Union-Firm Bargaining Scope and Structure under Strategic Foreign Direct Investment

This paper analyses the relationship between union power and the presence of multinational enterprises. The focus is on how union-firm bargaining structure and bargaining scope affect-and are affected by-strategic foreign direct investment (FDI). Concerning the bargaining scope (for a given bargaining structure) we firstly determine which one-i.e. right-to-manage (RTM) or efficient bargaining (EB)- is more favorable to FDI. Secondly, cases are identified in wich host-country firm(s) and union(s) agree on a bargaining agenda. Concerning the bargaining structure, we determine which one (i.e. partial unionization or full unionization -either centralized or decentralized-) maximizes the probability of MNE entry. Implications on host-country unemployment are also drawn.