Enterprise Boundaries and Employee Representation:
Deutsche Telekom and NTT Compared

Author Name SAKO Mari/Gregory JACKSON
Creation Date/NO. October 2003 03-E-025
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This paper investigates how employee representation affects, and is affected by, the way corporations structure themselves. In the analytical framework employed in the paper, the structure of the corporation and national labour institutions constitute key constraints on the goals of unions and management, but their strategic choices and interactions also alter and transform those structures. This perspective attempts to reconcile classical approaches to strategy (e.g. by Chandler) with institutional or systemic accounts (e.g. by Hall and Soskice) by examining industrial relations as structured interaction. The interaction between corporate strategy and labour strategy, for instance, may give rise to an outcome other than what is predicted on the basis of existing national institutional arrangements. Our approach is therefore a less deterministic version of institutionalism, allowing scope for strategy that is rooted in the contested nature of institutional and organisational boundaries.

Empirical analysis of the telecommunications sector - Deutche Telekom in Germany and NTT in Japan -- reveals that such structured interaction has led to markedly different outcomes, despite a broadly similar corporate strategy of diversification. In particular, we find that a relatively centralised managerial structure within the DT Group is matched with a decentralised works council structure and a declining presence of the unions (Verdi and IG Metall) at the DT companies, leading to a great diversity of human resource systems within the corporate group. By contrast, in Japan, despite a relatively weak position of the holding company in the NTT Group, the presence of a highly centralised NTT Union resulted in the application of a uniform human resource system for the whole corporate group.