Privately Ordered Participatory Management: An Organizational Failures Analysis

Privately Ordered Participatory Management: An Organizational Failures Analysis

Bainbridge, Stephen M., "Privately Ordered Participatory Management: An Organizational Failures Analysis" (September 1997).

Abstract:

American industrial enterprises long organized their production processes in rigid hierarchies in which production-level employees had little discretion or decision making authority. Recently, however, many firms have adopted participatory management programs purporting to give workers a substantially greater degree of input into corporate decisions. Quality circles, self-directed work teams, and employee representation on the board of directors are probably the best-known examples of this phenomenon.

These forms of workplace organization have garnered considerable attention from labor lawyers and economists, but relatively little from corporate law academics. This is unfortunate, both because the tools routinely used by corporate law academics have considerable application to the problem and because employee participation is ultimately a question of corporate governance.

According to conventional academic wisdom, perceptions of procedural justice are important to corporate efficiency. Employee voice promotes a sense of justice, increasing trust and commitment within the enterprise and thus productivity. Workers having a voice in decisions view their tasks as being part of a collaborative effort, rather than as just a job. In turn, this leads to enhanced job satisfaction, which, along with the more flexible work rules often associated with work teams, results in a greater intensity of effort from the firms workers and thus leads to a more efficient firm.

Although this view of participatory management has become nearly hegemonic, the academic literature nevertheless remains somewhat vague when it comes to explaining just why employee involvement should have these beneficial results. In contrast, my article presents a clear explanation of why some firms find employee involvement enhances productivity and, perhaps even more important, why it fails to do so in some firms. Despite the democratic rhetoric of employee involvement, participatory management in fact has done little to disturb the basic hierarchial structure of large corporations. Instead, it is simply an adaptive response to three significant problems created by the tendency in large firms towards excessive levels of hierarchy. First, large branching hierarchies themselves create informational inefficiencies. Second, informational asymmetries persist even under efficient hierarchial structures. Finally, excessive hierarchy impedes effective monitoring of employees. Participatory management facilitates the flow of information from the production level to senior management by creating a mechanism for by-passing mid-level managers, while also bringing to bear a variety of new pressures designed to deter shirking.

Here are some quotes from our visitors about the value of a MBA ... MBA will help achieve your goals. do you have enough business know-how to embark on an mba now or would you want to wait before stepping in? ... MBA will help stay "ahead of the curve," through advanced educational and training materials regarding business issues. ... MBA will help you achieve your goals, think about what specifically you want to learn and gain in an MBA.

Facts on MBA Today, MBA/DBA designations can be found anywhere and even accessed through on-line, distance learning or e-learning, such as that offered by the Open University Business School of the UK which has students world-wide. Because of the varying standards of MBAs worldwide, many of the elite business schools are accredited by independent bodies, such as the Association of MBAs and the European Foundation for Management Development. MBAs from universities evaluated by United States National Research Council (USNRC) may equip future scholars and professors. Such MBA category is a milestone for both professional and academic career advancement. Refer to faculty directories of such schools and USNRC ratings.

This site is growing and will contain info on subjects like aacsb online mba, mba jobs and mba international business .