German Works Councils, Profits, and Innovation
Worker participation is today much in vogue. Of the direct mechanisms, the German works council has attracted most theoretical and policy attention because of its participative reach, mandatory (though not automatic) nature, and seemingly limited distributive bargaining function. Despite its popularity, rather little is known of the effects of the institution on firm performance or, relatedly, of its likely nonrandom distribution. Using a new large-scale database, the authors report that German works councils are associated with significantly lower firm profitability but not with reduced innovative activity. Their findings do not closely accord with any extant quasi-theoretical representation of this participative institution. Copyright 1996 by WWZ and Helbing & Lichtenhahn Verlag AG
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Volume (Year): 49 (1996)
Issue (Month): 4 ()
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