Complementarities between Employee Involvement and Financial Participation

Abstract

The authors investigate whether productivity is greater if firms use employee involvement (EI) in decision making and financial participation (FP) as complementary practices. Based on representative panel data from Finnish manufacturing firms, the study uses diverse specifications to examine different theoretical explanations of the productivity effects of complementarities. The authors find virtually no evidence to support the theory of complementarities when EI and FP are simply measured by their incidence. They do find some evidence for complementarities using cross-sectional data (controlling for several covariates that related work has found to be important for firm performance) and also when analyses use measures of the intensity of FP. In accounting for differences in empirical findings across varying settings, the findings suggest that outcomes depend on the institutional context and are sensitive to variation in measurement and analytical methods.

Employee productivity spillovers generated by incentive schemes

“…To avoid this, companies should consider involving trade unions in the adoption of incentive schemes to ensure transparency and sufficient employee onboarding. Jones et al (2012bJones et al ( , 2017 found that employee involvement or direct participation through trade unions fostered financial participation and provided meaningful incentives to motivate employees in achieving performance targets. In another study, Antonietti et al (2017) confirmed that trade unions' presence in the workplace influences shared decision-making in the adoption of flexiblepay systems or incentive schemes aimed at improving employee productivity.…”

“…Determining employee participation in the financial wellbeing of organisations through monetary or non-monetary incentives is important for examining how extrinsic and intrinsic motivation lead to productivity. Studies investigating monetary or non-monetary incentive schemes have been instrumental in our understanding of employee productivity and organisational performance (Adewuyi & Effiong, 2017;Adom et al, 2020;Aguinis et al, 2013;Antonietti et al, 2017;Damiani et al, , 2016Daniel, 2019;Gielen et al, 2010;Jones & Kato, 2012;Jones et al, 2008Jones et al, , 2010Jones et al, , 2012Jones et al, , 2017Kalmi & Sweins, 2010;Kato & Kauhanen, 2018;Kato et al, 2010;Lucifora & Origo, 2015;Mullins, 2022;Ortlieb et al, 2016;Park et al, 2022;Sesil & Lin, 2011;Sgarbossa et al, 2022;Singh & Chaudhary, 2022;Ude & Coker, 2012;Yang & Chen, 2019;Yoon & Sengupta, 2021). However, there is a lack of empirical knowledge in South Africa with findings on incentiveinduced employee productivity focusing on the monetary and non-monetary components using panel data analysis.…”

La industria de la madera en las economías del APEC: una propuesta metodológica para la construcción de un Índice de Productividad Sostenible

“…Por su parte, Chun & Lee (2015), al igual que en Konings y Vanormeligen (2015) y Jones et al (2017), relacionaron esta productividad con las prácticas de compensación, encontrando una alta y significativa relación, apoyando con ello la hipótesis de que la ausencia de buenas prácticas e incentivos, puede ser uno de los factores que han limitado incrementos en la productividad del sector manufacturero.…”

The Economic Effects of Direct and Indirect Employee Involvement: Evidence From Corporate Social Responsibility Reports of Chinese Listed Companies

“…In addition, corporate financial performance can be measured by corporate profitability, corporate operating capacity, corporate labor productivity, etc. (Ayuningtyas and Misnaniarti, 2016;Jones et al, 2016). Based on both resource-based theory and empirical results, it is possible that employee direct involvement is positively associated with corporate financial performance.…”