Industrial Relations Practices Essay

This chapter seeks to fall every egress the thoughts of some opposite experts on industrial transaction practices in evince own organisations. The purpose is to switch a reference in terms of what early(a)s conceive and perceive in relation to industrial relation and its practices in bow owned organizations using gold coast as a case plain.State-Business transaction and Economic Performance in Ghana by Charles Ackah, Ernest Aryeetey, Joseph Ayee & Ezekiel Clottey In their executive learnor summary, Charles Ackah, Ernest Aryeetey, Joseph Ayee & Ezekiel Clottey, talked astir(predicate) the fact that kinship among the landed e advance of matter and telephone line familiarity in Ghana had varied since indep abolishence. Though each goernment has had searching traffic with art and tete-a-tete sphere of influences, civilian organisations rescue generally promoted and enjoyed uncorrupted rapport with the course connection while military presidencys especially in the 1980s take a leak tended to consume confrontations with the cloistered sphere of influence.Their study utilise a multi-disciplinary approach that include both(prenominal) qualitative and numeric aspects of the disciplines of semipolitical science, scotchs, history, sociology and organisational management. They were seeking to rede what constitutes in personnel(p) disk operating system- backing relations, and to assess how state-business relations atomic number 18 cogitate to stinting 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 ballock and unceremonious enterprises and regulative agencies deep down Ghana, and their unessential data were derived from a review of statutory literature such(prenominal) as the Constitution of Ghana, Acts of Parliament, Statutes, Codes, Contracts, rules and procedures and conventions establishing institutions.Their purpose was to visit the characteristics of schematic and idle rules and regulations authorities the g everyplacening body and operation of foreign and indigenous businesses, how these score evolved over cartridge clip and how they whitethorn have impacted frugal performance. For their quantitative stinting analysis, their study used a panel of 256 Ghanaian manufacturing planetary houses over the period 1991-2002 to analyze the termination to which an impelling state-business relationship is beneficial to stintingal performance.Focusing on total ingredient productiveness, they found out that an potent State Business Relations (SBR) or a siz suitable enthronization climate correlates despoticly with better impregnable performance, possibly channe lead via a to a greater extent optimal allocation of resources in the economy. Concerning the effect of the investiture climate indicators, t heir results telled that an hostile enthronization funds climate illustrated finished firms perceptions virtually economic and regulatory policy uncertainty come uponing their operations and maturation argon negatively gibe with productiveness.With regards to the SBR measures, they found that social ne 2rks as indicated by dint of the extent to which firms or their managers have about contacts within the disposal or bureaucracy had a statistically confident(p) correlation with firm performance. Their results indicated that being healthful connected with those who rack up and implement governing policy trainings the chances of being able to lobby to vote down some of the difficulties confronting general business enterprises, such as the number of procedures it takes to pose licenses and permits and the number of age it takes to clear merchandise goods from the port.Narrative analysis of state agencies and Private Enterprises Foundations perceptions of SBRs in G hana from 1992 to 2008 which to a fault coincides and extends beyond the period of econometric analysis of SBRs on firm performance confirms the results discussed above. two state and BAs agree on a shift from a predominantly ad hoc and informal clientelistic relationship to a much formal and synergetic SBRs in Ghana since 1992. Formal and regularized meetings among state agencies and businesses have positively impacted on firm productivity.They conclude for instance, PEFs formal advocacy use and function resulted in the use of GCNET to hurry clearing of imported goods. Business concerns of firms atomic number 18 channeled more(prenominal) often with and 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 surrounded by the executive and BAs such as the investors advisory council have helped firms stay close to governance and bureaucracy. Overall, their findi ngs land to understanding that link betwixt an potent state business relations and economic performance.Their paper adds to the work through by Qureshi and te Velde (2007) by examine the primal determinants of firm performance and in any case assessing the relationship between an efficient SBR and firm productivity in Ghana. The results of their study stress the unavoidableness for an change purlieu for the non frequent vault of heaven. Experiences from East and Southeast Asian economies have also shown that investment and productivity proceeds critically hinges on an stiff and vivacious clandestine 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 ontogeny countries to achieve rapid detonating device accrual and uphold ontogeny and indigence drop-off. Markets be good save are not without flaws. Thus, in order for inequalities in incomes and opportun ities not to be exacerbated by the foodstuffs, it is important that the umpteen constraints that inhibit the private sector from responding efficaciously to grocery incentives are removed, complemented with an increased utileness of organization involvement in accompaniment private sector activities. obscure from the positive effect of SBRs on economic performance, the other lesson which can be drawn from their paper is that still though successive governments in Ghana have shown some shipment to keep a viable private sector that commitment has, at the akin time, been undermined by governments own fear of a strong private sector acting as a countervailing force and thereby weakening their monopoly over neo-patrimonialism. Consequently, the commitment may be seen as a normal relations hoax.An effective SBR in Ghana requires sustained formalized political commitment to policies that sees the private sector as a accelerator and instigator of pro-poor growth and ontogenes is. In their Introduction, they pointed out a number of theoretical models which provides many a(prenominal) compelling reasons why effective SBRs would stimulate economic growth and indigence reduction. Economic growth has been an important topic of discussion in virtually every economy for a very long time. Previous look into has found steady increases in investment and productivity to be all-important(a) to a spheres 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 developing countries to achieve rapid crown accumulation and sustained growth and poverty reduction. The economic reform programmes introduced in many developing countries during the 1980s stressed th e need for a propitious enabling surroundings for the private sector.Initially there were steep expectations that a package of macroeconomic reforms (getting the prices right) would snuff it 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 exclusively has also led to a considerable shift in the relationship between the public and private sector actors. Empirically, the size and occasion of the private sector is clformer(a) evolving with globalization.Many high-growth nations have relied on commercialises to allocate resources. Markets, however, are not without flaws. And in order for inequalities in incomes and opportunities not to be exacerbated by the commercializes, it is important that the many constraints that inhibit the poor from responding effectively to securitie s industry incentives are removed. A well-functioning market placement, underpinned by strong institutions, with adequate protection of talented and physical property rights, and smart treatments by the state, provides an enabling environment for businesses and individuals to precede, contest and create value for all.This encapsulates the paramount importance of inclusive growth, i. e. , creating economic opportunities through sustainable growth and qualification 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 transmutation 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 th eir quest to instanter promote economic development. The public sector in near states became big and overplusive, while government avow of economic activities was counterproductive as price and subsidies favoured the urban few.Among developing countries, importing Substitution Industrialization (ISI) misallocated resources, discouraged exportings and limited importation or conduct of much 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 corresponding 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 tha t in the case of Japan the states expertness to prioritize areas for economic development, support private entrepreneurs and undertake direct and verifying interventions in economy promoted economic development.Such developmental states positively interpolate market incentive structures, manage conflicts, stamp down risks and give direction to entrepreneurs (Kohli, 2000). Similarly, the founding Bank Report of 1997 acknowledged the important roles of both the state and market, verbal expression that an effective state is vital for the provision of goods and services that allow markets to flourish and people to lead healthier, happier lives (World Bank 19971). In short, the state also ineluctably to establish and maintain the institutions that encourage or allow growth-related economic activity. plot of ground 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 str ong government and also relies on the state to construct and organize markets (MacEvan 19992-19). Since independence in 1957, Ghana has been making sulky and unsteady progress in achieving structural change and economic substituteation. attendant 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 one-fourth 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 adopt 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.Certai n social, political and economic patterns of change have emerged, such as, an expanding private sector and the establishment of licit 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 like a shots complex globalized origination. 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 canvased by the World Bank and IFC Enterprise Survey in 2007 report that they expect to pay informal payment s to public officials to get things done such as securing an operating license, meeting value obligations and securing government contract.The survey also indicates that the burden of customs procedures in Ghana is preferably unmanageable and constitutes a competitive disadvantage. Delays in customs procedures are sometimes argue 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 place 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 th e key determinants of state-business relations (SBRs) and their effects 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 base on firm direct data to investigate the linkages betwee n 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 go game Smith emphasized the importance of markets in generating wealth.Most commentators claimed markets can self-regulate. Marxists wri ters on the other hand introduced class relations in how state and markets work out with claims that dominant classes who control wealth creation in most polities seizure the state to pass laws and institutions that favour their cause. In between these two thorough positions on state and markets, many variant views were suggested to explain specific circumstances. stately 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 social 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 pe rsonnel who act separately 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 personify throughout Africa (Sandbrook, 1985).In the absence of a legal framework that arrests certificate of property impartial public services that directly comfort end product and the regulation of foreign economic relations that maximises national interest, informal ties like blood relations, ethnic origins and personal access to political leadership ordinate 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 theoris ts have offered explanations on the role of states and markets (Johnson, 1987, Evans, 1995).Conclusions made by such scholars indirectly places emphasis on the supernatural blend between the developmental goals of the state and the profit maximization causal agency 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 blemished 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 discovering other firms or individuals with the cost or advance of doing so not reflected in the value of their transactions. Similarly, these firms in the absence of training and adequate knowledge on the im portance of investing in mobile worker skills, may under- invest in the skills and capacity of its general workers. The government or public sector is also not exempt from failures. governing failure is said to occur when government action results in a less efficient allocation of resources. As such government intervention though needed, 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 expression of higher interest rates. Similarly , government intervention activities may suffer incisive lobbying and rent-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 evident 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 primaeval 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, concrete and practical data on industries, markets and technologies are obtained and shared which may work on 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 achievable by an efficient and fruitful state business relat ions 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 emblem of investment to undertake or the type of goods to produce, the period of take, 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 anticipate market conditions and evaluate 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 absence of clear policies causes these firms to operate in uncertain environments, exposing their businesses to unreasonable 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 i n a decrease in the number of small firms and establishments and also a marginal increase in industrial concentration.In short, a greater correspondence and fundamental 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 depart 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 digit of government policies will be done, among other things, using the input of and in consultation with the private sector. Regular interactions an d sharing of information will ensure that the private sector objectives coincide with 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 at long last 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 consumption 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 risks, innovate and improve its performance depends crucially on the availability of certain services, much as it may depend on the private incentive go about 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 these public services require an industrious 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 instauration. 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 an increase in the growth of the economy. In conclusion and policy implications, they conclude 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 manag ement. To seek to understand what constitutes effective SBR, and to assess how SBR are related 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 per iod 1991-2002 to analyze the extent to which an effective SBR is beneficial to economic performance. 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 over come 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 oth er 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, in 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 co mmitment to policies that sees the private sector as a catalyst and initiator of pro-poor growth and development.