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

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  • Abdulrahman Alsughayir

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.

Suggested Citation

  • Abdulrahman Alsughayir, 2016. "Employee Participation in Decision-making (PDM) and Firm Performance," International Business Research, Canadian Center of Science and Education, vol. 9(7), pages 64-70, July.
    • Handle: RePEc:ibn:ibrjnl:v:9:y:2016:i:7:p:64-70
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    References listed on IDEAS

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    More about this item

    Keywords

    participative decision-making; firm performance; Saudi Arabia;
    All these keywords.

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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