Should Institutional Investors Use Their Considerable Market Power to Influence the Human Resources Practices of Companies?
By Kirsten Anderson, Shelley Marshall and Ian Ramsay There has been considerable speculation recently regarding the effect of the growing prevalence of institutional investors in the equity markets on investee company behaviour. Institutional investors include superannuation funds, banks, mutual funds and insurance companies. It has been posited that the growth of institutional investors may lead to the pursuit of what is generally referred to in the human resource literature as ‘high commitment’ employment practices in investee companies.1 This may be because institutional investors are using ‘voice’ mechanisms to pressure investee companies to adopt ‘high commitment’ human resource practices. For the purposes of our study it is sufficient to note that these labour management practices typically involve managerial attempts to motivate and manage workers through a series of workplace practices that incorporate the interests of employees rather than through strict command and control st
