Unions and firm innovation in China: Synergy or strife?

Article history: Received 5 August 2011 Received in revised form 31 August 2011 Accepted 7 September 2011 Available online 22 September 2011 The ‘monopoly face’ of unions suggests that the rent-seeking activities of unions discourage research and development investment and that the collective bargaining rules may restrict management flexibility, thus deterring innovations. On the other hand, the arrival of unions in the workplace may ‘shock’ the management into adopting more systematic rather than ad hoc management practices and that such innovative workplace practices may enhance an organization's ability to introduce new products and/or new processes. Further, the ‘voice face’ of unions argues that the independent ‘questioning’ of the management deliberations by the unions can also lead to better, more creative and, hence, more productive solutions. This paper investigates the link between unions and firm innovations in China. Different from their counterparts in advanced economies, Chinese unions are found to encourage firm innovations and R&D investment. © 2011 Elsevier Inc. All rights reserved. JEL classifications: O3 J5