Flexibilizing Labor Relations Systems and Impacts on Corporate Financial Performances in Brazil

Abstract

Based on the work of Chadwick and Cappelli (2002), this paper attempts to ascertain the impacts of the functional and numerical flexibilization of work systems on corporate financial performances. A Multiple Regression and Variance Analysis was carried out to validate four Hypotheses. Hypothesis 1 may be partially validated, stating that human resources systems based on functional flexibility are associated with a better corporate financial performance, compared to the numerical flexibility system, as a significant alteration was noted in the Net Revenues indicator.

Hypothesis 2 was validated, stating that organizations with cost leadership strategies post better performances with human resources systems based on numerical flexibility, with poorer performances by systems based on functional flexibility, as the survey showed a statistically significant difference, indicating a higher percentage of companies with cost leadership strategies in the group of enterprises with a better numerical flexibility profile.

Hypothesis 3 may be validated, stating that highly capital-intensive companies post better financial performances with the functional flexibility system, and poorer financial performances with the numerical flexibility system, as the survey showed a positive statistical variance for highly capital-intensive companies working with functional flexibility.

Hypothesis 4 could not be validated, stating that unionized companies post better performances with systems based on functional flexibility, and poorer performances with numerical flexibility systems, as the findings did not present any significant statistical variation. The Chadwick and Cappelli (2002) survey obtained findings opposite to those presented by this study. In the USA, this survey demonstrated that companies with functional flexibility post better financial performances in terms of both Revenue and Profit Indicators.

The explanation for this difference in the findings may lie in the vast gap between the negotiatory labor system adopted in the USA and the statutary system established by Brazilian Law. Offering more flexibility to enterprises and employees, the US labor system endowings the work-force with greater adaptability, while not burdening the payroll with labor dues.

Keywords: Employment Law, Human Resource Management/Employee Relations, Strategy

JEL Classification: D23