Labour – management relationships in transitional economies: convergence or divergence in Vietnam and Indonesia? Ngan Collins a *, Alan Nankervis a , Sari Sitalaksmi b and Malcolm Warner c a School of Management, RMIT University, Melbourne, Victoria, Australia; b Faculty of Economics and Business, Gadjah Mada University, Indonesia; c Judge Business School, University of Cambridge, UK Western labour – management relationships (both formal and informal), their respective rights, obligations and negotiating frameworks, have been well- established, understood, and supported by a complex set of associated legislation for decades. However, in many developing countries, including Vietnam and Indonesia, historical, socio-cultural, ideological or political factors constrained the development of such formalized employee relations until very recent times. This paper explores the different paths taken by Vietnam and Indonesia towards a modern employee relations system, with its concomitant positive and adverse consequences. Keywords: convergence; divergence; employee relations; Indonesia; labour– management; Vietnam Introduction Western labour – management relationships (both formal and informal), their respective rights, obligations and negotiating frameworks, have been well-established for most of the last century in advanced economies and some less advanced ones, more or less universally understood (although not all would agree on this point), and supported by a complex set of associated legislation, despite recent attempts to modify or erode employee conditions and benefits in some countries in the name of enhanced efficiency, effectiveness or competitiveness. However, in many developing countries, including Vietnam and Indonesia in Southeast Asia, historical, socio-cultural, ideological or political factors have constrained the development of such formalized labour – management (LM) systems until very recent times. This paper explores both the similar and different paths taken by Vietnam and Indonesia towards a modern LM system, with their concomitant positive and adverse consequences. It goes on to explore the convergence – divergence dichotomy between the two developing countries, and between them and traditional Western models. This conceptual peg is used to provide a theoretical underpinning to the empirical evidence we set out. The study employs a qualitative research methodology, combining analyses of secondary data, with findings from a series of indepth interviews of senior managers in Indonesian and Vietnamese firms. In the case of Indonesia, 46 people were interviewed representing the two state-owned enterprises (SOEs) under study, regulators, and independent parties. Twenty four people were interviewed indepth from four SOEs cases in Vietnam. ISSN 1360-2381 print/ISSN 1743-792X online q 2011 Taylor & Francis DOI: 10.1080/13602381.2011.577143 http://www.informaworld.com *Corresponding author. Email: ngan.collins@rmit.edu.au Asia Pacific Business Review Vol. 17, No. 3, July 2011, 361–377