The Effect of Collective Decision-Making on Productivity: A Structural Equation Modeling

Abstract

The purpose of this study is to examine the relationship between common rationality (as a factor of convergence of employees and managers), collective decision-making (as one of the important methods of participation), and productivity (as an important indicator of organizational success). Structural equation modeling (SEM) is used to investigate the strength of these relationships. After the distribution of 98 questionnaires among organizational experts we used Smart PLS 2.0 to analyze the data. The results show that the indirect relationship between common rationality and productivity through a mediating variable of collective decision-making is stronger than the direct effect of common rationality on productivity. It means that common rationality as a substantial asset for an organization could be used to improve productivity but if managers want to utilize this asset, they should apply it through another mediator which is collective decision-making. Collective decision-making could facilitate the relationship between common rationality and productivity by creating synergy among employees, reducing biases, increasing decision quality, and reaching the optimal decision.