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The Theoretical Foundation of Industrial Relations and its Implications for Labor Economics and Human Resource Management

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  • Bruce E. Kaufman
Abstract
The author identifies the core principle that forms the theoretical and policy foundation for the field of industrial relations—labor is embodied in human beings and is not a commodity—and argues that the field's two central dependent variables are labor problems and the employment relationship. Next, he uses this core principle, along with complementary ideas from institutional economics, to develop a theoretical framework that not only explains the nature of the employment relationship and labor problems but also reveals shortcomings in related theories from labor economics and human resource management. Finally, this framework is used to derive the “fundamental theorem†of industrial relations, demonstrate that optimal economic performance occurs in a mixed economy of imperfect labor markets and organizations, and show that a certain amount of labor protectionism promotes economic efficiency and human welfare.

Suggested Citation

  • Bruce E. Kaufman, 2010. "The Theoretical Foundation of Industrial Relations and its Implications for Labor Economics and Human Resource Management," ILR Review, Cornell University, ILR School, vol. 64(1), pages 74-108, October.
    • Handle: RePEc:sae:ilrrev:v:64:y:2010:i:1:p:74-108
    DOI: 10.1177/001979391006400104
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    References listed on IDEAS

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    1. Marsden, David, 1999. "A Theory of Employment Systems: Micro-Foundations of Societal Diversity," OUP Catalogue, Oxford University Press, number 9780198294221.
    2. Kaufman, Bruce E., 2003. "The organization of economic activity: insights from the institutional theory of John R. Commons," Journal of Economic Behavior & Organization, Elsevier, vol. 52(1), pages 71-96, September.
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    6. Deakin, Simon & Wilkinson, Frank, 2005. "The Law of the Labour Market: Industrialization, Employment, and Legal Evolution," OUP Catalogue, Oxford University Press, number 9780198152811.
    7. Jason Potts, 2000. "The New Evolutionary Microeconomics," Books, Edward Elgar Publishing, number 2258.
    8. Bruce E. Kaufman, 2010. "Institutional Economics and the Minimum Wage: Broadening the Theoretical and Policy Debate," ILR Review, Cornell University, ILR School, vol. 63(3), pages 427-453, April.
    9. John T. Dunlop, 1977. "Industrial Relations, Labor Economics, and Policy Decisions," Challenge, Taylor & Francis Journals, vol. 20(2), pages 6-12, May.
    10. Craig F Freedman, 2008. "Chicago Fundamentalism:Ideology and Methodology in Economics," World Scientific Books, World Scientific Publishing Co. Pte. Ltd., number 6809, August.
    11. Taylor, Frederick Winslow, 1911. "The Principles of Scientific Management," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, number taylor1911.
    12. Robert Prasch, 2003. "How is Labor Distinct From Broccoli? Some Unique Characteristics of Labor and Their Importance for Economic Analysis and Policy," Middlebury College Working Paper Series 03-30, Middlebury College, Department of Economics.
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    Cited by:

    1. Bruce E. Kaufman, 2013. "Sidney and Beatrice Webb's Institutional Theory of Labor Markets and Wage Determination," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 52(3), pages 765-791, July.
    2. Dorian Aliu & Ayten Akatay & Armando Aliu & Umut Eroglu, 2017. "Public Policy Influences on Academia in the European Union," SAGE Open, , vol. 7(1), pages 21582440176, February.
    3. Neeraj Kumari & Rajnish Ratna, 2014. "Study of Factories Act Provisions and Industrial Relations in Manufacturing Sector," Journal of Public Policy & Governance, Research Academy of Social Sciences, vol. 1(1), pages 45-50.
    4. Peter Gahan & Andreas Pekarek, 2013. "Social Movement Theory, Collective Action Frames and Union Theory: A Critique and Extension," British Journal of Industrial Relations, London School of Economics, vol. 51(4), pages 754-776, December.
    5. Alex Bryson & Richard Freeman, 2013. "Employee Perceptions of Working Conditions and the Desire for Worker Representation in Britain and the US," Journal of Labor Research, Springer, vol. 34(1), pages 1-29, March.
    6. Martin Behrens & Andreas Pekarek, 2023. "Delivering the goods? German industrial relations institutions during the COVID‐19 crisis," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 62(2), pages 126-144, April.
    7. Alex Bryson & Richard Freeman & Rafael Gomez & Paul Willman, 2017. "The Twin Track Model of Employee Voice: An Anglo-American Perspective on Union Decline and the Rise of Alternative Forms of Voice," DoQSS Working Papers 17-13, Quantitative Social Science - UCL Social Research Institute, University College London.
    8. Bruce E. Kaufman, 2014. "History of the British Industrial Relations Field Reconsidered: Getting from the Webbs to the New Employment Relations Paradigm," British Journal of Industrial Relations, London School of Economics, vol. 52(1), pages 1-31, March.
    9. Bruce E. Kaufman, 2012. "An Institutional Economic Analysis of Labor Unions," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 51, pages 438-471, April.
    10. Bruce E. Kaufman, 2016. "Langbert on Left-Leaning Industrial Relations: Bringing Balance to a Right-Leaning Account," Econ Journal Watch, Econ Journal Watch, vol. 13(2), pages 200–223-2, May.
    11. Tashlin Lakhani, 2022. "How and Why Does Franchise Ownership Affect Human Resource Practices? Evidence from the US Hotel Industry," ILR Review, Cornell University, ILR School, vol. 75(2), pages 321-347, March.
    12. Bruce Kaufman, 2014. "Explaining Breadth and Depth of Employee Voice across Firms: A Voice Factor Demand Model," Journal of Labor Research, Springer, vol. 35(3), pages 296-319, September.
    13. Özlem Özgür BÜYÜKDERE, 2019. "100.Yılında Uluslararası Çalışma Örgütü: Değişen Koşullarda Politika Tercihleri ve Yönelimler," Journal of Social Policy Conferences, Istanbul University, Faculty of Economics, vol. 0(77), pages 59-96, December.

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