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The Anatomy of Employee Involvement and Its Effects on Firms and Workers

  • Richard B. Freeman
  • Morris M. Kleiner
  • Cheri Ostroff

A great many American firms have organized workplace decision-making in new ways to get employees more involved in their jobs -- using policies like self-directed work teams, total equality management, quality circles, profit-sharing, and diverse other programs. This paper uses a firm-based data set and employee-based information to illuminate several aspects about the locus and economic impacts of employee involvement (EI). Having information from employees as well as from firms allows us to ask not only what EI does for firms, the principal question in the literature on the subject, but also what EI does for workers; and to examine EI from the bottom up' perspective of participants rather than managers. We find that EI practices are linked in an hierarchical structure that provides a natural scaling of EI activities and the intensity of the EI effort. Firms that have EI are also more likely to have profit-sharing and other forms of shared compensation. However, EI has a weak and poorly specified effect on output per worker, but it has a strong and positive impact on employee well-being.

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File URL: http://www.nber.org/papers/w8050.pdf
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 8050.

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Date of creation: Dec 2000
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Handle: RePEc:nbr:nberwo:8050
Note: LS
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  1. Morris M. Kleiner & Jonathan S. Leonard & Adam M. Pilarski, 1999. "Do Industrial Relations Affect Plant Performance?: The Case of Commercial Aircraft Manufacturing," NBER Working Papers 7414, National Bureau of Economic Research, Inc.
  2. Sandra E. Black & Lisa M. Lynch, 1997. "How to Compete: The Impact of Workplace Practices and Information Technology on Productivity," NBER Working Papers 6120, National Bureau of Economic Research, Inc.
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