15 June 2016

Making sense of employer collectivism – The case of Danish wage bargaining under recession

This conceptual article argues that preferences of employers for collective action cannot be reduced to rational actors making decisions based on market structures or institutional logics. Both markets and institutions are inherently ambiguous and employers therefore have to settle for plausible – rather than accurate – rational strategies among many alternatives through so-called sensemaking. Sensemaking refers to the process by which employers continuously make sense of their competitive environment by building causal stories of competitive advantages. The article therefore tries to provide a better understanding of how preferences for collectivism are formed, sustained and potentially changed by identifying dominant and competing stories that either reinforce or challenge preferences for collectivism. Hereby, the article fills a theoretical, empirical and methodological void in studies that allude to the ambiguous role of markets and institutions but do not study how actors deal with this ambiguity. The sensemaking concept is illustrated with an analysis of wage bargaining in Denmark during the recent recession when Danish labour cost competitiveness was in a deplorable state. However, unlike countries in similar situations, for example Finland and Sweden, Danish employers retained a coordinated industry-level bargaining system, which makes it an interesting paradox to study from the vantage point of sensemaking.

The article is published in The Journal of Industrial Relations

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