Thursday, March 5, 2015

Walton & McKersie Help an Economist Mature into an Industrial Relations Scholar

I cannot attend today's 50th Anniversary Celebration of  Richard Walton and Robert McKersie’s seminal 1965 book, A Behavioral Theory of Labor Negotiations. But a conversation last week with Joel Cutcher-Gershenfeld prompted me to start thinking about its impact on me. In my final year as an economics Ph.D. student at Princeton in the early 1990s, I was lucky that Craig Olson—then a Professor of Industrial Relations at the University of Wisconsin, now at the University of Illinois—spent a year there as a visiting professor. I had little knowledge of the then-mysterious field of industrial relations, but as a leading scholar in that field, Craig kindly introduced me to the key works in the field. I can’t remember everything he recommended, but I certainly remember that A Behavioral Theory of Labor Negotiations was high on the list.

This soon made an impact on my thinking. On a specific level, Walton and McKersie’s insights on intraorganizational bargaining—developed not only in A Behavioral Theory of Labor Negotiations, but also elsewhere—were important for my dissertation. I was analyzing UAW pattern bargaining. The standard economic explanations for pattern bargaining are, unsurprisingly, market-based: wage patterns as 1) taking wages out of competition, or 2) as “rough-and-ready guides whereby the working of supply and demand is anticipated,” as John R. Hicks put it in his 1932 A Theory of Wages (p. 80). But even as a budding economist, no pun intended, I was skeptical about these economic-based explanations. Indeed, archival evidence of union memos and records pointed, in my mind, to internal union political considerations, not market forces. I was familiar with Ashenfelter and Johnson’s model of strikes that was rooted in internal union dynamics (of course, since we would routinely have lunch meetings in Ashenfelter’s large Princeton office, in the shadow of a large portrait of another Hicks: Clarence J. of Standard Oil fame). And I was familiar with the famous Ross-Dunlop debate in which Arthur Ross championed the political side of union wage determination. But Walton and McKersie’s framework provided a much stronger foundation for understanding the role of internal union political dynamics in the context of the entire negotiations process.

On a deeper level, A Behavioral Theory of Labor Negotiations made a more lasting impact on my thinking in at least two ways. One, though economists at Princeton and a few other places study labor unions with some eye toward institutional realities, the general approach in economics is not to give a lot of attention to how things really work within and across organizations. A Behavioral Theory of Labor Negotiations opened up this space to me through its classic development of the four subprocesses of negotiations. Through these subprocesses, I could now start to understand how labor and management negotiators actually interacted, and how decisions were made. This helped me recognize the importance of real-world institutions in understanding the employment relationship. And the need to do so in a rich, multidisciplinary way. These are, of course, two hallmarks of industrial relations scholarship.

Two, A Behavioral Theory of Labor Negotiations introduced me to mixed motive conflict; and as such, to another fundamental principle of industrial relations scholarship—that the employment relationship is best characterized as a mixed-motive bargaining relationship, something I would end up writing about multiple times (eventually). In these ways, then, A Behavioral Theory of Labor Negotiations helped me grow from a young economist into an industrial relations scholar with a deeper, multidisciplinary understanding of institutions and the employment relationship.

Like too many others to count, A Behavioral Theory of Labor Negotiations has also shaped my teaching. And hopefully in some modest way I am helping to continue its influence on future generations. In particular, Walton and McKersie’s four subprocesses form the core of the negotiations material in the bargaining chapter of my textbook, Labor Relations: Striking a Balance (McGraw-Hill). Call me old-fashioned, but I’ve even retained their original terms and have explicit subsections devoted to each one. Nowhere else in my textbook does one piece of work receive such extended discussion. And other key insights on labor negotiations and labor-management relationships are a byproduct of their seminal work, especially Walton and McKersie’s book with Joel Cutcher-Gershenfeld, Strategic Negotiations: A Theory of Change in Labor-Management Relations (Harvard Business School Press), and Raymond Friedman’s Front Stage, Backstage: The Dramatic Structure of Labor Negotiations (MIT Press).

For me personally, then, Walton and McKersie’s work has been influential in significant ways that might not be readily apparent beyond my textbook. But more broadly speaking, the true testament to the enduring importance of A Behavioral Theory of Labor Negotiations is that its insights and the follow-up work it has spawned are still so useful 50 years later, not only for academics seeking to understand labor relations (or negotiations more generally), but also for practitioners who negotiate and manage relationships in diverse organizations.

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