Cognitive and affective approaches to employee participation: Integration of the two approaches

Journal of World Business 47 (2012) 450–458

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Cognitive and affective approaches to employee participation: Integration of the two approaches Rhokeun Park * Kwangwoon University, School of Business, 527 Nurikwan, 26 Kwangwoon-gil, Nowon-Gu, Seoul 139-701, Republic of Korea

A R T I C L E I N F O

A B S T R A C T

Keywords: Cognitive approach Affective approach Employee participation Information sharing Organizational commitment Performance

Numerous studies have examined cognitive and affective approaches to decision-making participation, but no study has attempted to integrate the two approaches. This is the first empirical study to apply the two approaches to financial participation. To integrate the two approaches, this study investigated the applicability of the two approaches to decision-making and financial participation as well as the relationship between two essential variables in each approach: information sharing and organizational commitment. The proposed hypotheses were tested by structural equation models using the Workplace Employment Relations Survey, which was conducted in Great Britain. The findings revealed that selfmanaging teams and group incentives were positively related to information sharing, which in turn were positively associated with organizational commitment and perceived company performance. Crosscultural implications are discussed. ß 2011 Elsevier Inc. All rights reserved.

1. Introduction In the past few decades, interest in employee participation has increased as companies have attempted to gain a competitive advantage, in part due to growing international competition and pressure to increase performance (Kirkman & Shapiro, 1997; Kuipers & Stoker, 2009; Lawler, Mohrman, & Ledford, 1992; Levine & Tyson, 1990; McNabb & Whitfield, 1999; Riordan, Vandenberg, & Richardson, 2005). There has also been increased research on the effects of employee participation on company performance. Although decision-making and financial-participation plans have been adopted to increase competitiveness, the empirical evidence on the effectiveness of these plans is mixed. Therefore, further examination is needed to know whether these plans can really improve the competitiveness of companies and, if they can, how they can affect company performance. A great deal of the research on employee participation in decision making (or employee involvement) has focused on individual or company-wide outcomes such as job performance, productivity, quality, and financial performance. Reviews and meta-analyses have concluded that participation in decision making does not always have significant effects on performance, but certain types of participation have positive effects. In their meta-analysis, Wagner and Gooding (1987) found little evidence that participation in decision making had a meaningful relation-

* Corresponding author. Tel.: +82 02 940 5639. E-mail address: [email protected]. 1090-9516/$ – see front matter ß 2011 Elsevier Inc. All rights reserved. doi:10.1016/j.jwb.2011.05.011

ship with performance. In their literature review, Levine and Tyson (1990) concluded that while substantive participation, such as self-managing teams, was usually related to improved productivity, consultative participation such as quality circles did not seem to achieve significant improvements in productivity. In a more positive finding, Wagner’s research (1994) showed that decisionmaking participation had a significant effect on productivity, although the size of this effect was small. The existing studies on financial participation have reported mixed results in regard to performance. Kaufman (1992) found that gain sharing led to significant increases in productivity: 8% in the first year and 17.5% in the third year. On the other hand, Weitzman and Kruse (1990) reported that although no study on profit sharing had reported significantly negative effects on productivity, 94% of the regression analyses they reviewed had positive coefficients and 60% of those coefficients were significant. This means that 45% of the analyses did not obtain significant results. Kruse (1993) pointed out that prior studies provided little information on the causality and mechanisms between profit sharing and productivity improvement. In this study, employee participation includes both decisionmaking participation and financial participation. Decision-making participation includes plans in which employees are able to provide input into decisions on how the work is done (e.g., self-managing teams). Financial participation covers group-incentive plans (e.g., profit sharing and gain sharing), in which employees’ compensation is tied to workplace performance (Peterson & Luthans, 2006). Although a plethora of studies have examined the effects of employee-participation plans on company-level performance, the

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mechanisms explaining these effects have rarely been studied. In particular, few empirical studies have analyzed the mechanisms through which financial participation affects company performance (Long, 2000). The research on the pathways through which decision-making participation affects performance has centered on affective and cognitive approaches (see Miller & Monge, 1986; Wagner, Leana, Locke, & Schweiger, 1997 for meta-analytic reviews). The affective approach focuses on how affective factors, such as morale, commitment, and satisfaction, mediate the relationship between employee participation and performance (Kim, 2005). On the other hand, the cognitive approach stresses the importance of information sharing and utilization of employees’ knowledge as mechanisms between employee participation and performance (Kim, 2005). The two approaches, however, may not be mutually exclusive. For example, employees in participation plans may become more committed to the company when they are provided with more information related to management because sharing information with them signals that the company is committed to its employees. Despite this possibility, there has been no attempt to integrate the two approaches. Thus, this study attempts to integrate the two approaches while investigating the mechanisms through which decision-making and financial-participation plans affect company performance. Therefore, the findings of this paper provide new insights into whether the affective and cognitive approaches can be integrated and how decision-making and financial participation influences company performance.

something back to the organization in order to balance the exchange relationship (Shore & Barksdale, 1998). While social-exchange relationships are based on trust between parties and do not require an immediate return according to Blau (1964), economic-exchange relationships are based on tangible and contractual relations and warrant clear reciprocation. Decision-making participation may promote social-exchange relationships between the organization and its employees, and financial participation may strengthen economic-exchange relationships. An employee’s perceived obligation to reciprocate for organizational support will be manifested by commitment to the organization’s goals. Employees committed to the organization will be motivated to make extra effort, which in turn will likely improve organizational performance. Although organizational performance may not be a simple sum of individual performance (Ostroff, 1992), aggregate employee attitudes are strongly related to performance at the organizational level (Fulmer, Gerhart, & Scott, 2003; Koys, 2001). Some studies have confirmed different aspects of the affective approach. For example, Bakan, Suseno, Pinnington, and Money (2004) found that participation in decision making enhanced the organizational commitment of participants. Florkowski (1987) proposed a model in which organizational commitment mediated profit sharing and company performance. Appelbaum, Baily, Berg, and Kalleberg (2000) presented evidence that pay-for-performance plans significantly increased organizational commitment. These findings, coupled with the literature discussed above, led to the following two hypotheses:

2. Theory and hypotheses

Hypothesis 1a. Decision-making participation will be positively related to employees’ organizational commitment, which in turn will be positively associated with organizational performance.

2.1. Affective approach Affective factors, such as job satisfaction and organizational commitment, play an important role as mediators of the relationship between employee participation and performance. From participation plans, employees can acquire work rewards, which may be classified as intrinsic or extrinsic (Kinicki & Kreitner, 2008; Nalbantian, 1987). While intrinsic rewards include psychological benefits such as a sense of achievement and satisfaction, extrinsic rewards include financial and material rewards such as high earnings and generous benefits (Kinicki & Kreitner, 2008). These rewards will motivate employees to work efficiently and hold more positive attitudes toward the company and encourage them to strive for the company’s success. Exchange theory predicts that employees make contributions to the organization in exchange for rewards that they receive from the organization or management (Chang, 2006; Park, Appelbaum, & Kruse, 2010; Scholl, 1981; Wayne, Shore, & Liden, 1997). By participating in making decisions on how the work is done, employees obtain a sense of achievement, self-expression, and satisfaction. Employees may perceive these intrinsic rewards as organizational support, which in turn may make them feel an obligation to reciprocate the company’s generosity by supporting its organizational goals (Rhoades & Eisenberger, 2002; Rhoades, Eisenberger, & Armeli, 2001). Allen, Shore, and Grifeth (2003) argued that allowing participation in decision making signals that the employees’ contributions are valued and employee participation is a precursor of perceived organizational support (POS), which in turn leads to employees’ commitment to the organization. Financial participation provides employees with a chance to increase their earnings according to the contributions they make. Favorable opportunities for rewards such as group incentives lead to higher POS (Eisenberger, Armeli, Rexwinkel, Lynch, & Roades, 2001; Rhoades & Eisenberger, 2002; Rhoades et al., 2001). Such monetary rewards and POS make employees feel obliged to give

Hypothesis 1b. Financial participation will be positively related to employees’ organizational commitment, which in turn will be positively associated with organizational performance. 2.2. Cognitive approach In the 1970s, a group of scholars (e.g., Anthony, 1978; Locke & Schweiger, 1979; Miles & Ritchie, 1971) stepped into the debate by arguing for the importance of information sharing as a mediator between decision-making participation and performance. The cognitive approach argues that employees know more about their jobs and thus can make better-quality decisions than their supervisors (Wagner et al., 1997). Especially in complex organizations, employees may have more knowledge about how to do their jobs than managers. Under this condition, decisions by employees may be more efficient than those by managers (Levine & Tyson, 1990). Because it is employees who produce products and services, organizations can improve productivity to a greater extent when employees have greater access to information and knowledge related to management. Without information, employees will have difficulty acting responsibly (Randolph, 1995). In particular, employees with a strong need for cognition make greater contributions to job performance than those with a low need for cognition because they are motivated to logically analyze information and to solve problems (Sojka & Detter-Schmelz, 2008). Scully, Kirkpatrick, and Locke (1995) concluded in their experimental study that participation in decision making is beneficial because subordinates obtain useful information from decisionmaking situations. Expectancy theory predicts that employees are much more motivated when they perceive a strong relationship between goal accomplishment and promised outcomes, such as monetary rewards and promotion (Florkowski, 1987; Kinicki & Kreitner,

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2008; Vroom, 1964). Decision-making participation may provide employees with information about which behaviors will be rewarded and which behaviors will not. Therefore, after adopting decision-making participation plans, a company should provide employees with information related to the operation of the company to assist them in making appropriate decisions. Likewise, a company should provide employees with more information after adopting financial-participation plans to help them recognize whether their behavior is in accordance with the goals of the company and whether they can expect to receive monetary rewards when those goals are reached. Hammer (1988) argued that financial-participation plans create pressure on management to share management-level information with employees. Employees who are motivated by having more information and knowledge are able to make greater contributions to organizational goals through efficient and hard work, which in turn improves organizational performance. These lines of research contributed to the following two hypotheses: Hypothesis 2a. Decision-making participation will be positively related to information sharing, which in turn will be positively associated with organizational performance. Hypothesis 2b. Financial participation will be positively related to information sharing, which in turn will be positively associated with organizational performance. 2.3. Integration of the two approaches A few studies have compared the effects of cognitive and affective factors of employee participation on outcomes, although they were limited to decision-making participation. Specifically, these studies examined which approach more effectively explained the relationship between decision-making participation and company performance. Latham, Winters, and Locke (1994) indicated in their experimental study that the cognitive benefits of decision-making participation were greater than the affective benefits. Likewise, Wagner et al. (1997) found in their metaanalysis that a cognitive framework, compared to an affective framework, tended to produce significantly greater satisfaction and higher performance. They recommended moving away from an affective approach toward a cognitive approach. On the contrary, Miller and Monge (1986) asserted in their meta-analysis that affective models received stronger support than cognitive models because decision-making participation had greater effects on satisfaction (which they considered to be more related to affective models) than on productivity (which they considered to be more related to cognitive models). The two approaches, however, do not have to be mutually exclusive and can be integrated into one model. For example, if the organization provides them with information about the changes in the way that the organization operates, employees will perceive this information sharing as a signal that the organization respects them and values their contribution to its performance. As exchange theory posits, employees will feel an obligation to reciprocate the organization’s support with their own commitment. Consequently, the extent to which employees are provided with information is likely to be associated with the level of their organizational commitment. Hammer (1988) proposed that providing employees with management information enhances commitment to the company. Cooke (1994) and Mitchell, Lewin, and Lawler (1990) asserted that group-incentive plans can indirectly improve organizational commitment by increasing communication about company performance. An integrated model was posited by Hanlon and

Taylor (1991), in which organizational communication through a gain-sharing plan enhances an employee’s cognition and attitude, which in turn improve performance. Unfortunately, this model only examined gain sharing’s effects on organizational communication. In sum, information sharing is likely to encourage employees to be more committed to the organization. Despite a variety of theoretical arguments, the relationship between information sharing and organizational commitment has yet to be empirically investigated with attention to the mechanisms through which employee participation affects company performance. Based on the discussion above, the final hypothesis is specified as follows: Hypothesis 3. Information sharing will be positively related to organizational commitment. Fig. 1 consists of three alternative models: a traditional model, a unified model, and a saturated model. The traditional model was adapted by combining the affective and cognitive approaches from Hypotheses 1a and 1b and Hypotheses 2a and 2b, respectively. The unified model was established by adding a link between information sharing and organizational commitment (i.e., Hypothesis 3) to the traditional model. In the saturated model, which is another competing model, a direct link between employee participation and performance was added to the unified model. The purpose of this saturated model is to examine whether employee participation directly affects performance through mechanisms other than an affective or cognitive approach. Employee participation includes both decision-making participation and financial participation, and each practice is tested separately.

3. Methods 3.1. Data To investigate the hypotheses of this paper, I used the 2004 Workplace Employment Relations Survey (WERS), which was conducted in 2004 and 2005. The survey covered a broad range of employment practices across almost all industries in Great Britain. The 2004 WERS data were collected from managers responsible for employment relations or personnel matters, from employee representatives, and from employees in private- and public-sector companies with five or more employees (Department of Trade and Industry, 2005). This paper uses the data from managers and employees. A total of 2295 managers and 22,451 employees participated in the survey. Managers were interviewed in person, and then employees were provided with a self-completion survey. Up to 25 employee participants were randomly selected in each workplace. The employee survey was collected from only 1965 workplaces, or 85.6% of the workplaces in which managers were interviewed. The managers of the remaining workplaces did not agree to the employee survey, and were deleted from the sample. The number of employees surveyed in each workplace ranged from 1 to 25. Workplaces in which only one employee was involved in the survey accounted for 0.19% of the workplaces in the sample (the least frequent mode), and workplaces in which 20 employees were involved accounted for 7.22% of the sample (the most frequent mode). The former was excluded from the analyses because this paper analyzes the aggregation of perceptions of employees in each workplace. The response rate was 64% for the manager interviews and 60.7% for the employee survey (Department of Trade and Industry, 2005). Forty-seven percent of the respondents were male, and the majority of participants (94%) were White. Their average age was

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(a) Traditional model Information

Employee participation

Performance

Commitment

(b) Unified model Information

Employee participation

Performance

Commitment

(c) Saturated model Information

Employee participation

Performance

Commitment Fig. 1. Conceptual models.

approximately 45 years and they earned about £17,000 per year. The average establishment employed 414 people. Because the variables used in this paper are based on multiple sources, self-report and common-method biases could be minimized (Donaldson & Grant-Vallone, 2002). Whereas most previous national studies have had difficulty in simultaneously analyzing individual-level variables (e.g., employee attitudes) and organization-level variables (e.g., organizational performance) because of analytical-level issues, the multilevel structure of the WERS dataset made it easy to combine these variables. 3.2. Measures 3.2.1. Independent variables Self-managing teams were chosen as a proxy for decisionmaking participation, and group incentives were chosen as a proxy for financial participation. Both variables ranged from 1 (no employees) to 7 (100% employees), reflecting the proportion of nonmanagerial employees covered by each participation plan among total employees. These independent variables were measured through the manager interview. A team was considered to be a self-managing team when ‘‘team members jointly decide how the work is to be done’’ and when ‘‘the teams are given responsibility for specific products or services.’’ This concept is consistent with previous research, which has generally defined a

self-managing team as a team in which members conduct groupbased work and have considerable discretion and responsibility (Batt, 2004; Kirkman & Rosen, 1999). Self-managing teams existed in 39.4% of the study’s workplaces. The independent variable group incentive represents the proportion of employees covered by payment systems based on the performance of a group, workplace, or organization among total employees. The workplaces that provided this payment for only managerial employees were excluded from this measure. Group-incentive plans existed in 33.2% of the study sample. When latent variables have single indicators in a structural equation model (SEM) analysis, the measurement error variance must be specified a priori (Rigdon, 1998). I assigned an item reliability of .80 to the two measures, which is approximately the average reliability of the three other constructs (information sharing, organizational commitment, and performance). 3.2.2. Information sharing This construct was measured in the employee survey. Data on information sharing came from a survey question that asked employees how good they thought managers at their workplace were at keeping employees informed about (a) changes to the way the organization was being run (runway), (b) changes in staffing (staff), (c) changes in the way the respondent did his or her job (jobway), and (d) financial matters, including budgets or profits

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(budget). For reach of the four items, the survey respondents noted the managers’ level of effectiveness, ranging from very poor (coded 1) to very good (coded 5). The Cronbach’s alpha of these four items was .94. These items reflect a downward flow of information (from managers to employees) as a measure of information sharing and do not include upward (from employees to managers) or horizontal (among employees) information sharing. Scully, Kirkpatrick, and Locke (1995) argued that upward and horizontal information flows can be identified with participation itself and that only downward information flows can be defined as information sharing. 3.2.3. Organizational commitment This construct also was measured in the employee survey. Data on organizational commitment came from a survey question that asked respondents to rate their level of agreement with three statements: ‘‘I share many of the values of my organization’’ (value); ‘‘I feel loyal to my organization (loyal)’’; and ‘‘I am proud to tell people who I work for’’ (proud). These three items were measured on 5-point response scales, and the Cronbach’s alpha of these items was .90. The items are related to affective organizational commitment and have often been used in studies employing the Organizational Commitment Scale (e.g., Mowday, Steers, & Porter, 1979). 3.2.4. Performance The dependent variable performance was measured via the manager interview, where the managers were requested to compare their organizations with others in the same industry. This construct consists of financial performance (financial), labor productivity (productivity), and quality of product or service (quality). Financial performance was measured by a variety of criteria that individual organizations target, including profits, value added, sales, costs, and stock price. Studies have provided evidence that subjective measures of firm performance have strong correlations with objective measures (Delaney & Huselid, 1996; Dess & Robinson, 1984; Dess, Lumapkin, & Covin, 1997). Moreover, perceptual performance measures allow us to evaluate the impacts of participation plans in nonprofit organizations, where objectiveperformance measures are often not available (Delaney & Huselid, 1996). These three items were measured on 5-point response scales, and the Cronbach’s alpha of these items was .65. It seems that this relatively low reliability is because the three items reflect somewhat different aspects of organizational performance. 3.3. Analytic strategy Because the two key variables of this study, information sharing and organizational commitment, were measured by employee selfreports, I evaluated the construct validity. I then assessed the justification of aggregation of the two measures by examining the within-group agreement (rwg), intraclass correlation (ICC1), and reliability of the mean (ICC2; Liao & Chuang, 2004). To examine the three models, I employed a structural equation model using LISREL 8.50 (Jo¨reskog & So¨rbom, 1993). While an ordinary-least-square (OLS) regression model assumes no measurement error and no reverse causality, SEM can minimize these problems because measurement errors and feedback effects are incorporated into the model (Baron & Kenny, 1986). SEM can resolve the problem of multicollinearity because multiple items are loaded on the same latent variables and then each latent variable is used as a single factor (Rigdon, 1998).

Table 1 Means and correlations.

1. 2. 3. 4.

Self-managing team Group incentive Information sharing Organizational commitment 5. Performance a b **

S.D.

(1)

(2)

(3)

(4)

3.04 2.44 3.26 3.66

2.60 2.35 .57 .45

.00 .07** .08**

.08** .00

(.94)b .62**

(.90)

3.67

.58

.03

.05

.16**

.19**

(5)

(.65)

n = 1443. Cronbach’s alpha in parentheses. p < .01.

workplace level. Self-managing teams were positively correlated with information sharing and organizational commitment (p < .01), but group incentives were positively correlated only with information sharing (p < .01). Although these correlations were statistically significant, the correlation coefficients were small; therefore, the practical implications of the findings should be considered with caution. 4.1. Validity of measures The dimensionality of the three latent variables (information sharing, organizational commitment, and performance) was conducted by a principal-components factor analysis with varimax rotation. I obtained a three-factor solution in which all the items had high loadings on each corresponding factor (average loading = .84), which explained 77.5% of the variance. I then conducted a confirmatory factor analysis in order to evaluate discriminant validity using LISREL 8.50, testing 1-factor, 2-factor, and 3-factor models of the three constructs. The 3-factor model fit the data best (RMSEA = .05, NFI = .99, CFI = .99, SRMR = .03, GFI = .98, AGFI = .96). Table 2 displays the results of the confirmatory-factor analysis based on the 3-factor model, including the loadings of each factor and the correlations among the factors. There was evidence of convergent validity because all of the indicators had reasonably large loadings on each corresponding factor and significant t-values (Kline, 1998; Segars & Grover, 1993). Schneider, White, and Paul (1998) recommended a cutoff of .50 for factor loadings. There was also evidence of discriminant validity, given the correlations among factors were only moderate (Kline, 1998).

Table 2 Confirmatory factor analysis with LISREL. Measurement variables

Factor loading

Runway Staff Jobway Budget Value Loyal Proud Financial Productivity Quality

.95 .94 .93 .80

Information

Commitment

Performance

(48.7) (47.6) (46.3) (36.2) .85 (39.0) .88 (40.9) .89 (41.7) .63 (19.2) .73 (21.1) .50 (16.1) Factor correlations

4. Results Table 1 presents the means and standard deviations of the variables and the correlations among the variables at the

Meana

Commitment Performance t-values in parentheses.

Information

Commitment

.66 (39.6) .21 (6.7)

– .24 (7.4)

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Table 3a LISREL results (self-managing team). Model

x2

df

x2/df

RMSEA

SRMR

NFI

CFI

GFI

AGFI

Traditional model Unified model Saturated model

692.84 179.01 178.35

41 40 39

16.900 4.475 4.573

.105 .049 .050

.227 .026 .026

.918 .984 .984

.921 .987 .987

.920 .978 .978

.871 .964 .963

Table 3b LISREL results (group incentive). Model

x2

df

x2/df

RMSEA

SRMR

NFI

CFI

GFI

AGFI

Traditional model Unified model Saturated model

759.75 240.36 238.56

41 40 39

18.530 6.009 6.117

.110 .059 .059

.229 .030 .030

.912 .978 .979

.916 .982 .982

.913 .971 .971

.860 .952 .951

recommended by Schneider et al. (1998) as a cutoff. Thus, the aggregation of these variables was justified.

4.2. Aggregation of individual-level variables The measurement variables of the two individual-level constructs (information sharing and organizational commitment) were aggregated within each workplace so that they would capture a workplace-wide climate. Although the level of measurement of these variables was the individual, the statistical analysis was conducted at the organizational level because the individuals’ answers were aggregated in each workplace by taking the mean of these variables (Klein, Dansereau, & Hall, 1994). Prior to using the means, however, the validity of aggregating individual perceptions had to be investigated by checking the reliabilities of responses among employees in the same workplaces (Hofmann & Stetzer, 1998; Patterson, Payne, & West, 1996). The viability of the workplace-level constructs was examined by within-group agreement, the intraclass correlation, and the reliability of the mean. Median rwg values of .84 for information sharing and .88 for organizational commitment were calculated. These median rwg values were greater than .60, the cutoff value recommended by James (1982). Intraclass correlations (ICC1) were similar to or larger than .12, which is the median value that James (1982) found in his review of the literature. Reliability of the mean (ICC2) values was also similar to or larger than .60, which was

4.3. Model evaluations Using the structural equation model, three models were tested in order to examine the applicability of the cognitive and affective approaches to self-managing teams and then to group incentives. Table 3a presents goodness-of-fit indices for alternative models and the hypothesized model (unified model) regarding selfmanaging teams, and Table 3b presents the indices for group incentives. Browne and Cudeck (1989) suggested that an RMSEA value of less than .05 signifies a close fit, and a value of .05 to .08 indicates a reasonable fit. According to Mueller (1996), NFI and CFI values above .90 are considered to represent a good overall fit. Pedhazur (1997) pointed out that a small standardized RMR (SRMR) indicates a good fit. Finally, values greater than .90 for GFI and .80 for AGFI signify a satisfactory fit (Pedhazur, 1997). In Table 3a, the traditional model, in which the cognitive and affective approaches were considered separately, did not provide a good fit (e.g., x2/df = 16.900; RMSEA = .105; SRMR = .227). On the other hand, the unified model, in which the two approaches were

Information .026*

Self-managing team

.100*

Performance

.661** .169**

Commitment

Information .026*

Group incentive

.098*

Performance

.664** .172**

Commitment a b

The solid lines represent significant paths, and the dotted lines represent insignificant paths. * p < .05, ** p < .01 Fig. 2. Revised unified structural models.

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considered together, provided a substantially better fit than the traditional model. The comparison of chi-square values in the two models confirmed that the unified model fit the data better than the traditional model (Dx2ð1Þ ¼ 513:83; p < .001). The unified model provided a very good fit in all the goodness-of-fit indices. The saturated model also provided a better fit than the traditional model and had goodness-of-fit indices similar to those of the unified model. The comparison of chi-square values between the unified and the saturated models, however, was not significant (Dx2ð1Þ ¼ :66; p > .05) and thus favored the more restricted, unified model (Rigdon, 1998). Table 3b tested the three models in order to investigate the applicability of the two approaches to group incentives. The traditional model did not provide a good fit (e.g., x2/df = 18.530; RMSEA = .110; SRMR = .229). On the other hand, the unified model provided a substantially better fit than the traditional model. The comparison of chi-square values in the two models confirmed that the unified model fit the data better than the traditional model (Dx2ð1Þ ¼ 519:39; p < .001). The unified model indicated a very good fit in all of the goodness-of-fit indices except for x2/df (6.009) and RMSEA (.059), which still may be considered reasonable fits (Pedhazur, 1997). The saturated model also provided a better fit than the traditional model and had goodness-of-fit indices similar to those of the unified model. The comparison of chi-square values between the unified and the saturated models was not significant (Dx2ð1Þ ¼ 1:80; p > .05) and thus favored the more restricted, unified model (Rigdon, 1998). These results persisted when each measurement variable of performance (financial performance, productivity, and quality) was run individually in the models as a dependent variable. In sum, the unified models are favored over the traditional model and the saturated model both for selfmanaging teams and group incentives. Fig. 2 presents the revised unified models for the two participation plans, respectively. In the figure, self-managing teams were indirectly associated with organizational commitment through information sharing. This path provides partial support for Hypothesis 1a. Group incentives also had a significant association with organizational commitment, but only through information sharing. This provides indirect support for Hypothesis 1b. Self-managing teams were significantly associated with more information sharing, which in turn was positively related to organizational performance; this supports Hypothesis 2a. Group incentives were also associated with more information sharing, which in turn was positively related to organizational performance; this supports Hypothesis 2b. Finally, information sharing was strongly associated with organizational commitment, which supports Hypothesis 3. 5. Discussion and conclusions Contrary to the debate over cognitive and affective approaches in the literature, this paper shows that the two approaches can be unified by linking information sharing to organizational commitment. This study also provides evidence that sharing management information with employees through self-managing teams or group incentives leads to organizational commitment, an important finding given the lack of attention to this relationship in most previous studies. This study also sheds light on the mechanisms through which self-managing teams and group incentives affect company performance. 5.1. Managerial relevance The findings in this study have at least four important implications. First, the results suggest that a company should share information related to the company’s operations with employees when it adopts employee-participation plans to

improve employees’ organizational commitment and company performance. Formally adopting such plans without information sharing may not improve those important outcomes. If employees do not have the necessary information to make decisions, they will be frustrated and demotivated (Riordan et al., 2005). Second, when a company introduces employee-participation plans, the plans should be broad-based in order to make real gains. When measuring both participation plans by the proportion of employees covered by each plan (rather than whether a workplace had each plan in place), the plans had stronger relationships with information sharing, organizational commitment, and performance. In addition, when introducing participation plans, management should provide employees with considerable discretion for decision-making and reasonable financial incentives. For example, Kirkman and Rosen (1999) found that more empowered teams accomplished higher levels of performance than less empowered teams. Third, a vertical-fit proposition (Delery & Doty, 1996) argues that an organization’s HR practices are more effective when these practices are coincident with the organizational context. Erez and Earley (1993) asserted that when HR practices are congruent with cultural values, they would be more effective in improving employee attitudes and behavior than when they are incongruent. One might expect collectivistic HR practices, such as self-managing teams and group incentives, to work better in nations with generally more collectivistic cultures, such as Asian countries, than in nations in which individualistic cultures are prominent, such as the UK and U.S. This study, however, provides evidence that these collectivistic HR practices work well even in a relatively individualistic nation, the UK. More research still needs to examine whether cultural differences moderate the relationship between these collectivistic HR practices and organizational outcomes. Finally, although there is no evidence that employee participation practices have experienced significant changes in the years since this study’s data were collected, further research is needed to investigate the impacts of the current global financial crisis on these practices. Given that employee-participation plans have been adopted over the past decades to gain a competitive advantage amid growing international competition and highperformance pressures (Lawler et al., 1992; McNabb & Whitfield, 1999; Riordan et al., 2005), organizations should adopt these plans more extensively to cope with the current financial crisis and intensified international competition. 5.2. Limitations Despite the importance of the present findings, this paper has some limitations, which should be addressed in future research. First, because this paper is based on a cross-sectional dataset, it cannot confirm the causes and effects of the studied relationships. In particular, the significant paths from information sharing to organizational commitment in the self-managing-team and groupincentive models do not mean that organizational commitment can be improved only after information is shared and do not refute the possibility of the reverse path from organizational commitment to information sharing. As employees demonstrate more commitment toward the company’s success, managers may provide employees with greater access to information. The path from information sharing to organizational commitment means that information sharing should be presupposed to encourage greater organizational commitment. Second, the performance variables were based on self-reports. Although objective performance measures may be more desirable, research has suggested that there are high correlations between objective and perceptual measures of performance (Dess & Robinson, 1984; Perry-Smith & Blum, 2000). Moreover, perceptual

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performance measures allow us to assess the effects of participation plans in nonprofit organizations, where objective performance measures are often unavailable (Delaney & Huselid, 1996). Third, while multiple employees in each workplace responded to the measures of information sharing and organizational commitment, the measures of participation plans and performance were based on a single manager’s report in each workplace. When reliabilities of .70 instead of .80 were applied to all of the participation plans, however, there were few changes in the results, and the item reliability of the performance variables was not prohibitively low. Fourth, this paper included only a downward flow of information in the information-sharing construct, with upward and horizontal information sharing excluded. As Scully et al. (1995) argued, upward and horizontal information sharing may be identified with participation itself. Future research needs to examine whether the three types of information sharing are enacted at the same time or separately. Finally, because information sharing and organizational commitment were measured via employee self-reports, the correlations between the two variables may have been overestimated. However, because there is evidence of convergent and discriminant validity between the two constructs, self-report bias does not seem to be a serious problem for the results presented here. Apart from information sharing and organizational commitment, other variables may be explored as mediators in future studies. Employee-participation plans may help a company accumulate human capital because employees have greater loyalty through those plans, which provides employees with a motive to stay longer in the company, to take more training, and to develop job skills. For example, Azfar and Danninger (2001) found that profit sharing reduced employee turnover and increased the frequency and duration of company training. In fact, the frequency of training in the present study sample (2004 WERS) was significantly related to information sharing and organizational commitment (results not shown but available upon request). More moderators in the relationships between employee participation and outcome variables need to be investigated as well. As indicated above, many previous studies have reported few effects or small effect sizes of employee-participation plans. Additionally, the fact that all companies do not adopt those plans implies that the effects may depend on the context in which a company is placed. For example, the organizational climate may be an important moderator in the relationship between employee participation and organizational commitment. The effects of employee participation on organizational commitment could be stronger in companies that have better relationships between employees and managers. These and other potential mediators and moderators should be investigated in future research. Acknowledgements I would like to thank Wayne Cascio and two anonymous reviewers for their helpful comments. I also wish to thank several people who commented on earlier drafts of the manuscript: Doug Kruse, Eileen Appelbaum, Joseph Blasi, and Derek Jones. The present research has been conducted by the Research Grant of Kwangwoon University in 2011. References Allen, D. G., Shore, L. M., & Grifeth, R. W. (2003). The role of perceived organizational support and supportive human resource practices in the turnover process. Journal of Management, 29(1): 99–118. Anthony, W. P. (1978). Participative management. Massachusetts: Addison-Wesley. Appelbaum, E., Baily, T., Berg, P., & Kalleberg, A. L. (2000). Manufacturing advantage: Why high performance work systems pay off. Ithaca, NY: Cornell University Press.

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