Owners, External Managers, and Industrial Relations in German Establishments

34 Pages Posted: 18 Nov 2019

See all articles by Arnd Kölling

Arnd Kölling

Berlin School of Economics and Law

Claus Schnabel

University of Erlangen-Nuremberg; IZA Institute of Labor Economics


Using data from the representative IAB Establishment Panel in Germany and estimating a panel probit model with fixed effects, this paper finds a negative relationship between the existence of owner-management in an establishment and the probabilities of having a works council or a collective bargaining agreement. We show that family firms which are solely, partially or not managed by the owners significantly differ in the presence of works councils and collective bargaining agreements. The probabilities of having works councils and collective agreements increase substantially if just some of the managers do not belong to the owner family. We argue that these differences cannot simply be attributed to an aversion of the owners against co-determination and unions but require taking account of the notion of socio-emotional wealth prevalent in family firms. In addition, our results support the idea that external managers mainly act as agents rather than stewards in family firms.

Keywords: industrial relations, co-determination, works council, collective agreement, family firm, Germany

JEL Classification: J53, M54, G32

Suggested Citation

Kölling, Arnd and Schnabel, Claus, Owners, External Managers, and Industrial Relations in German Establishments. Available at SSRN: https://ssrn.com/abstract=3488194 or http://dx.doi.org/10.2139/ssrn.3488194

Arnd Kölling (Contact Author)

Berlin School of Economics and Law ( email )

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Berlin, D-10315

Claus Schnabel

University of Erlangen-Nuremberg ( email )

Institut für Wirtschaftsforschung
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+49 911 5302 721 (Fax)

HOME PAGE: http://https://www.arbeitsmarkt.rw.fau.de/english-version/staff/prof-dr-claus-schnabel/

IZA Institute of Labor Economics

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