How national institutions limit turnaround strategies and human resource management. A comparative study in the airline industry

Abstract

The influence of national institutions, particularly employee representation, on managers’turnaround strategiesremains largely unexplored in the literature. Therefore, this paper assesses the pressures that affected two Europeanairline companies, British Airways (BA) and Iberia, and their turnaround responses in a context of economic crisisand austerity, particularly from the perspective of strategic human resource management (SHRM). Our case studiesshow that when national institutions grant a number of rights to employee representatives, an innovative HRMstrategy enables the recovery strategy required to deal with internal sources of decline. In contrast, when nationalinstitutions provide fewer rights to employee representatives, there is room for company HRM strategy to challengeor resist institutional pressures. Our research focuses particularly on how coercive pressures exerted by employeerepresentation, according to the legal framework governing labor relations, affect turnaround strategies.