OWNERSHIP OR COMPETITION? AN EVALUATION OF THE EFFECTS OF PRIVATIZATION ON INDUSTRIAL RELATIONS INSTITUTIONS, PROCESSES AND OUTCOMES ANDREW PENDLETON This paper examines whether privatization and exposure to product market compe- tition leads to changes in labour management and industrial relations. Three sets of propositions are examined: privatization will lead to lower changes in industrial relations institutions and processes; privatization will lead to lower average levels of remuneration relative to public sector firms; and privatization will lead to rela- tively higher levels of efficiency. In each instance it is hypothesized that competition will add to ownership effects. These propositions are examined drawing on data derived from the UK bus industry. INTRODUCTION Privatization in the UK has attracted a great deal of interest from scholars worldwide but relatively little attention has been given to the impact of privatization on industrial relations and labour management. This is sur- prising since reform of these was an important objective behind the Con- servative privatization programme. A succession of secretaries of state justi- fied privatization in terms of its likely impact on trade unions and industrial relations (see Ferner and Colling 1991, pp. 391–2; Foster 1993, p. 51). It was often suggested that state ownership had provided nationalized industry trade unions with excessive political power and had enabled them to obstruct much-needed attempts to improve efficiency in these industries. The desirability of privatization resided in its apparent capacity to reduce the political and economic influence of these unions, and hence to transform the pattern of labour management in these industries, thus making an important contribution to improvements in efficiency, profitability and cus- tomer service in privatized firms. This paper is concerned with whether privatization leads to these pre- dicted reforms to labour management and industrial relations. The evidence so far, derived mainly from case study investigations of single firms and industries, is mixed. Some common developments can be observed, such as moves to reform bargaining structures, but there has been considerable diversity between privatized firms and industries in managerial approaches Andrew Pendleton is Professor of Human Resource Management at Manchester Metropolitan Uni- versity. Public Administration Vol. 77, No. 4, 1999 (769–791)  Blackwell Publishers Ltd. 1999, 108 Cowley Road, Oxford OX4 1JF, UK and 350 Main Street, Malden, MA 02148, USA.