Preparing for Privatization: Corporate Strategy and Industrial Relations in New Zealand's State‐owned Enterprises
| Published date | 01 March 1993 |
| Author | Pat Walsh,Kurt Wetzel |
| DOI | http://doi.org/10.1111/j.1467-8543.1993.tb00380.x |
| Date | 01 March 1993 |
British
Journul
of
Industrid Relutions
31:l
March
1993
0007-1080
Preparing for Privatization: Corporate
Strategy and Industrial Relations in
New Zealand's State-owned
Enterprises
Pat
Walsh*
and
Kurt
Wetzel**
Final version accepted
26
March
1992.
Abstract
This paper examines the irnpact
of
the 'political contingency' upon man-
agement strategy in New Zealand's newly estublished public enterprises.
It
is
argued that an uriumbiguous stute strategy
of
readeying the organizations
swiftly for privatization gave management a clear mandate for radical
restructuring. The coincidence
of
commercial and political rationality greatly
reduced the likelihood
of
direct political intervention in the operution
of
the
organizations and led
to
substuntial changes
to
traditional pmtterns
of
industrial rrlations. Variations in munagement strategy reflected different
organizational circumstunces rather thun differing applications
of
the political
contingency.
1.
Introduction
The restructuring
of
the state has been a major focus in capitalist economies
over the last decade. State restructuring leads directly
to
organizational
restructuring, sometimes on a massive scale, as firms attempt
to
respond to
new circumstances. In turn, organizational restructuring has major im-
plications for
all
aspects
of
industrial relations. The particular form that state
restructuring takes, the contcxt
in
which
it
occurs and, crucially, the
objectives set for
it
vitally affect organizational choices and the pattern of
industrial relations in those organizations.
The analysis presented here explores the relationships among state
restructuring, organizational restructuring and two key aspects
of
industrial
relations.
It
assesses the impact of recent and radical state restructuring
in
New Zealand on the structure of collective bargaining within state trading
*Industrial Relations Centre, Victoria University
of
Wellington,
NZ
**College
of
Comrnercc. University
of
Saskatchewan,
Canada
58
enterprises, and
on
the
role and influence of trade unions in organizational
decision-making.
The argument draws upon Chandler’s (1962) classic formulation that
organizational structure follows organizational strategy. In turn, as many
recent studies have argued, industrial relations and personnel consider-
ations tend to be very much subordinate to prior decisions about strategy
and structure. Kochan
et
al.
(1986: 17), for example, identify industrial
relations decisions
as
consequences of higher-tier strategic decision-making.
Streeck (1987) suggests that continuing business uncertainty requires that
business strategy take precedence over industrial relations. Similarly, Guest
(1987, 1989) observes that most organizations subordinate industrial
relations considerations to wider strategic concerns. This tends to imply
a
move away from a co-operative industrial relations approach. Imaginative
human resource management policies designed to engender organizational
commitment without jeopardizing corporate objectives
is
too
demanding
for most managers.
Purcell(1989) argues that
in
large organizations strategic decisions shape
industrial relations. First-order strategic decisions concern the organ-
ization’s long-term direction and the scope
of
its activities. Second-order
decisions have
to
do with an organization’s internal operating procedures
and with relations among its component parts. The exercise of strategic
choice
in
industrial relations represents a third-order decision. The
operation of industrial relations policy is a downstream consequence
of
those three levels
of
strategic decision-making.
Strategic decisions are influenced by a range of environmental variables,
including the state
of
product, capital and labour markets, technology, the
nature of the work-force, law and public policy. In public enterprises, a
key
factor shaping strategic decision-making is what Batstone
et
af.
(1984) call
the political contingency. The retention
of
public ownership and
of
ultimate
ministerial responsibility gives rise to a distinctive relationship between
owners and managers that differs from the corresponding relationship
in
the
private sector. Corporate strategy, and therefore organizational structure,
are shaped as much by the particular manner
in
which the political
contingency operates as by the market-related factors that dominate in the
private sector (Pendleton 1988). This analysis explores the impact
of
the
political contingency upon corporate strategy
in
New Zealand’s state trading
enterprises.
British Journal
of
Industrial Relations
2.
State Restructuring in New Zealand
Between 1984 and 1990, the New Zealand Labour government undertook
a
programme
of
state restructuring that was reinarkable for its scope,
its
speed
and its ideological consistency (Boston
et
al.
1991; Scott
etal.
1990). This was
part of a wider programme
of
sweeping economic liberalization (Bollard and
Buckle 1987; Easton 1989). Labour privatized, either wholly
or
partially,
15
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