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Ceding Control: An Experimental Analysis of Participatory Management

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  • Mellizo, Philip

    (College of Wooster)

  • Carpenter, Jeffrey P.

    (Middlebury College)

  • Matthews, Peter Hans

    (Middlebury College)

Abstract

We use an experiment to evaluate the effects of participatory management on firm performance. Participants are randomly assigned roles as managers or workers in firms that generate output via real effort. To identify the causal effect of participation on effort, workers are exogenously assigned to one of two treatments: one in which the manager implements a compensation scheme unilaterally or another in which the manager cedes control over compensation to the workers who vote to implement a scheme. We find that output is between seven and twelve percentage points higher in participatory firms.

Suggested Citation

  • Mellizo, Philip & Carpenter, Jeffrey P. & Matthews, Peter Hans, 2017. "Ceding Control: An Experimental Analysis of Participatory Management," IZA Discussion Papers 10576, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp10576
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    1. José J. Domínguez & Giulio Ecchia & Natalia Montinari & Raimondello Orsini, 2023. "When Workplace Democracy Backfires. Lab Evidence on Honesty and Cooperation," ThE Papers 23/02, Department of Economic Theory and Economic History of the University of Granada..

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    More about this item

    Keywords

    real effort; participatory management; intrinsic motivation; control; voice; experiment;
    All these keywords.

    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • J53 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Labor-Management Relations; Industrial Jurisprudence
    • J54 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Producer Cooperatives; Labor Managed Firms
    • M50 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - General

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