Sharing Decision-Making and Group Incentives: The Impact on Performance

Abstract

This article looks at the impact on establishment performance of using employee involvement and group incentives independently and in combination. These empirical questions are evaluated using establishment-level UK data from the Corporate Performance Project sponsored by the Centre for Economic Performance at the London School of Economics. The findings indicate an insignificant effect when task control is transferred in isolation, and a (mostly) insignificant effect when residual return rights are used alone. However, the findings indicate a positive and significant effect on performance when control and return rights are shared together.