Impact of Codetermination on Firm Productivity and Profitability
By: Neal Jujian Tan
Advising Faculty: Candace Howes
The aim of this paper is to investigate the impact of supervisory board level codetermination on firm productivity and profitability. This paper explains the institutional framework surrounding codetermination, and highlights the theoretical foundations of the arguments surrounding employee representation. In our empirical analysis, we use a panel data to run productivity and profitability analysis on codetermined and non-codetermined firms within the manufacturing sector. We find positive productivity effects of both one-third and near parity supervisory board codetermination. However, there are no significant profitability differences between codetermined and non-codetermined firms. The final section highlights how works councils codetermination can be used as a potential mechanism to resolve the fast-food standoff in the United States, as it facilitates constructive cooperation between workers and employers.
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Related Fields: Economics