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The purpose of this paper is to move beyond the usual analysis of the effects of worker representation. Instead of estimating the impact of the mere presence of works…
The purpose of this paper is to move beyond the usual analysis of the effects of worker representation. Instead of estimating the impact of the mere presence of works councils on business achievements, the focus is on the performance effects of managerial attitudes vis-à-vis worker representation. More precisely, the authors study whether managerial willingness to cooperate with employee representatives and giving them a (timely) say in company policies translates into better company performance.
After an introduction of the typical Belgian workplace representation, the authors briefly discuss the relevant literature and the sample, leading to several hypotheses. The data are from a survey in Belgium complemented with annual report information. Hypotheses are tested with hierarchical OLS regression. Special attention is given to moderating and mediating effects.
The authors find that especially the timing of involving worker representatives in company decision making has a significant impact on labor productivity. More broadly, the authors reveal that these managerial attitudes matter more in larger establishments.
Although nationwide, representative, and statistically valid, the data set is quite small (142 usable observations), which obstructs the application of refined estimation techniques.
Practical advice should be conditional on country context and size class. In Belgium, smaller enterprises can boost their performance by involving the works council rather late in the process. Probably, this has to do with the powerful position of Belgian unions in works councils. The managerial implications for larger Belgian establishments are very different, however. In these cases, earlier involvement of the works council is advised, as this will enhance the establishment’s performance.
Belgian works councils reflect a specific employee representation system that is rarely studied. More broadly, attitudinal effects are under-researched. The data set is unique, combining subjective with objective data, so reducing the risk of respondents’ bias.
The purpose of this paper is to examine whether works councils (WCs) in Belgium have a positive effect on firm performance, notably productivity and profitability, while…
The purpose of this paper is to examine whether works councils (WCs) in Belgium have a positive effect on firm performance, notably productivity and profitability, while taking the role of trade unions into account.
The authors first introduce the typical Belgian industrial relations system, discussing the similarities and differences with neighboring countries. This is followed by a brief overview of the relevant literature. Subsequently, the impact of Belgian employee representation on firm performance is estimated by means of OLS, using a newly developed questionnaire administered among Belgian CEOs. Special attention is given to moderating and mediating effects.
The authors find that Belgian WCs have a small (direct) significantly positive effect on labor productivity, but not on profitability. The additional results of the mediation test show tentatively that WCs might affect profitability indirectly, through their impact on productivity. Despite trade unions’ dominance in practice, the findings reveal that their impact is insignificant.
Although nationwide, rich and representative, as well as statistically valid, the data set is rather small (196 usable observations). The data set offers ample opportunities to further explore what makes effective Belgian WCs different from their non-effective counterparts.
The data set is unique, and combines subjective CEO with objective performance data. The data offer the opportunity to do a first study into the special case of Belgium, which has a distinct union-dominated IR regime. In this study, the focus is furthermore on the rarely studied WC-trade union interaction. In addition, subtle moderation and mediation effects are estimated.