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Complementarities between Employee Involvement and Financial Participation

Author

Listed:
  • Derek C. Jones
  • Panu Kalmi
  • Takao Kato
  • Mikko Mäkinen

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.

Suggested Citation

  • Derek C. Jones & Panu Kalmi & Takao Kato & Mikko Mäkinen, 2017. "Complementarities between Employee Involvement and Financial Participation," ILR Review, Cornell University, ILR School, vol. 70(2), pages 395-418, March.
    • Handle: RePEc:sae:ilrrev:v:70:y:2017:i:2:p:395-418
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    Citations

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    Cited by:

    1. Jones, Derek C. & Kalmi, Panu & Kato, Takao & Mäkinen, Mikko, 2017. "Worker separation under performance pay: Empirical evidence from Finland," Bank of Finland Research Discussion Papers 33/2017, Bank of Finland.
    2. Filippo Belloc, 2019. "Employer‐employee profit‐sharing and the incentives to innovate when the dismissal regulation matters," Metroeconomica, Wiley Blackwell, vol. 70(4), pages 641-654, November.
    3. KATO Takao & MIYAJIMA Hideaki & OWAN Hideo, 2016. "Does Employee Stock Ownership Work? Evidence from publicly-traded firms in Japan," Discussion papers 16073, Research Institute of Economy, Trade and Industry (RIETI).
    4. Paul E. M. Ligthart & Erik Poutsma & Chris Brewster, 2022. "The development of financial participation in Europe," British Journal of Industrial Relations, London School of Economics, vol. 60(3), pages 479-510, September.
    5. Kato, Takao & Kodama, Naomi, 2017. "Women in the Workplace and Management Practices: Theory and Evidence," IZA Discussion Papers 10788, Institute of Labor Economics (IZA).
    6. repec:zbw:bofrdp:2017_033 is not listed on IDEAS
    7. Jones, Derek C. & Kalmi, Panu & Kato, Takao & Mäkinen, Mikko, 2017. "Worker separation under performance pay : Empirical evidence from Finland," Research Discussion Papers 33/2017, Bank of Finland.
    8. Yeongjoon Yoon & Sukanya Sengupta, 2019. "The effect of employee share ownership on employee commitment and turnover: comparing the cases in Britain and South Korea and the role of the economy," Industrial Relations Journal, Wiley Blackwell, vol. 50(5-6), pages 486-516, November.

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