The Dunlop theory of industrial relations states that the industrial system is comprised of three distinct parts: management organizations, workers and government agencies. These three entities cannot act completely independent of each other, but instead are intertwined, and the power each one holds is relative to its position within the market and political environment. The theory was created by sociologist John Dunlop in 1958.
Dunlop's theory basically states that the industrial relations system is really a social subsystem, and its actions are dependent on three factors: technology, the economy and the distribution of political power. All three of these environmental factors and the rules that are derived from them are what determines the relationship between employers and workers in the industrial context.
This theory differs from the prevailing ideologies of the time, which mostly considered employers, workers and the government as separate, autonomous agencies with separate and independent powers and processes. By contrast, Dunlop's theory paints the entire industrial relationship as a complex system with interconnected parts that cannot operate independent of each other. Dunlop placed a lot of emphasis on external or environmental forces shaping the roles of each of the three principal parts. Management, the labor force and technology all coexist within the broader context of society, and are governed by legal, political, social and economical forces.