The Effects of Expanding Employee Decision Making on Contributions to Firm Value in an Informal Reward Environment

46 Pages Posted: 2 Jan 2007 Last revised: 18 May 2009

See all articles by Michael G. Williamson

Michael G. Williamson

University of Illinois at Urbana-Champaign - Department of Accountancy

Abstract

I use an experiment to examine whether expanding employee decision making - by either allowing employees to jointly determine firm activities with employers or assigning employees the sole authority to determine these activities - affects contributions to firm value. I investigate this issue in an informal reward setting where employers cannot commit to how employees will be rewarded. Experimental results demonstrate that employees jointly determining firm activities with employers evaluated the decision-making environment to be fairer than employees with either no role or sole authority to choose firm activities which led them to derive more enjoyment from their work environment which ultimately led them to contribute a greater amount to firm value. Despite the higher contributions, employees with a joint role neither expected nor received a greater informal reward from employers. My findings contribute to literature suggesting that the incorporation of non-pecuniary factors such as employees' preferences for a fair decision-making environment into organizational architecture designs can increase the efficiency of employment relationships.

Keywords: organizational architecture design, employee decision making, informal rewards, procedural fairness

Suggested Citation

Williamson, Michael G., The Effects of Expanding Employee Decision Making on Contributions to Firm Value in an Informal Reward Environment. Contemporary Accounting Research, Forthcoming, Available at SSRN: https://ssrn.com/abstract=954349 or http://dx.doi.org/10.2139/ssrn.954349

Michael G. Williamson (Contact Author)

University of Illinois at Urbana-Champaign - Department of Accountancy ( email )

1206 South Sixth Street
Champaign, IL 61820
United States

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