New Investment Funds, Restructuring, and Labor Outcomes: A European Perspective

14 Pages Posted: 10 May 2011

See all articles by Howard Gospel

Howard Gospel

King's College London - The Management Centre

Andrew Pendleton

University of York (UK)

Sigurt Vitols

WZB Berlin Social Science Center

Peter Wilke

affiliation not provided to SSRN

Date Written: May 1, 2011

Abstract

Manuscript Type: Empirical.

Research Question/Issue: This article considers the consequences for employment, work organization, and industrial relations when companies are acquired by private equity, hedge funds, or sovereign wealth funds. It also assesses the role of national labor regulation in moderating labor outcomes.

Research Findings/Insights: The article draws on three case studies a Spanish supermarket chain, a German engineering company, and a ports and logistics group hitherto based in the UK. Employment reductions are found in each case, though to varying extents. There are few changes in work organization but some developments in employee voice and representation. National systems of labor regulation do not impact substantially on employment reductions but they do affect the extent to which worker representatives receive information after, though not during, the acquisition.

Theoretical/Academic Implications: Contrary to extant theory, the extent of national employment regulation does not appear to be an impediment to restructuring by investment funds. The differential effect of the three funds suggests that the extent of ownership is not decisive in explaining the level of activism or its impacts on labor. Instead, the objectives and time frames of funds appear to be more important.

Practitioner/Policy Implications: The implication of the findings is that greater disclosure and regulation of new investment funds is more likely to enhance employee protection than further labor regulation. Broadly, this has been the main thrust of recent policy within European Union institutions.

Keywords: Corporate Governance, Funds, Labor, Europe

Suggested Citation

Gospel, Howard and Pendleton, Andrew and Vitols, Sigurt and Wilke, Peter, New Investment Funds, Restructuring, and Labor Outcomes: A European Perspective (May 1, 2011). Corporate Governance: An International Review, Vol. 19, No. 3, pp. 276-289, 2011. Available at SSRN: https://ssrn.com/abstract=1837186 or http://dx.doi.org/10.1111/j.1467-8683.2011.00848.x

Howard Gospel

King's College London - The Management Centre ( email )

150 Stamford Street
London, SE1 9NN
United Kingdom
44 020 78484121 (Phone)

Andrew Pendleton

University of York (UK) ( email )

Heslington
York YO10 5DD
United Kingdom

Sigurt Vitols

WZB Berlin Social Science Center ( email )

Reichpietschufer 50
D-10785 Berlin
Germany

Peter Wilke

affiliation not provided to SSRN

No Address Available

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