Implications of Financial Capitalism for Employment Relations Research: Evidence from Breach of Trust and Implicit Contracts in Private Equity Buyouts

September 11, 2013

Ian Clark

An increasing share of the economy is organized around financial capitalism, where capital market actors actively manage their claims on wealth creation and distribution to maximize shareholder value. Drawing on four case studies of private equity buyouts, this article published in the British Journal of Industrial Relations challenges agency theory interpretations that they are ‘welfare neutral’ and show that an alternative source of shareholder value is breach of trust and implicit contracts. It also shows why management and employment relations scholars need to investigate the mechanisms of financial capitalism to provide a more accurate analysis of the emergence of new forms of class relations and to help us move beyond the limits of the varieties of capitalism approach to comparative institutional analysis.

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Eileen Appelbaum | Co-Director

Eileen Appelbaum is Co-Director of the Center for Economic and Policy Research, Washington, DC, Fellow at Rutgers University Center for Women and Work, and Visiting Professor at the University of Leicester, UK. Prior to joining CEPR, she held positions as Distinguished Professor and Director of the Center for Women and Work at Rutgers University and as Professor of Economics at Temple University. She holds a PhD in economics from the University of Pennsylvania.

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