Adoption and Termination of Employee Involvement Programs

Abstract

This study uses a 10-year longitudinal database on U.S. manufacturing establishments to analyze the dynamics of the adoption and termination of employee involvement programs (EI). We show that firms' use of EI has not grown continuously, but rather introduce and terminate EI policies in ways that imply that the policies are complementary with each other and with other advanced human resource practices, seemingly moving toward an equilibrium distribution of EI policies. Using a Markov model, we estimate the long-run distribution of the number of EI programs in firms and find that adjustment to the steady-state distribution takes about 20 years.