Worker Participation and Firm Performance

Abstract

Assessing the robustness of empirical estimates, and thus the generality of theoretical models, is an important objective in applied research. Accordingly, this paper offers a further test of the Freeman-Lazear employee involvement model. The theoretical model posits that the form and level of bargaining has an important bearing on levels of employee involvement chosen by management. Sub-optimal levels of employee involvement are predicted for firms engaged in workplace level distributive or competitive bargaining. In contrast to earlier tests of the model based on British and German data, findings in this paper (based on the 1995 Australian Workplace Industrial Relations Survey) provide little support for the theorised relationships.

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