with the government may not be in the dark when it comes to policy decisions. several(prenominal) studies confirm the negative effect that uncertainty has on investment.For instance, Bonds and Cummins (2004), in a survey of publicly-traded US companies, found that uncertainty has a negative effect on investment in both the short- and the long -run. Similarly, Ghosal (2003) was also able to show that periods of greater uncertainty have a crucial effect on industry dynamics and thus results in a decrease in the number of small firms and establishments and also a marginal increase in industrial concentration.In short, a greater correspondence and interaction between the state and the business enhances the free flow of information on prospective policies and reduce the level of uncertainty in the business environment, which is expected to result in a greater business confidence, quick firm-decision making and more accurate forecasting. Secondly, an effective liaison between the state and the market results in tailor-made, accurate and efficient government policies and institutions.In other words, an effective SBR will ensure that government policies towards businesses are appropriate and of good quality. This is because, in the presence of such an effective relationship between the state and the market, the creation of government policies will be done, among other things, using the input of and in consultation with the private sector. Regular interactions and sharing of information will ensure that the private sector objectives coincide w ith public action and that local level issues are inputted into the centralized policy processes.The private sector through that will be able to identify opportunities and constraints, as well as possible policy options for creating incentives, lowering investment risks and reducing the cost of doing business. This result in more efficient and convenient government regulations and policies such as tax regimes, licensing requirements and propriety rights obtained through policy dialogues and advocacy which will go a long way to reduce the risks and costs faced by firms and finally enhance their productivity.Finally, a good relationship between the state and businesses brings about an improvement in the quality, relevance and appropriateness of government taxing and expense plans. An effective relationship will help to ensure that certain facilities and mechanisms necessary for the survival of businesses are available and operational. This is because what motivates a firm to take ris ks, innovate and improve its performance depends crucially on the availability of certain services, much as it may depend on the private incentive veneering the firm.Examples of these public services are good infrastructural system, information and communication technology, legal and judicial services, defense and security, availability of finance as well as the availability of human and physical capital. These facilities and systems affect the firms productivity both directly and indirectly. For example, the provision of basic amenities like water and electricity affect productivity directly by facilitating the smooth running of businesses.On the other hand, the provision of infrastructure though may not directly affect productivity will indirectly enhance the transportation of inputs and output to and from the production sites which will enhance the speed of production and also the quality of marketed products and eventually enhance their productivity. The efficient delivery of t hese public services require an dynamical participation of the private sector which will be responsible for lobbying the government to increase its spending in those areas, creating a more favorable environment for investment.Again, a good SBR is also able to stimulate and sustain mental hospital. Schumpeter (1940) explains that innovation is one of main forces behind firm dynamics and economic growth. Also, sometimes such collaboration between the government and businesses may result in the government taking the lead to encourage and motivate the private sector to engage in research and development by providing incentives, venture capital for new enterprises and also appropriate property rights. All these activities by the government affect the productivity of the firms directly and encourage further investment.In effect, effective and sustained SBR can ameliorate both market and government failures, which are pervasive in most developing countries, and consequently bring about a n increase in the growth of the economy. In conclusion and policy implications, they cogitate that the relationship between states and businesses in forging economic growth and development has been an enduring area of research for economists and political scientists since the Industrial Revolution of the 17th Century.The relationship between the state and business community in Ghana has varied since independence. Though each government has had distinct relations with business and private sector, civilian governments have generally promoted and enjoyed good rapport with the business community while military governments especially in the 1980s have tended to have confrontations with the private sector.This study used a multi-disciplinary approach that included both qualitative and quantitative aspects of the disciplines of political science, economics, history, sociology and organizational management. To seek to understand what constitutes effective SBR, and to assess how SBR are rel ated to economic performance, the study relied on historical institutionalist inductive theories- comparative historical analysis and path-dependence, among others.For this analysis, the study relied on both primary data, from interviews with selected formal and informal enterprises and regulatory agencies within Ghana, and secondary data derived from a review of statutory literature such as the Constitution of Ghana, Acts of Parliament, Statutes, Codes, Contracts, rules and procedures and conventions establishing institutions. The purpose here was to examine the characteristics of formal and informal rules and regulations governing the establishment and operation of foreign and indigenous businesses, how these have evolved over time and how they may have impacted conomic performance. For the quantitative economic analysis, the study used a panel of 256 Ghanaian manufacturing firms over the period 1991-2002 to analyze the extent to which an effective SBR is beneficial to economic pe rformance. Focusing on total factor productivity, we have found that an effective SBR or a sound investment climate correlates positively with better firm performance, possibly channelled via a more optimal allocation of resources in the economy.Concerning the effect of the investment climate indicators, our results show that an unfriendly investment climate illustrated through firms perceptions about economic and regulatory policy uncertainty affecting their operations and growth are negatively are negatively correlated with productivity, while social networks as indicated through the extent to which firms or their managers have close contacts within the government or bureaucracy have a statistically positive correlation with firm performance.These results indicate that being well connected with those who make and implement government policy increases the chances of being able to lobby to overcome some of the difficulties confronting normal business enterprises, such as the number of procedures it takes to obtain licenses and permits and the number of days it takes to clear imported goods from the port. Narrative analysis of state agencies and PEFs perceptions of SBRs in Ghana from 1992 to 2008 which also coincides and extends beyond the period of econometric analysis of SBRs on firm performance confirms the results discussed above.Both state and BAs agree on a shift from a predominantly ad hoc and informal clientelistic relationship to a more formal and synergistic SBRs in Ghana since 1992. Formal and regularized meetings between state agencies and businesses have positively impacted on firm productivity. For instance, PEFs formal advocacy role and function resulted in the use of GCNET to expedite clearing of imported goods. Business concerns of firms are channeled more often through formal by BAs to state agencies.Firms through their BAs make inputs into budget and other policy on formalized basis. Moreover, strong formal relationship between the executive and BAs such as the investors advisory council have helped firms stay close to government and bureaucracy. Overall, our findings contribute to understanding the link between an effective SBR and economic performance. This paper adds to the work done by Qureshi and te Velde (2007) by investigating the key determinants of firm performance and also assessing the relationship between an effective SBR and firm productivity in Ghana.The results of the study stress the need for an enabling environment for the private sector. Experiences from East and Southeast Asian economies have also shown that investment and productivity growth critically hinges on an effective and vibrant private sector underpinned by a sound investment climate. Promoting a sound investment climate is one of the core responsibilities of the state in both developed and developing countries to achieve rapid capital accumulation and sustained growth and poverty reduction.Markets are good but are not without flaws. Thus, i n order for inequalities in incomes and opportunities not to be exacerbated by the markets, it is important that the many constraints that inhibit the private sector from responding effectively to market incentives are removed, complemented with an increased effectiveness of government involvement in supporting private sector activities.Apart from the positive effect of SBRs on economic performance, the other lesson which can be drawn from the paper is that even though successive governments in Ghana have shown some commitment to supporting a viable private sector that commitment has, at the same time, been undermined by governments own fear of a strong private sector acting as a countervailing force and thereby weakening their monopoly over neopatrimonialism.Consequently, the commitment may be seen as a public relations hoax. An effective SBR in Ghana requires sustained formalized political commitment to policies that sees the private sector as a catalyst and initiator of pro-poor growth and development.