This article presents a simple formal model of institutional complementarity (IC)
applied to industrial relations, and develops two important aspects of IC. We first
develop a formal definition for the static and dynamic aspects of IC and then relate
these to the interaction between financial relations and the outcome of a wage bargaining
between firms and trade unions. Trade unions and firms have the choice between a
cooperative negotiation targeting at the long-term success of the firm and a conflictual
relation targeting at maximizing the current share. One important determinant in
this game will be the time horizon financial investors have as they influence the
realization of future gains of cooperation between workers and firms. When financial
investors are patient, a pareto-superior cooperative equilibrium can be attained.
On the other hand, whenever one of the two bargaining parties gets too weak, the
viability even of the long-term equilibrium is threatened.