Who Benefits Most from Employee Involvement: Firms or Workers?

• Published in: The American economic review Vol. 90; no. 2; pp. 219 - 223
• Main Authors: Freeman, Richard B., Kleiner, Morris M.
• Format: Journal Article
• Language: English
• Published: Menasha, Wis American Economic Association 01.05.2000
• Subjects: Coefficients; Comparative studies; Effects; Employee involvement; Employees; Employment; Enterprises; Goal setting; Human resources; Industry; Information sharing; Labour relations; Production functions; Productivity; Regression analysis; Statistical median; Survey design; The NBER/Sloan Project on Industrial Technology and Productivity: Incorporating Learning from Plant Visits and Interviews into Economic Research; Workers; Working papers; Workplaces; United States > US
• ISSN: 0002-8282; 1944-7981
• DOI: 10.1257/aer.90.2.219

Employee involvement programs are the leading-edge form of personnel and labor relations in the U.S.. While many managers believe that these programs raise productivity and profits, the statistical evidence that employee involvement improves the performance of firms is equivocal. In this study, it is argued that the main beneficiaries of employee involvement are workers and managers. The effects of employee involvement on productivity using panel data on firms and the effects of employee involvement on workers using a survey of employees are estimated, and it is found that employee involvement barely affects firm productivity but substantially improves worker well-being. Two explanations are offered for this result.