The effect of participative management on organizational performance: the case of Taiwan

Abstract

The aim of this study is to investigate the impact of participative management on the behaviour of employees and the financial effectiveness of the enterprise. The analytical data are based on the survey of 308 Taiwan enterprises. Multiple regression results show that both suggestion system and labour-management committee have a positive impact on employees' behaviour in terms of turnover and absenteeism rates. Likewise, the quality control circle (QCC) and profit sharing have a positive impact on organizational effectiveness as seen in profit and revenue growth rates. However, employee stock-ownership plans and grievance-handling systems have negative effects on both performance indicators - employee behaviour and organizational effectiveness. The practical implications are also discussed.