The impact of BLER on the corporate activity in the UE

• Published in: Ekonomia i prawo Vol. 22; no. 2; pp. 311 - 326
• Main Author: Rudolf, Stanisław
• Format: Journal Article
• Language: English
• Published: Torun Wydawnictwo Naukowe Uniwersytetu Mikołaja Kopernika 30.06.2023; Nicolaus Copernicus University Press
• Subjects: Boards of directors; Business cycles; Business Economy / Management; Corporate governance; Decision making; Economics; Employees; Institutional investments; Management and complex organizations; Participation; Stockholders; Tax avoidance; Works councils; BLER; corporate governance; stakeholder theory; tax avoidance; agency theory
• ISSN: 1898-2255; 2392-1625
• DOI: 10.12775/EiP.2023.018

Motivation: Since the 1970s, there has been recorded a significant scope of employee representation in corporate governance bodies, as the earlier German solutions have been popularized in many European countries. Since then, there has been a discussion about the impact of this representation on the activities of companies, their economic results, their value, etc. The research conducted on this subject does not provide a clear answer on this topic. Aim: The article aims to determine the impact of board-level employee representation (BLER) on the activities of companies. The latest findings in this area, based on the results of empirical research shall be considered. New types of BLER impact on the value of companies in various phases of the business cycle and on preventing tax avoidance shall be presented. The objective of the article is also to provide the governments of particular countries with additional arguments in favor of introducing or expanding the institution of employee representation. In the longer term, these arguments should encourage the EU authorities to try to develop and adopt a directive on this subject, obliging member states to introduce or extend BLER. Results: The controversy over the influence of BLER on the company’s operations has not diminished. However, taking into account the entirety of such an impact (ideological, economic, and social results), there has been an increasing number of arguments in favor of a positive assessment of such an impact. They are provided by the latest, extensive empirical research conducted on this subject, covering several dozen countries. They indicate that BLER has a positive effect on the stabilization of the company in times of economic downturn (recession), that it affects the adoption of a long-term development strategy by companies, etc. The research also shows that representation of the employees in boards prevents companies from tax avoidance. Its effectiveness correlates with the scope of such representation.