The Impact of Labour Conflicts on Organisational Performance: Insights from a Literature Review

Abstract

Organisational performance is a key determinant of firms’ competitiveness and sustainability, closely shaped by the quality of employment relations. In this article, labour conflicts are defined within the sphere of industrial relations, involving workers, employers, and sometimes the state. This study adopts a narrative literature review as its methodological approach, synthesising findings across diverse contexts. Most studies report negative financial and operational effects of labour conflicts, while a smaller but significant subset identifies constructive outcomes through social dialogue, institutional regulation, and organisational learning. The review highlights five major dimensions of organisational performance affected: financial, operational, employee and social outcomes, corporate image and customer satisfaction, as well as innovation and learning. Overall, findings suggest that poorly managed conflicts generate economic losses, productivity decline, and reputational damage, whereas constructive management can transform conflicts into levers of cohesion, regulation, and innovation. This synthesis underscores the heterogeneity of existing evidence, the scarcity of research in emerging contexts, and the need for integrative frameworks that link labour conflicts with multi-dimensional performance outcomes.

Classification JEL : J53, M54, J24, L25.

Paper type : Theoretical Research