The effects of expanding employee decision making on contributions to firm value in an informal reward environment

Research output: Contribution to journalArticle

Abstract

I use an experiment to examine whether expanding employee decision making -by either allowing employees to jointly determine firm activities with employers or assigning employees the sole authority to determine these activities -affects contributions to firm value. I investigate this issue in an informal reward setting where employers cannot commit to how employees will be rewarded. Experimental results demonstrate that employees who jointly determined firm activities with employers evaluated the decision-making environment to be fairer than did employees with either no role or sole authority to choose firm activities. This led employees with a joint role to derive more enjoyment from their work environment, which ultimately led them to contribute a greater amount to firm value. Despite the higher contributions, employees with a joint role neither expected nor received a greater informal reward from employers. My findings contribute to literature suggesting that the incorporation of nonpecuniary factors such as employees' preferences for a fair decision-making environment into organizational architecture designs can increase the efficiency of employment relationships.

Original languageEnglish (US)
Pages (from-to)1183-1209
Number of pages27
JournalContemporary Accounting Research
Volume25
Issue number4
DOIs
StatePublished - Jan 1 2008
Externally publishedYes

Keywords

  • Employee decision making
  • Informal rewards
  • Organizational architecture design
  • Procedural fairness

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics

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