Employee involvement in decision-making: the more the better?

Xiaowen Tian and Xiaoxuan Zhai

International Journal of Manpower, 2019, vol. 40, issue 4, 768-782

Abstract: Purpose - The purpose of this paper is to relate participative decision-making (PDM) to organizational learning, and examine the impact of PDM on organizational performance. Design/methodology/approach - The paper integrates the resource-based theory with organizational learning theory to develop a framework, and distinguishes PDM in which decisions are jointly made by employees and managers from employee decision-making (EDM) in which decisions are completely in the hands of employees. The paper incorporates an augmented Cobb–Douglass production function into a structural equation model to estimate the performance impact of PDM and EDM. Findings - The paper tests the framework against firm-level data form China, and finds that PDM provides an opportunity for collective learning, and has a positive relationship with productivity-based profit gains; the positive relationship is stronger in firms whose management has greater accumulated knowledge and experience; EDM fails to provide an opportunity for collective learning, and has a negative relationship with productivity-based profit gains. Originality/value - Prior research focused on the role of PDM in enhancing the motivation and performance of individual employees, considered the degree of employee involvement as a continuum with the highest being decision-making “completely in the hands of employees,” and concluded that the more involved are employees in decision-making the better. This paper relates PDM to organizational performance, and challenges this conventional view from an organizational learning perspective.

Keywords: Organizational performance; Organizational learning; Exclusive participative decision-making; Inclusive participative decision-making (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eme:ijmpps:ijm-05-2017-0090

DOI: 10.1108/IJM-05-2017-0090

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