Using the endowment effect to explain managerial resistance towards codetermination: Implications for employment relations from the German case

• Published date: 01 January 2020
• Author: Gregor Gall,Mark Harcourt,Helen Lam,Richard Croucher,Adrian Wilkinson
• DOI: http://doi.org/10.1111/1748-8583.12261
• Date: 01 January 2020

ORIGINAL ARTICLE

Using the endowment effect to explain managerial

resistance towards codetermination: Implications

for employment relations from the German case

Mark Harcourt

1

| Gregor Gall

2

| Adrian Wilkinson

3

|

Richard Croucher

4

| Helen Lam

5

1

Waikato Management School, University of

Waikato, Hamilton, New Zealand

2

Centre for Employment Relations, Innovation

and Change (CERIC), Leeds University

Business School, University of Leeds,

Leeds, UK

3

Centre for Work, Organisation and

Wellbeing, Griffith University, Brisbane,

Australia

4

Middlesex Business School, Middlesex

University, London, UK

5

Centre for Innovative Management, Faculty

of Business, Athabasca University, St. Albert,

Canada

Correspondence

Professor Gregor Gall, Leeds University

Business School, University of Leeds, Leeds,

UK.

Email: gregorgall@outlook.com

Abstract

This article provides an innovative defence of codetermina-

tion by way of exploring two of the most significant the-

orised objections to it from neo-liberal and libertarian

perspectives, namely the defence of the right to manage as

freely chosen by employees and employers alike, and the

right to manage being the most efficient, lowest transaction

cost mode of employee governance. Instead, we focus upon

management preference emanating from the endowment

effect, and manifested in management style and ideology,

as a more credible explanation for management's support

for its prerogative to manage. The endowment effect pro-

mpts both strong employer and manager objections to

codetermination and weak employee willingness to seek it

because humans place more value upon items currently in

their possession than upon those they do not possess. We

explore this argument by examining the experience of code-

termination in Germany. The significance of our argument

lies in identifying managerial preference as the key variable

to be challenged and changed in order to pacify manage-

ment opposition to codetermination through political, ideo-

logical, and institutional means.

KEYWORDS

corporate governance, employment relations, Germany,

managerial behaviour

Received: 24 September 2018 Revised: 9 August 2019 Accepted: 23 August 2019

DOI: 10.1111/1748-8583.12261

Hum Resour Manag J. 2020;30:149–163. wileyonlinelibrary.com/journal/hrmj © 2019 John Wiley & Sons Ltd 149