Labor Relations Commons^™

Performance And Growth In Entrepreneurial Firms: Revisiting The Union-Performance Relationship, Rosemary Batt, Theresa M. Welbourne

Rosemary Batt

[Excerpt] A substantial body of research has examined the relationship between unions and firm performance. It generally has found a positive relationship between unions and productivity and a negative relationship between unions and financial performance (Freeman & Medoff, 1984; Addison & Hirsch, 1989; Belman, 1992; Freeman, 1992). The exit/voice model is most commonly used to explain this paradox (Freeman & Medoff, 1984). Freeman and Medoff argued that the “monopoly power” of unions leads to high union wages and restrictive work rules, both of which raise the costs of production and lower profit margins. The presence of unions, however, also lowers …