The Economic Effects of Direct and Indirect Employee Involvement: Evidence From Corporate Social Responsibility Reports of Chinese Listed Companies.

Yongzhong Jiang,Yutao Zhu,Xixi He,Xinzhi Gao,Guosong Wu

doi:10.3389/fpsyg.2021.762608

Abstract

Employee direct involvement and indirect involvement have been identified as essential forms of an enterprise’s democratic management in the digital economy. Research on the complementary effects of direct and indirect involvement is still in a blank state in China, which limits the external validity and accumulation of employee participation theory. The present study aimed to investigate the complementary effects of employee direct involvement and indirect involvement on the firm’s financial performance. Although previous research suggests that the influence of employee direct or indirect involvement on corporate financial performance has been examined separately, it is unclear whether the association between employee direct involvement and indirect involvement is complementary or conflictual. Based on strategic human resource management theory, we semantically encode 2,680 corporate social responsibility reports and the annual reports of 268 state-owned listed enterprises published from 2014 to 2018 via content analysis method, and the economic effects of employee direct involvement and indirect involvement were concurrently measured. We use configuration theory to explore the complementary effects between employee direct involvement and indirect involvement. Our results reveal that (1) employee involvement in Chinese enterprises was unbalanced, (2) both employee direct involvement and indirect involvement were positively related to enterprise’s financial performance, and (3) there is a complementary effect between the two forms of employee involvement. Theoretical and practical implications of these findings are discussed.

Highlights

From 2000 to 2019, the number of labor dispute cases accepted and parties to such cases showed an upward trend: The number of labor dispute cases accepted reached 1,069,638 in 2019, for an increase of 691% over 2000 (National Bureau of Statistics in China, 2020)
In the process of performing content analysis on the listed companies’ corporate social responsibility reports, we found that listed companies have traditional employee direct involvement (DI) methods – such as factory affairs disclosure systems, suggestion boxes, rationalization proposal, quality circles, employee symposia, and corporate intranet communication platforms – and use innovative forms of employee DI, such as work- and life-quality plans, independent management teams, high-level exchange meetings, general manager reception days, employee satisfaction surveys, and new media communication platforms, such as WeChat and Weibo
Our study aimed to resolve these deficiencies by employing a content analysis method and the semantic encoding of corporate social responsibility reports and the annual reports analyzing the economic effects of employee direct involvement and indirect involvement concurrently

Summary

Introduction

From 2000 to 2019, the number of labor dispute cases accepted and parties to such cases showed an upward trend: The number of labor dispute cases accepted reached 1,069,638 in 2019, for an increase of 691% over 2000 (National Bureau of Statistics in China, 2020). China’s problems with labor relations are serious. Employee involvement has Economic Effects of Employee Involvement great practical significance for the creation of a harmonious society. With the development of a new generation of network information technology – cloud computing, big data, artificial intelligence, and blockchain – the digital economy is expanding at unprecedented speed, and it has led to major changes in technical characteristics and behavior on both the demand and supply side (Sutherland and Jarrahi, 2018). Corporate employees want to have more opportunities to express their views and be more involved in the democratic management of their enterprise (Breeze and Wiepking, 2020). Employee involvement is conducive to communication between employees and the company and facilitates harmonious labor relations (Zhu et al, 2015). It is crucial that we examine employee involvement in the digital economy

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Conclusion