The Benefits of a Participative Leadership Style: New Article Published in the “Journal of Economics and Management Strategy”

In his recently published article, Johannes Lehmann investigates HIM, a leadership style developed by Edward E. Lawler in 1986. HIM aims to align the interests of employers and employees through empowering employees. It advocates for the delegation of decision-making power and autonomy as far down the organizational hierarchy as possible to achieve this alignment. The essence of HIM lies in employers providing employees with Knowledge, Power, Information, and Rewards, commonly referred to as the four pillars of HIM.

The empirical analysis relies on a large-scale panel data set collected by the Institute for Employment Research (IAB) that is representative of the German economy. This dataset spans 15 years and includes 51,919 observations, allowing for the estimation of causal effects of HIM on establishment productivity.

Descriptive evidence indicates that decision makers value the joint implementation of the pillars of HIM, as they tend to cluster and factor analysis confirms that the included management practices reflect a single underlying management orientation. These results underscore that HIM reflects a real-world management style present in the German economy rather than just a theoretical construct.

The causal analysis reveals a positive effect of HIM and each of its four pillars on establishment productivity. These effects materialize for HIM adoption, HIM intensification and the presence of a HIM philosophy. However, no positive interactions (synergies) between the individual pillars emerge. Finally, the results reveal no significant differences in the effectiveness of HIM across establishment size, sector, knowledge intensity, or innovation strategy. This illustrates that the positive effect is similar across very different organizational contexts and that many different companies can benefit from HIM.