Participative Decision Making (PDM)

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This entry is adapted from the peer-reviewed paper 10.3390/su13148016

Participative decision making (PDM) is the opportunity for an employee to provide input into the decision-making process related to work matters (i.e., work organization, task priority) or organizational issues, for example, when they have a say on promoting new strategy ideas. Elele and Fields state that PDM is a management initiative based on the ”theory Y”, which suggests that employees are interested in being committed and performing well if managers value their contributions in making decisions that affect the nature of work. The diverse opportunities to participate in the decision-making process can provide mutual benefits for employees and employers. Some writers have proposed that PDM enhances motivation, organizational commitment, and job satisfaction. The literature frames employee participation in different contexts, depending on the political, social, and legal environment of the countries.

direct employee participation PDM sustainability

1. Participative Decision Making (PDM)

As commented in the introduction, the variable to be explained is the direct participation of the employee, at a general level, as well as distinguishing the scope of the decisions in which employees participate (operational and organizational) based on a range of variables at the micro (employee), meso (organization), and macro (cultural and sustainability indexes) levels. This structure per level could be visualized in Figure 1, which appears at the end of this section. The content of each of these variables is detailed below. Participative decision making (PDM) is the opportunity for an employee to provide input into the decision-making process related to work matters ^[1] (i.e., work organization, task priority) or organizational issues, for example, when they have a say on promoting new strategy ideas. Elele and Fields ^[2] state that PDM is a management initiative based on the ”theory Y”, which suggests that employees are interested in being committed and performing well if managers value their contributions in making decisions that affect the nature of work. The diverse opportunities to participate in the decision-making process can provide mutual benefits for employees and employers. Some writers have proposed that PDM enhances motivation ^[3]^[4], organizational commitment, and job satisfaction ^[5]^[6]. The literature frames employee participation in different contexts, depending on the political, social, and legal environment of the countries ^[7]. That is why other terms coexist with “employee participation” and are used similarly at the heart of PDM. These other terms include employee “voice”, “engagement”, “involvement”, or “empowerment”. Although there are some differences among these concepts ^[8]^[9]^[10], all share a common central point—to describe an environment in which employees can decide and act on what impacts their work and organizational decisions. According to ^[11], PDM is the same thing as employee involvement in decision making.

Figure 1. Research model.

Previous researchers identify a fourfold framework to classify participative practices ^[12] in terms of degree, form, level, and scope. First, the degree indicates whether employees are simply informed, consulted, or involved about news or changes in the business. In other words, the degree is the extent to which employees can influence decisions. Second, the form represents whether participation is promoted by company initiatives or workers’ union representation. In the first scenario, it takes the form of direct employee participation (suggestion schemes, staff surveys, informal or formal meetings, and quality circles are some examples of direct participation) and evolves all the activities driven by managers and organizations to allow employees to have a say in decision making. On the other hand, when trade unions act as intermediaries and give voice to employees through their representation, the form of participation is categorized as indirect ^[13]. Third, previous researchers differentiate whether participation takes place at the individual, group, or department level ^[12]. Fourth, the scope, which is about the subject decision, distinguishes a wide range of issues related to operational concerns, such as how to improve practices on the manufacturing line ^[14] and strategic matters, when they are related to organizational decision-making processes such as mergers or mission and organizational goals ^[15]. Precisely, the scope is the approach used in this article to differentiate kinds of PDM.

Regarding the scope of employee participation, it can be said that it has been transformed with the evolution of industrial relations. At the beginning of the decade of the 1980s, employees could take part in decisions that affected their immediate work. This was called task discretion, which according to the definition of Kalleberg et al. ^[16] is ‘‘to participate in making decisions about their jobs and working conditions”. In this line, many organizations tried to give autonomy to employees to develop their skills and make decisions regarding their tasks, time, and work conditions. This is also known as job autonomy and involves the different ways in which an employee can develop their tasks with freedom. These concepts are related to operational PDM, which occurs when employees have a voice in their immediate job. As Sia et al. ^[17] point out, when an organization provides enough freedom for employees in their task, it positively influences their creativity and performance. Although task discretion currently exists, workplaces suffered a management transformation during the 1990s with the transition to a knowledge-based economy that allows employee views in decision making related to strategic issues, which are those related to business goals. It is precisely this direct consultation that has become the central theme where managers allow employees to influence organizational issues. In the literature, the extent to which employees can decide on organizational or strategic matters is referred to as organizational participation ^[18]^[19].

From the human resources perspective, the current paper focuses on PDM as direct employee participation, which is referred to as an employer-leading tool that allows employees to take part in decision-related operational and organizational matters. This definition is supported by ^[20]^[21], who indicate that employee participation refers to the extent to which employees are allowed or encouraged to share their views and ideas about organizational activities or provide their input in organizational decision making. The present study intends to explore whether there are noticeable differences among all the determinant variables and the scope of the decision.

2. Micro Level: Perceived Supervisor Support

Previous researchers support that consensual and participative decision making are proper in modern companies that need to effectively respond to change ^[22]^[23]. Given that direct employee participation is an employer-driven initiative, managers gain special attention as promoters (or detractors) of employee participation. According to Blau ^[24]^[25], social exchange theory (PDM) states the basis for a social exchange that goes beyond the standard economic contract. Previous studies on decision making have focused on superior–subordinate communication ^[26]^[27]. Analyzing this combination, Torka et al. ^[28] pointed out that a good relationship between managers and employees will increase employee involvement. A recent study developed by Wohlgemuth et al. ^[29] finds that managers can facilitate employee participation through both trust in and informal control of subordinates. Regarding operational decision making, a study by Humphrey and colleagues showed consistent positive relationships between social support and interdependence ^[30]. In line with these approaches, a manager will determine if an employee is only informed of or involved in the decision-making process. Although this positive relationship was studied previously ^[31], the current study explored whether this link occurs in terms of the scope. This leads to the proposition that there exists a positive relationship between PSS and employee participation at all its levels:

Hypothesis 1 (H1).

PSS relates positively to direct employee participation.

Hypothesis 1a (H1a).

PSS relates positively to organizational direct employee participation.

Hypothesis 1b (H1b).

PSS relates positively to operational direct employee participation.

3. Meso Level: Ownership and Size

The decision-making process is different under public or private ownership and depends on the roles that those kinds of organizations play in our society. According to Nutt ^[32], private sector organizations sell products or services to consumers in markets to create wealth for shareholders. In contrast, public organizations are governmental agencies that deliver contracts for services and collect information about the needs of a society ^[33]. The decision-making processes in these types of organizations are different. Specifically, these differences were studied by Nutt, who concluded they were related to political influence, data availability, ownership, and goals. Each of these statements is also supported by more studies in the literature.

In terms of political influence, a study by Shaed et al. ^[34] reveals that the decision making of public organizations gives the power to decide to political forces, placing political concerns above economic issues. In addition, it states that wide levels of decision and bureaucracy exist, which makes it a slower and more time-consuming process. Another distinction between the sectors is related to data collection ^[32]. The private sector has the chance to buy more information from the market, which gives it more autonomy and flexibility in the decision-making process, while access to data is difficult for the public sector. Brown et al. ^[35] support that employee participation and practices implemented to increase productivity and profitability may be particularly strong in the private sector. Nutt and Backoff ^[36] analyzed differences in goal setting. In this sense, goals in the private sector are often clear and follow efficiency; however, those in the public sector are complex and conflict-ridden, increasing the time required to make decisions. Specifically, the complexities of the public sector make the promotion of strategic decision making difficult, because legislation prohibits political leaders from collecting information from the market. However, regarding the large autonomy that public employees have ^[37], operational decision-making is expected to be promoted by the public sector. Hence, it is hypothesized that:

Hypothesis 2 (H2).

The public sector tends to promote PDM less than the private sector.

Hypothesis 2a (H2a).

The publicsector tends to promote organizational PDMless than the private sector.

Hypothesis 2b (H2b).

The publicsector tends to promote operational PDM more than the private sector.

Organizational size is another meso variable and distinguishes between small, medium, and large organizations according to business activity. Human resource practices vary depending on the size of the company. Kersley et al. ^[38] consider that forms of direct employee participation are more common in large companies. This rationale is in line with previous authors who state that larger organizations are more participative than smaller organizations ^[39]. Considering these antecedents, it seems clear that organizational size could have significance for PDM. In terms of scope, it is precise to differentiate between business orientation and organizational size. This may be because larger companies have a strategic orientation. A study assessed by McEvoy and Buller in 2013 found that HR in larger firms was more strategic and less operational than HR in small and mid-sized firms ^[40]. Under this premise and considering that PDM is an HR practice, it is expected that large companies promote organizational decisions. Research into organizational size also supports that larger structures decrease employee autonomy in the workplace ^[41]. Thus, it is expected that:

Hypothesis 3 (H3).

Organization size is positively related to PDM.

Hypothesis 3a (H3a).

Organization size is positively related to organizational PDM.

Hypothesis 3b (H3b).

Organization size is negatively related to operational PDM.

4. Macro Level: Cultural Values and Sustainability

The literature focused on strategy highlights that the macro environment is made up of all the social, legal, political, economic, and cultural factors that affect organizations ^[42]^[43]^[44]. In other words, the environment sets guidelines for the exercise of business activity. Coyle-Shapiro and Shore ^[45] postulated that major external environmental changes accelerate the evolution of sociocultural values by altering the relationship between the organization and its employees and affecting employee responses to an organization’s policies and practices. The need to incorporate a cross-cultural approach to the reality of companies is explained by ^[46]: “Each country has unique institutional and cultural characteristics that provide sources of competitive advantage that are only reliable when there are changes in the environment. Managers, therefore, need to assess the extent of the national culture that may interfere with their company efforts to respond with the appropriate strategy now and in the future” (p9). In other words, national culture theory could be used as a framework for researching many areas such as business management, and it also conditions the decision-making process ^[47]. Furthermore, culture determines values and behaviors that individuals reflect in the organizations ^[48]. To expand this approach, Hofstede scores have been considered for the analysis since they represent the most valuable reference for cross-cultural studies ^[49]. In addition to culture, and considering the increase for caring the environment and how employees are involved in green activities at organizations ^[50], sustainability has been added as another macro variable. In the following sections, all the macro variables (cultural and sustainability) are analyzed.

4.1. Power Distance

This dimension refers to the power distribution among the members of institutions and organizations within a country ^[51]. In organizations, power distance (PD) is represented by strong hierarchical structures where power is mainly developed by managers and leaders, while employees feel comfortable in a bureaucratic atmosphere. In contrast, in low power distance cultures, managers tend to delegate the decision-making process ^[52], so employees feel that the power to make decisions is shared at the same level among all people integrated into the organization ^[53]. In a scenario of high power distance cultures, managers are not willing to share goal setting with employees ^[54], and employees are fearful of expressing their views and seek to avoid conflict ^[55]. This leads us to the formulation of the following hypotheses:

Hypothesis 4 (H4).

The higher the level of power distance, the lower the level of employee participation in that country.

Hypothesis 4a (H4a).

The higher the level of power distance, the lower the level of employee organizational participation in that country.

Hypothesis 4b (H4b).

The higher the level ofpower distance, the lowerthe level of employee operational participation in that country.

4.2. Individualism–Collectivism

This Hofstede dimension is related to the differentiation of group versus individual interests. Individualistic cultures focus on self-concept, freedom, and individual rights. In contrast, collectivistic countries are characterized by a spirit of membership, where values, goals, and interests are respected by all the members of a country. Adopting this approach to work organizations, two main structures can be distinguished in the way people work. Therefore, when work is developed from an autonomous perspective, employees act as individuals. Previous research has found that individualistic cultures promote more autonomy at work than collectivistic cultures ^[56]^[57]. In contrast, teamwork and collaboration between members is a common practice for collectivist organizations ^[58]. Regarding the decision-making process, this paper expects that individualistic countries promote greater autonomy in the daily tasks of an organization, which indicates a positive relationship between individualism and operational decision making. On the other hand, collectivistic cultures help promote teamwork and knowledge sharing ^[59], which are positively related to organizational decision making. In line with these affirmations, this study proposes:

Hypothesis 5 (H5).

The higher the level of individualism, the lower the level of employee participation in that country.

Hypothesis 5a (H5a).

The higher the level of individualism, the lower the level of organizational employee participation in that country.

Hypothesis 5b (H5b).

The higher the level of individualism, the higher the level of operational employee participation in that country.

4.3. Masculinity–Femininity

This cultural value is defined according to the gender dimension. Historically, human behavior has been analyzed by gender, distinguishing between values more pronounced in women than in men. According to Wu ^[60], empathy, family, participation, and care are values that have been especially attributed to women. In contrast, monitorization, autocratic leadership, and pursuit of material goals are standards more commonly followed by countries characterized by male values. In line with the gender approach, this study considers that female values will promote employee participation the most because women promote interpersonal relationships ^[61]. In the case of operational participation, ^[62] indicates that male managers are more likely to apply a task-oriented style, which means that they define the time and goals of the tasks. According to this appreciation, male managers are expected to not promote task discretion due to their tendency to monitor work. Additionally, in terms of leadership, women tend to adopt a democratic style, which promotes employee participation in decision making. From a strategic point of view, it is expected that women encourage employees to participate in the decision-making process related to organizational matters:

Hypothesis 6 (H6).

The higher the level of male values in the country where the organization is located, the lower the level of employee participation.

Hypothesis 6a (H6a).

The higher the level of male values in the country where the organization is located, the lower the level of operational employee participation.

Hypothesis 6b (H6b).

The higher the level of male values in the country where the organization is located, the lower the level of organizational employee participation.

4.4. Time Orientation

The cultural literature mainly recognizes time in terms of the length of short- or long-term planning. This cultural dimension accounts for how countries focus on the future. Countries with a long-term orientation are aware of the future, so members of these countries believe in perseverance, resource maintenance, and thrift. Luria et al. pointed out that “in societies with a long term orientation, people expect to have more interaction with others in the future and are consequently more willing to help others” ^[63] (p. 7). According to this rationale, employees will be encouraged to participate in decision making in organizations located in countries with a long-term orientation. Based on the nature of decisions, previous researchers have aligned long-term orientation with the strategic decision-making process ^[64]^[65]. Moreover, Qian et al. ^[66] explain that employees with a future orientation are engaged in goal setting. For that reason, it is expected that employee participation in organizational decisions is positively related. In contrast, a short-term approach emphasizes proximate returns and planning in the moment ^[67]^[68], which seems to be related to operational involvement. Following this logic, it is expected that:

Hypothesis 7 (H7).

The higher the level of long-term orientation in the country where the organization is located, the greater the employee participation in that organization.

Hypothesis 7a (H7a).

The higher the level of long-term orientation in the country where the organization is located, the lower the operational employee participation in that organization.

Hypothesis 7b (H7b).

The higher the level of long-term orientation in the country where the organization is located, the greater the organizational employee participation in that organization.

4.5. Uncertainty Avoidance

This cultural dimension reflects a society’s tolerance for dealing with ambiguous and risky situations. In countries with high uncertainty avoidance, organizations create rules that control the rights and duties of employees. In contrast, countries with low uncertainty avoidance prefer fewer rules and feel comfortable in risky situations ^[69]. In practice, employees who work with low uncertainty avoidance are not afraid of changes. However, under high uncertainty avoidance situations, employees prefer obligations and rules defined by management ^[70]. In countries with a high uncertainty level, employees need routines that reduce uncertainty regarding task-related matters ^[71]. Therefore, employees avoid making their own decisions about their tasks. Regarding organizational decision making, Hood and Logsdon 2002 ^[72] point out that employees will participate less in contexts of high uncertainty. Previous arguments confirm that uncertainty avoidance will decrease employees’ opportunities to participate in decision making, either operational or strategic. Consequently, it is hypothesized that:

Hypothesis 8 (H8).

The higher the level of uncertainty avoidance, the lower the level of employee participation in that country.

Hypothesis 8a (H8a).

The higher the level of uncertainty avoidance, the lower the level of organizational employee participation in that country.

Hypothesis 8b (H8b).

The higher the level of uncertainty avoidance, the lower the level of operational employee participation in that country.

4.6. Indulgence

Indulgence versus restraint is the latest dimension included by Hofstede. The cultural value of indulgence is defined by the level of happiness and enjoyment in life exhibited by a society, while high levels of restraint are featured by behavioral discipline ^[73]. Regarding decision making, people from restraint-oriented cultures tend to be moderate ^[74]. Although previous research found a significant and positive relationship between PDM and indulgence ^[75], this dimension has been particularly unexplored. This study expects a positive and direct relationship between indulgence and all forms of PDM:

Hypothesis 9 (H9).

The higher the level of indulgence, the higher the level of employee participation in that country.

Hypothesis 9a (H9a).

The higher the level of indulgence, the higher the level of organizational employee participation in that country.

Hypothesis 9b (H9b).

The higher the level of indulgence, the higher the level of operational employee participation in that country.

4.7. Sustainability

In addition to culture, organizations receive external pressure from different regulatory and social drivers that influence change in organizations. Institutional theory helps to analyze the factors that encourage organizations to adapt to the social norms of the business environment ^[76]^[77]. The way that organizations adapt their business to the external environment is called an isomorphism.

Institutional theory defines three forms of drivers that are conducive to isomorphism in an organization ^[78]: normative, coercive, and mimetic isomorphic drivers. Normative isomorphism occurs when organizations follow similar practices promoted by professionals of the sector ^[79]. Coercive isomorphism compiles all norms, rules, and regulative pressure that influence change. Mimetic influence takes place when organizations imitate the actions of successful competitors to achieve similar environmental standards. According to DiMaggio and Powell ^[78], three forces within organizations and the environment promote convergent business practices, which affect organizational decision making ^[80] and explain the sustainable initiatives of organizations. According to Renukappa et al. ^[81], the literature on institutional theory facilitates an understanding of how changes in government regulation, technology, competitors, and stakeholders affect the way organizations innovate their business model to be more sustainable ^[82]^[83]^[84]. This approach is supported by Campbell ^[85], who states that the existence of regulations tends to affect the organization´s social responsibility initiatives.

This idea affirms that countries’ institutional factors and regulations condition the reality and development of organizations. As occurs with cultural values, organizations’ sustainable activities reflect the level of sustainability of the country. At the country level, sustainability is part of a competitiveness index that measures how countries behave in terms of sustainable development (WCY, 2015) ^[86]; that is, how a country is committed to the environment and the development of its infrastructure without compromising its resources. This construct extrapolates to organizations through social responsibility and the different initiatives that promote sustainable behavior. Social responsibility in companies has gained relevance in recent years as society has increased its awareness of sustainable matters. This means that organizations have to reach long-term development to achieve their goals while pursuing a balance between all the invested resources ^[87]. Sustainable organizations extend their sustainable values to all their structures. When human resources management adopts a sustainable approach in all its practices (recruitment, training, onboarding, etc.), it is referred to as sustainable human resources management (SHRM) or green human resources management (GHRM).

According to ^[88], employee empowerment is one type of green human resources management (GHRM) practice, such as training and selection. Additionally, sharing knowledge about environmental initiatives or joint consultation are other examples of HR green practices. According to this rationale, previous research has shown that employee participation is a key element for sustainable initiatives ^[89]^[90]. In this sense, it is useful for organizations to count on employee activity for volunteering or ecologic practices. However, there is a lack of empirical research about whether sustainable practices promote employee participation for any kind of issue. For that reason, it is expected that sustainable organizations also promote participative initiatives related to all types of issues (organizational and operational) based on the level of sustainability of the country. In this study, since we do not have a sustainability indicator at the company level, we will use as an approximation the value of the sustainability indicator of the country in which the organizations are located, so:

Hypothesis 10 (H10).

The sustainability levels of the country where organizations are located are positively related to employee participation in PDM.

Hypothesis 10a (H10a).

The sustainability levels of the country where organizations are located are positively related to organizational employee participation.

Hypothesis 10b (H10b).

The sustainability levels of the country where organizations are located are positively related to operational employee participation.

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