How and Why Participatory Management Improves a Company's Social Performance

Abstract

Many of the humanistic values that CSR3 theorists would like to see embedded in business organizations are the foundation of participatory management theory. Does the institutionalization of democratic processes and values-in the form of nonmanagement employees voicing their opinions on production issues and electing representatives to key decision-making teams-improve a company's social performance? This research question is examined based on the documentation of changes in stakeholder policies and outcomes at four companies operating under a Scanlon-type gainsharing system for 4 to 6 years. Gainsharing's collaborative problem-solving mechanisms benefited owners in terms of cost savings, customers in terms of improved product quality and service, suppliers in terms of product feedback, and production employees in terms of improved health and safety conditions, as well as a variety of other favorable changes in policies and outcomes.