Workplace innovation, employment relations and HRM: two electronics companies in South Korea

Abstract

Analysing two electronics companies (unionized LG Electronics and non-union Samsung SDI) in Korea, the present paper investigates the impact of union status on workplace innovations and the effects of workplace innovations on organizational performance. Both case firms are considered highly innovative, model companies in terms of their sophisticated human resource management (HRM) and cooperative employment relations (ER). We first provide a conceptual framework and generate three propositions. The framework is composed of three main components: input, organizational system and output. The major findings include: (1) the adoption of high performance work organizations (HPWO) is highly dependent upon top management and union/employee representatives; (2) the two case firms adopted two different production modes (a team production mode in LG Electronics and a lean production mode in Samsung SDI); and (3) alignment among organizational design and work processes, ER systems and HRM systems would lead to high organizational performance. We also discuss the transferability of HPWO to other cultural settings in a universalism-contingency context.

Keywords:

• Workplace innovation
• employment relations
• human resource management
• high performance work organization
• union status
• South Korea

Notes

 1 Narrative descriptions of these two cases can also be found in Kim et al. (2000) and Kim and Bae (2004).

 2 The authors wish to thank Byung-Hoon Lee for his contribution to this case study.

 3 During a telephone interview on 22 July 2002, LG Electronics Union President, Seok Chun Chang, mentioned that ‘our union assumed an important role of collecting retirement applications during the financial crisis. It was a difficult decision for union, since members could easily regard their union as co-opted when a union, instead of management, did that. I think strong union leadership was essential to assume such a role without hurting the union's independent image’.

 4 The numbers in the text are a little different from those in Tables 2 3 as the latter were also adjusted by the consumer price index of each year.

 5 Temporary employees were hired and paid by temporary help agencies that sent employees to this plant. Temporary employees worked at this plant and were under the supervision of SDI. Contract employees were hired and paid by contract companies that obtained contracts from SDI to carry out specific work assignments. Contract employees usually worked at this plant but were under the supervision of the contract company.

 6 Under doctrinaire non-union management, maintaining non-union status is one of the explicit management goals, and the management attempted to maintain non-union status by utilizing a positive approach (e.g. excellent and fair HRM), a negative approach (e.g. discrimination against union activists) or both (Foulkes, 1980).

 7 As we will discuss later, the improvement of ER in this non-union establishment since the late 1990s was indicated by (1) the absence of labour disputes such as occurred in the previous period over employment restructuring; (2) the reduction of voluntary turnover, absences and tardiness; (3) autonomous labour-management agreements guaranteeing employment security (no lay-off agreement) and profit sharing; and (4) the expanded role of the LMC in plant decision-making. Although we cannot show more direct indicators of ER at this plant, such as individual-level survey data on the labour relations climate, we believe that the above indicators at least suggest that the labour relations climate at the plant has moved in a more positive direction in recent years.

 8 Although LG Electronics recorded continuing increases in sales and profits during the 1997–8 financial crisis, partly due to the improved labour relations and successful workplace innovations, Samsung SDI showed a temporary reduction in sales and profits during the crisis.

 9 We only counted voluntary turnover among white- and blue-collar employees, which we believe is likely to reflect the labour relations climate at the plant to some extent. Involuntary turnover is not likely to result from poor labour relations.

10 Statistics on absence and tardiness in SDI were available only after 1999.