Employee Participation in Decision-making (PDM) and Firm Performance

Abdulrahman Alsughayir

International Business Research, 2016, vol. 9, issue 7, 64-70

Abstract: The objective of this study is to examine the influence of employee participation in decision-making on firm performance in Saudi Arabia¡¯s manufacturing sector. Data were collected through pre-validated, piloted questionnaires, which were e-mailed to 341 manufacturing firms. The questionnaires asked about employee involvement in decision-making and performance variables. The response rate was 63.4 percent. Dimensions of PDM were rendered into 20 statements in the form of a five-point Likert scale. The scale, ranging from no involvement to substantial involvement, measured the degree of PDM. Additionally we used a five-point Likert scale to determine the extent of the firms¡¯ performance in terms of the 10 criteria. The scores of the 10 items were summed and averaged to establish the mean index of the firms¡¯ performance. An index of less than 4.0 was regarded as low firm performance; an index of 4.0 and above was considered to represent high firm performance. Statistical tools were used in analysis. Through product¨Cmoment correlation, we examined whether a relationship existed between employee participation in decision-making and firm performance. Regression analysis provided the extent of variation in the dependent variable and Z-test (approximated by the independent samples t-test). Findings showed a significant positive relationship exists between PDM and firm performance, suggesting that PDM is an essential component influencing firm performance. The higher the level of employee participation in decision-making, the higher the level of firm performance.Future studies involving the service industry would shed light on PDM in industries besides manufacturing.

Keywords: participative decision-making; firm performance; Saudi Arabia (search for similar items in EconPapers)
Date: 2016
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