The impact of business ownership change on employee relations: buy-outs in the UK and The Netherlands

Abstract

A buy-out is a fundamental change in the structure of ownership that may affect the way employee relations develop within an organization. Little is known about the impact of buy-outs upon employee relations. This paper aims to address this gap. We focus on two main questions. First, what are the effects of a buy-out on employee relations in an organization? Second, does the national institutional context affect the impact of buy-outs on employee relations? The paper reports changes to employee relations in buy-outs in the contrasting institutional environments of the UK and the Netherlands. Overall, we find that buy-outs positively affect HR practices with increases in training, employee involvement, the number of employees and pay levels. The positive effects appear to be significantly stronger in a less institutionalized environment like the UK than in the more institutionalized environment of the Netherlands. Buy-outs raised HRM practices in the UK to a level closer to, although still below, that of Dutch buy-outs.

Keywords:

• Buy-outs
• employee relations
• HRM
• agency theory
• institutional theory
• comparative analysis