See discussions, stats, and author profiles for this publication at: https://www.researchgate.net/publication/251572170 The Impact of Organizational Size and Alliance Formations on Perceived Organizational Performance ARTICLE in INDIAN JOURNAL OF INDUSTRIAL RELATIONS · JANUARY 2011 CITATIONS READS 2 1,197 1 AUTHOR: Ajay K. Jain Management Development Institute Gurgaon 43 PUBLICATIONS 125 CITATIONS SEE PROFILE All in-text references underlined in blue are linked to publications on ResearchGate, Available from: Ajay K. Jain letting you access and read them immediately. Retrieved on: 23 February 2016 ISSN No. 0019-5286 T h Shri Ram Centre for IR & HR e I n d i a n J o u Announces a New Publication r n a l o f I n d u s t r i a A REVIEW OF ECONOMIC & Quality of Growth l R e SOCIAL DEVELOPMENT l a Approaches to Inclusive Development in Asian Societies ti o n s V o l . Lead Article on Editors: 4 7 J.S. Sodhi Globalization Dilemmas N N.K. Nair o . 3 & the Way out J a n u a Dani Rodrik Contact: A.C Mishra, Asst. Manager r y Shri Ram Centre for IR & HR 2 0 4, Safdar Hashmi Marg, New Delhi – 110 001 1 2 Phone 011-43213100 Fax 23352410 Email : [email protected], Website :www.srcirhr.com S R C Vol. 47 No. 3 January 2012 The Indian Journal of Industrial Relations Regd. No. 10631/65 A Review of Economic & Social Development The Indian Journal of Industrial Relations The Indian Journal of Industrial Special Issues A Review of Economic & Social Development Relations: A Review of Economic & Social Development (IJIR) is devoted to dissemination of knowledge for effective Affirmative Action (Oct. 08) Notes for Contributors Subscription Rates management of human resources and Guest Editor: Lord Meghnad Desai (With effect from July 1, 2011) harmonious industrial relations. 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Proofs will not be Hashmi Marg, New Delhi-110001. Graphic All rights reserved. No part of this sent to the authors. layout and production by M/S Professional Media House, Shop No. 28, B- Block, Central publication may be reproduced in any Editor (cid:183)Authors will receive one specimen copy of Market, Dilshad Garden, Delhi-110 095. form or by any means, without written the issue free of charge. N.K. Nair permission of the publisher. The Indian Journal of Industrial Relations A Review of Economic & Social Development VOLUME 47 NUMBER 3 JANUARY 2012 Contents Articles Globalization Dilemmas & the Way Out Dani Rodrik 393 Win-Win Human Resource Strategies for Working-Hours Reduction Fang-Tai Tseng 405 A Game Theoretic Approach to Conciliation-Adjudication Model Shubhabrata Basu 423 Recruitment & Selection Practices in Manufacturing Firms in Bangladesh Mir Mohammed Nurul Absar 436 Wage- Productivity Linkages in Indian Industries M. Manonmani 450 Determinants of Foreign Direct Investment: A Macro Perspective B.K. Lokesha & D.S. Leelavathy 459 Role of Transformational Leaders as Change Agents: Meera Shanker & Leveraging Effects on Organizational Climate Omer Bin Sayeed 470 Transformational Leadership: The Link between Upasana Aggarwal & P-O Fit, Psychological Contract & Signature Experiences Keith C D’Souza 485 Authentic Leadership & Work Engagement Kumar Alok & D. Israel 498 Communication Competence of Indian Engineers in IT & ITeS Sector Reeta Raina & Neerja Pande 511 Innovation Promotion Competencies of Indian Managers: An Empirical Study Ravindra Jain & Pragya Sharma 527 Appreciative Inquiry: Models & Applications Pavitra Mishra & Jyotsna Bhatnagar 543 VOLUME 47 NUMBER 3 JANUARY 2012 Impact of Organizational Size & Alliance Formations on Perceived Organizational Performance Ajay K. Jain 559 Book Review Employee Relations Management P.N. Singh & Neeraj Kumar Deepa Mishra & MiralPandya 575 Research Handbook of Comparative Employment Relations Michael Bary & Adrian Wilkinson Debi S. Saini 577 IJIR announces the release of its back volumes (1965 onwards) in JSTOR Archive as part of the Arts & Science IX Collection. To view the journal online please visit: http://www.jstor.org/action/showPublication?journalCode=indijindurela IJIR online www.irhrjournal.com SHRI RAM CENTRE FOR INDUSTRIAL RELATIONS AND HUMAN RESOURCES, ECONOMIC & SOCIAL DEVELOPMENT 4, Safdar Hashmi Marg, New Delhi-110 001 Phone: 011-43213100 Fax: 011-23352410 E-mail: [email protected], [email protected] Website: www.srcirhr.com Globalization Dilemmas & the Way Out Dani Rodrik The objective of international eco- Key Ideas nomic arrangements must be to at- tain the maximum amount of inte- Let me start with some of the broad gration or the maximum thickness ideas before going on to what I call a in economic transactions that are fundamental political trilemma of the consistent with maintaining space world economy. This will allow us to high- for diversity in national institutions light some of the key tensions, particu- and the arrangements. The objec- larly those between hyper-globalisation tive would be to create enough and democracy. The Euro Zone today policy space to allow rich countries demonstrates my arguments quite well. to rework their social compacts at home, poor countries to restructure The first key idea is that there is a and diversify their economies so that natural limit to how far markets can ex- they can position themselves better tend themselves and that limit is defined to benefit from globalisation, and all by the scope of the workable regulations nations, rich and poor alike, to es- and governance that markets need. This tablish financial systems and regu- is a corollary to Adam Smith’s famous latory structures that are more at- dictum that the division of labour is lim- tuned to their own needs. A better ited by the extent of the market. The managed globalisation will be a bet- corollary is that the market itself in turn ter globalisation, argues the paper. is limited by the scope of workable regu- lations that non-market institutions need to extend to the same range that the markets are trying to cover. Dani Rodrik is Rafiq Hariri Professor of International Political Economy at John F. Kennedy School of Government, Harvard University. The first The second idea relates to who or recipient of the prestigious A. O. Hirschman Award what provides or where do these institu- of the Social Science Research Council (New York) tions of regulation and governance come he authored many titles including the best sellers, from? The main locus of legitimate gov- Has Globalization Gone Too Far (1997) and The ernance today still remains the nation Globalization Paradox (2011). This article is excerpted from his keynote address at the Bharat state. By legitimate locus I mean the an- Ram Memorial Seminar held in New Delhi on 16 swer to the following question: at what December, 2011. level does democratic deliberation rests The Indian Journal of Industrial Relations, Vol. 47, No. 3, January 2012 393 Dani Rodrik for the most part? It is mostly at the level what I call hyper-globalisation, which is of the nation state and therefore, any something that we actually cannot attain notion of global governance or trans-na- and any set of policies at the national or tional governance or any kind of mecha- global level that are designed as if that is nism of international governance or a worthy and feasible goal, is likely to multi-lateralism that has significant insti- bounce back with unexpected negative tutions of democratic accountability and consequences. representativeness is still far off. When we get the balance wrong be- Third, there are legitimate differ- tween institutions of governance and the ences across nation states on the shape reach of markets at the global level, we these governance institutions ought to are going to run either into problems of take. These differences arise from cul- legitimacy or problems of efficiency. tural differences. They arise also from When we push for global rules and glo- the varying needs and preferences of dif- bal harmonisation too far without mecha- ferent nation states and from the differ- nisms of political accountability we are ent levels of development in different going to run into problems of inefficiency countries. and instability. We then push global mar- kets too far without corresponding rules. None of these three ideas are par- ticularly controversial when they are Institutions of Capitalism taken individually. Yet collectively they have implications which run counter to a Adam Smith had a key insight in to lot of current thinking about how to ad- the importance of markets and private dress globalisation. initiative that market was the most cre- ative and dynamic engine known to man and that this market required a very mini- Global governance is fundamen- mal state, providing very minimal func- tally a fool’s errand for good and tions. That markets required very thin substantive reasons. level of governance has survived both in textbooks as well as in libertarian tradi- We have to resign ourselves to a tion that is still actually very strong in world where the governance of the world United States, which views markets as economy is bound to remain a patchwork, separate and disembodied from politics no matter how hard we push for global as long as the government simply pro- governance. Global governance is fun- tects property rights and undertakes na- damentally a fool’s errand for good and tional defence functions, nothing else is substantive reasons. The implication is required for markets really to prosper. that, once we internalise that idea, we have no other option but to understand In the Twentieth Century, we devel- that we need to moderate our ambitions oped a much richer conception of the with regard to economic globalisation or markets. We better understood that the 394 The Indian Journal of Industrial Relations, Vol. 47, No. 3, January 2012 Globalization Dilemmas & the Way Out markets need to be embedded in a much tion of the welfare state and the industry more complete, and stricter set of insti- policy was the practical expression of tutions and that the markets are not self- these ideas. creating. Anything other than a village market requires investments in transport Bretton Woods System and logistics to create a market place whether electronic, virtual or real. Mar- During the Bretton Woods era when kets are not necessarily self-regulating this set of ideas came to a fruition, the either, thus requiring a whole panoply of kind of world economy we had was the regulatory institutions, from financial one that was based largely on national regulations to those relating to consumer systems of capitalism and not a global safety and also competitive behaviour. one. In fact, the Bretton Woods system Markets are not self-stabilising and made the whole economy work by therefore need monetary and fiscal in- throwing lots of sand in the wheels of stitutions to stabilise them over time. Of both international commerce and finance. course, markets are not self-legitimising On the side of international finance we and so we need institutions of social had the capital controls. On the side of safety nets and social insurance. Ulti- international trade we had very thin set mately we also need a political democ- of rules that kept a lot of global commerce racy to legitimise the working of markets outside the domain of global or multi-lat- which goes far beyond the original eral discipline. Smithian conception of a very thin state. After the 1980’s, we began to push for a somewhat different conception. Ultimately we also need a political The key idea here was of full-fledged democracy to legitimise the work- globalisation or what I call hyper- ing of markets which goes far be- globalisation that required elimination of yond the original Smithian concep- transaction costs on international trade tion of a very thin state. and finance and that went beyond sim- ply reducing import tariffs or eliminating In practice, during much of the capital controls at the border. It meant Twentieth Century and certainly after reforming the domestic regulatory appa- World War II, the practical realisation of ratus such that the differences across this conception of embedded markets countries would not in themselves impede took the form of combining Keynesian global trade and finance. It meant the ideas about macro-economic manage- agenda under the World Trade ment and the welfare state, providing Organisation being pushed for regulatory extensive forms of social insurance and harmonisation in a lot of areas. It also safety nets in much of the developing meant financial globalisation where ev- world and elsewhere as well through the erything was done to ensure the free, extensive industry policies and restruc- unimpeded flow of capital across the turing of the economies. This combina- borders. The Indian Journal of Industrial Relations, Vol. 47, No. 3, January 2012 395 Dani Rodrik Now the flaw of the system was that space restricts the options too much to it did not provide sufficiently strong glo- be really compatible with democracy. Of bal governance mechanisms to support course, there is historically the big tran- international commerce and finance while sition from the Gold Standard. Great Brit- at the same time weakening the very ain went off it in 1931. In Britain a lot of national institutions of governance that political forces then exerted pressure on previously had ensured that the spread the government to reflate the economy or the growth of domestic or national while the rules of the Gold Standard re- markets could provide for the prosperity quired to keep very high interest rates. for all. The consequence of this was the Ultimately, the domestic political forces very syndrome associated with the last won and Britain had to get off Gold in two decades; malfunctioning by both the response essentially to mass politics. economic as well as the political institu- tions. One way to put all these ideas on Hyper-Globalization a historical frame is to highlight the kind of dilemma that we face today, the po- What I mean by hyper-globalisation litical trilemma of the world economy. is a global market that is as integrated as a national market is. It means a world Talking historically, the period of the economy where national borders are not Gold Standard of the 19th century or associated with any transaction costs on roughly the period from1880 until about international trade and finance. the First World War was a system where we tried to combine a very open world It means a world economy where economy with the system that was in fact national borders are not associated a patchwork in terms of governance and with any transaction costs on inter- where the basic unit was still individual national trade and finance. countries and the nation states. Certainly national sovereignty reigned supreme but the manner in which the Gold Standard What does that actually mean for in- and its rules played out was that individual dividual nation states? It means that na- countries had very little space within tion states are unable to impose restric- which to carry out their economic poli- tions at the borders such as import tar- cies. In fact, there was not even a con- iffs, import restrictions, capital controls. ception of what domestic economic sov- There is more; nation states must also ereignty really meant. This was, of course harmonise domestic legal and regulatory before Keynes. regimes with the global ones to minimise transaction costs that might arise from We have learnt from history that this jurisdictional discontinuities like different kind of a model is fundamentally not com- bank regulations, different consumer patible with democracy because the nar- safety regulations and so forth. It must rowing of domestic political and economic also be the case that nation states are sovereignty or domestic economic policy credibly pre-committing not to deviate 396 The Indian Journal of Industrial Relations, Vol. 47, No. 3, January 2012 Globalization Dilemmas & the Way Out from those harmonised regimes. Logi- were permanently an integral part of the cally, therefore, the only manner in which regime because he understood that, for we can attain hyper-globalisation is by the healthy functioning of domestic eco- restricting the scope of domestic policy nomic management, countries needed in this way. certain amount of insulation from the vagaries of short-term international fi- Such narrowing of policy space con- nance and trade regime. The GATT re- flicts with the conventional conceptions gime actually worked out a similar ar- of democracy. There are less ambitious rangement in trade, given the various forms of globalisation that may in fact exceptions that were called for in agri- be compatible with and actually enhance culture, services and even within manu- democracy. That is precisely the kind of facturing, for textiles and clothing as globalisation and not hyper-globalisation trade in those areas encroached on the that we need to push for. domestic social and political bargains. This was a vision that explicitly kept Bretton Woods Compromise hyper-globalisation at bay. Post World War II the Bretton Wood Bretton Woods regime explicitly regime picked a very different system. designed rules that left significant Taking off from the interpretation of policy space for individual coun- Keynes and others as to what had gone tries. wrong during the War II period, the Bretton Woods regime explicitly designed rules that left significant policy space for After the 1980’s, particularly after individual countries. This was meant to 1990, we have been pushing for hyper- open up the space for individual govern- globalisation which has created failures ments so that they could practice of deep legitimacy where global rules Keynesian demand management policies. went too far. The key example of this is They could erect their own social safety the World Trade Organisation which nets and welfare states and they had economists and trade lawyers think is the enough economic policy space to conduct greatest construction of the last 30 years. restructuring policies and industrial poli- Probably it may be the least popular in- cies and that is what we mean by the ternational organisation if you ask the Bretton Wood compromise. It explicitly person on the street. Problems of legiti- left out any attempt at trying to move macy on the one hand and issues of in- towards hyper-globalisation or achieve adequate regulation on the other were in economic globalisation beyond a certain fact of those who did not go far enough level. This was an explicitly incomplete in the area international finance. globalisation. Keynes famously said in 1945 that capital controls as part of the In principle, we can imagine a third Britain Woods regime were not meant to alternative to complete the trilemma by be simply a temporary expedient. They posing the question: why not dispense The Indian Journal of Industrial Relations, Vol. 47, No. 3, January 2012 397