Management communication, unionization, FDI and company performance in a developing country

Purpose – The purpose of this paper is to examine the associations between management direct communication to employees, unionization, foreign direct investment (FDI) and company performance in Mauritius, Africa's most successful economy. Design/methodology/approach – The authors use firm data from a survey conducted in Mauritius in late 2011. The authors conduct regression analysis to study the relationship between direct communication, unionization and performance conditional on ownership type. Findings – Mauritian labour unions, in common with their counterparts from mainland Africa, are strongest in the public sector. They have been characterized as weak and lacking in influence on management. Yet the authors find a strong association between unionization and management communication in the private sector. The authors also find a positive association between direct communication and company performance which the authors argue is likely to be an indirect consequence of unionization. FDI shows no particular effects. Research limitations/implications – It appears that the consequences of union presence transcend pay and conditions. The effects are unexpectedly marked, particularly when the stress by some authors on union weakness in the private sector is taken into account. Originality/value – It may be that local unions’ strong focus on the enterprise – a form of representation favoured by US-based multinational companies, constitutes a strength in stimulating management communication to employees by focusing union activities at that level. Whilst the authors have suggested that this is unlikely to be primarily a result of conscious union strategy, the enterprise focus may serve to buttress existing employee attitudes. In any event, unionization is certainly closely associated in this African country with a practice that is linked to positive economic effects at the enterprise level.