Successful corporate democracy: Sustainable cooperation of capital and labor in the Dutch Breman Group

Academy of Management Executive

Volumn 18, Issue 3, 2004, Pages 54-66

  De Jong, Gjalt ^a   Van Witteloostuijn, Arjen ^a,b,c  

^a UNIVERSITY OF GRONINGEN   (Netherlands)

^b DURHAM UNIVERSITY   (United Kingdom)

^c MAASTRICHT UNIVERSITY   (Netherlands)

Author keywords

[No Author keywords available]

Indexed keywords

EID: 8144221943     PISSN: 10795545     EISSN: None     Source Type: Journal    
DOI: 10.5465/AME.2004.14776169     Document Type: Review

References (50)

1. These organizational arguments derive from Gratton, L. 2004. The democratic enterprise. London: Financial Times Prentice Hall.
2. This aligns with the 'spill-over' argument. For an extensive discussion, see Carter, N. 1987. Consciousness and change: A study of the development process of a worker co-operative. Bath: University of Bath.
3. For descriptions of democracy in companies, see, e.g., Leadbeater, C. 2000. The weightless society. London: Texere. Empirical evidence demonstrates that a wide range of different democratic structures can be found in cooperatives, ranging from direct participatory to indirect representative forms of democracy. These include the grassroots collectives that sprang up in the 1970s across North America and Europe, the large cooperative sectors in France and Italy, and the plywood cooperatives in the Pacific Northwest of the US.
4. The legal entity of the case company is Breman Group Netherlands. Throughout the article, we interchangeably use Breman or the Breman Group, both referring to the same corporate entity.
5. For a helpful overview, see Gratton, L. 2004. The democratic enterprise. London: Financial Times Prentice Hall: 26 and following.
6. Employee Stock Ownership Plans (ESOPs), which have become popular in the US in recent years, are often excluded from this definition. It was discovered that an ESOP was a defensive strategy by managers threatened by hostile takeover. Furthermore, ESOPs give partial ownership to some of the workers but usually leave control in the hands of powerful others, with just a minority of worker representatives sitting on the company board. Hence, the majority of ESOP workers do not participate in the governance of the enterprise. As we explain in detail, for corporate democracy it is not so much shared ownership in terms of stocks that matters, but rather shared responsibility and shared say in the company, i.e., codetermination.
7. Management fads, including those related to corporate democracy, tend to come in waves. On this point see Abrahamson, E. 1997. The emergence and prevalence of employee management rhetorics: The effects of long waves, labor unions, and turnover, 1875 to 1992. Academy of Management Journal, 40: 491-533.
8. There is a huge non-English literature on industrial relations and works councils in different European languages. For overviews of this literature in English, see Frege, C. M. 2002. A critical assessment of the theoretical and empirical research on German works councils. British Journal of Industrial Relations, 40: 221-248; and Addison, J.T., Schnabel, C., & Wagner, J. 2004. The course of research into the economic consequences of German works councils. British Journal of Industrial Relations, 42: 255-281.
9. There is a huge non-English literature on industrial relations and works councils in different European languages. For overviews of this literature in English, see Frege, C. M. 2002. A critical assessment of the theoretical and empirical research on German works councils. British Journal of Industrial Relations, 40: 221-248; and Addison, J.T., Schnabel, C., & Wagner, J. 2004. The course of research into the economic consequences of German works councils. British Journal of Industrial Relations, 42: 255-281.
10. Frege, C. M. 2002. A critical assessment of the theoretical and empirical research on German works councils. British Journal of Industrial Relations, 40: 223.
11. See, for example, Marginson, P., et al. 2004. The impact of European works councils on management decision-making in UK and US-based multinationals: A case study comparison. British Journal of Industrial Relations, 42: 209-233.
12. An introduction to the Dutch history of works councils is Visser, J. 1995. The Netherlands: From paternalism to representation, in: Rogers, J., & Streeck, W. (Eds.), Works councils: Consultation, representation, and cooperation in industrial relations. Chicago: University of Chicago Press.
13. In the past three years, we have supported about twelve works councils in large and medium-sized Dutch companies as outside experts. In all cases, the executive management team had announced a major reorganization program, involving a substantial number of layoffs. According to Dutch law, the works councils have the legal right to give advice about such issues. Note that we have no consultancy relationship whatsoever with the Breman Group. Our observations are in line with other research on the actual functioning of works councils. For an example, see Kotthoff, H. 1981. Betriebsräte und betriebliche Herrschaft: eine Typologie von Partizipationsmustern im Industriebetrieb. Frankfurt: Campus; and Kotthoff, H. 1994. Betriebsräte und Bürgwerstatus: Wandel und Kontinuität betrieblicher Codetermination. Munich and Mering: Rainer Hamp Verlag.
14. In the past three years, we have supported about twelve works councils in large and medium-sized Dutch companies as outside experts. In all cases, the executive management team had announced a major reorganization program, involving a substantial number of layoffs. According to Dutch law, the works councils have the legal right to give advice about such issues. Note that we have no consultancy relationship whatsoever with the Breman Group. Our observations are in line with other research on the actual functioning of works councils. For an example, see Kotthoff, H. 1981. Betriebsräte und betriebliche Herrschaft: eine Typologie von Partizipationsmustern im Industriebetrieb. Frankfurt: Campus; and Kotthoff, H. 1994. Betriebsräte und Bürgwerstatus: Wandel und Kontinuität betrieblicher Codetermination. Munich and Mering: Rainer Hamp Verlag.
15. Oliver, C. 1991. Strategic responses to institutional processes. Academy of Management Review, 16: 145-179.
16. We reconstructed the Breman model based on interviews we performed with management team members in combination with in-depth document studies, the latter including written notes and minutes of meetings. Most of these documents provided data for, or were the result of, discussions in meetings that served processes of public testing of and inquiry into the new organizational design introduced and developed in the Breman Group. Reports from academic researchers and policy-makers from the early days of the Breman model provided additional sources of data, such as Goodijk, R. 1987. Ondernemerschap en medezeggenschap ('Entrepreneurship and participation'). Unpublished Ph.D. thesis. Enschede: University of Twente. Of course, a case study methodology does not allow for testing causal relationships between variables under consideration. The research approach, however, does help to identify fine-grained processes and key characteristics underlying a radically democratic organization such as Breman, which is the purpose of this study.
17. On this modern mentality with a cost-cutting efficiency-promoting bias, see Cascio, W.F. 2002. Responsible restructuring: Creative and profitable alternatives to layoffs. San Francisco: Berret-Koehler.
18. The company has an active policy for incapacitated employees. Whereas other firms remove incapacitated employees as much as possible-a major problem for the Dutch economy - Breman ensures lifetime employment for this category of employees and actively hires them from outside the company. In this way, Breman contributes to societal solidarity.
19. The majority of shares are family-owned, but this does not determine their say in the company. To prevent stereotypical shareholder behavior, the Breman Group does not promote direct shareholder ownership by individual employees, although any outsider including the employees can obtain shares in the firm. Legal documents prevent the sellout of all shares, because this conflicts with one of the grounding principles of the organization: continuity.
20. This roundabout route was invented to circumvent Dutch legislation, which does not allow works councils to hire employees.
21. A nice introduction into the overwhelming number of theories in strategic management is Mintzberg, H., Ahlstrand, B., & Lampel, J. 1998. Strategy safari: A guided tour through the wilds of strategic management. London: Prentice-Hall.
22. See, for instance, many chapters in Baum, J.A.C. (Ed.). 2002. Companion to organizations. Oxford: Blackwell Publishers.
23. A well-known analysis here is D'Aveni, R. A. 1994. Hypercompetition: Managing the dynamics of strategic maneuvering. New York: Free Press.
24. Stacey, R. 2001. Complex responsive process in organizations: Learning and knowledge creation. London: Routledge.
25. See, for example, Seshadri, S., & Shapira, Z. 2003. The flow of ideas and timing of evaluation as determinants of knowledge creation. Industrial and Corporate Change, 5: 1099-1124.
26. Pennings, J. M., Lee, K., & Witteloostuijn, A. van. 1998. Human capital, social capital, and firm dissolution. Academy of Management Journal, 41: 425-440.
27. Huselid, M. 1985. The impact of human resource management practices on turnover, productivity, and corporate financial performance. Academy of Management Journal, 38: 635-672; and Pfeffer, J. 1998. The human equation: Building profits by putting people first. Cambridge, MA: Harvard Business School Press.
28. Huselid, M. 1985. The impact of human resource management practices on turnover, productivity, and corporate financial performance. Academy of Management Journal, 38: 635-672; and Pfeffer, J. 1998. The human equation: Building profits by putting people first. Cambridge, MA: Harvard Business School Press.
29. There is a game-theoretic argument why not launching a downsizing program is particularly beneficial in bad times, when the economy is hit by a downturn. See on this Witteloostuijn, A. van, Boone, C.A.J.J., & Lier, A. van. 2003. Toward a game theory of organizational ecology: Production adjustment costs and managerial growth preferences. Strategic Organization, 1: 259-300; and Witteloostuijn, A. van. 1998. Bridging behavioral and economic theories of decline: Organizational inertia, strategic competition, and chronic failure. Management Science, 44: 501-519.
30. There is a game-theoretic argument why not launching a downsizing program is particularly beneficial in bad times, when the economy is hit by a downturn. See on this Witteloostuijn, A. van, Boone, C.A.J.J., & Lier, A. van. 2003. Toward a game theory of organizational ecology: Production adjustment costs and managerial growth preferences. Strategic Organization, 1: 259-300; and Witteloostuijn, A. van. 1998. Bridging behavioral and economic theories of decline: Organizational inertia, strategic competition, and chronic failure. Management Science, 44: 501-519.
31. Burt, R. S. 1992. Structural holes: The social structure of competition. Cambridge, MA: Harvard University Press.
32. See, for example, Bachmann, R. G., & Witteloostuijn, A. van (Eds). 2003. Networks, social capital, and trust: A multidisciplinary perspective on interorganizational relationships. Special Issue of International Studies of Management & Organization, 33: issues 2 and 3.
33. Kogut, B., & Zander, R. 1996. What firms do? Coordination, identity and learning. Organization Science, 7: 502-518; Nooteboom, B. 2000. Learning and innovation in organizations and economies. Oxford: Oxford University Press; and Weick, K.F. 1995. Sensemaking in organisations. Thousand Oaks, CA: Sage.
34. Kogut, B., & Zander, R. 1996. What firms do? Coordination, identity and learning. Organization Science, 7: 502-518; Nooteboom, B. 2000. Learning and innovation in organizations and economies. Oxford: Oxford University Press; and Weick, K.F. 1995. Sensemaking in organisations. Thousand Oaks, CA: Sage.
35. Kogut, B., & Zander, R. 1996. What firms do? Coordination, identity and learning. Organization Science, 7: 502-518; Nooteboom, B. 2000. Learning and innovation in organizations and economies. Oxford: Oxford University Press; and Weick, K.F. 1995. Sensemaking in organisations. Thousand Oaks, CA: Sage.
36. This is an example of combined activities that cycle from exploration to exploitation. See March, J. 1991. Exploration and exploitation in organizational learning. Organization Science, 2: 71-86.
37. Examples of classic contributions to the organizational learning literature are Argyris, C., & Schön, D.A. 1978. Organizational learning. Reading, MA: Addison-Wesley; March, J. 1991. Exploration and exploitation in organizational learning. Organization Science, 2: 71-86; and Senge, P. M. 1990. The fifth discipline: The art and practice of the learning organization. New York: Doubleday. For overviews of recent studies, see many chapters in Baum, J.A.C. (Ed.). 2002. Companion to organizations. Oxford: Blackwell Publishers.
38. Examples of classic contributions to the organizational learning literature are Argyris, C., & Schön, D.A. 1978. Organizational learning. Reading, MA: Addison-Wesley; March, J. 1991. Exploration and exploitation in organizational learning. Organization Science, 2: 71-86; and Senge, P. M. 1990. The fifth discipline: The art and practice of the learning organization. New York: Doubleday. For overviews of recent studies, see many chapters in Baum, J.A.C. (Ed.). 2002. Companion to organizations. Oxford: Blackwell Publishers.
39. Examples of classic contributions to the organizational learning literature are Argyris, C., & Schön, D.A. 1978. Organizational learning. Reading, MA: Addison-Wesley; March, J. 1991. Exploration and exploitation in organizational learning. Organization Science, 2: 71-86; and Senge, P. M. 1990. The fifth discipline: The art and practice of the learning organization. New York: Doubleday. For overviews of recent studies, see many chapters in Baum, J.A.C. (Ed.). 2002. Companion to organizations. Oxford: Blackwell Publishers.
40. Examples of classic contributions to the organizational learning literature are Argyris, C., & Schön, D.A. 1978. Organizational learning. Reading, MA: Addison-Wesley; March, J. 1991. Exploration and exploitation in organizational learning. Organization Science, 2: 71-86; and Senge, P. M. 1990. The fifth discipline: The art and practice of the learning organization. New York: Doubleday. For overviews of recent studies, see many chapters in Baum, J.A.C. (Ed.). 2002. Companion to organizations. Oxford: Blackwell Publishers.
41. This is well-known from Argyris' work. See, for example, Argyris, C. 2003. A life full of learning. Organization Studies, 24: 1178-1192; and Argyris, C., Putman, R., & McLain Smith, D. 1985. Action science. San Francisco: Jossey-Bass.
42. This is well-known from Argyris' work. See, for example, Argyris, C. 2003. A life full of learning. Organization Studies, 24: 1178-1192; and Argyris, C., Putman, R., & McLain Smith, D. 1985. Action science. San Francisco: Jossey-Bass.
43. Flood, R. L., & Romm, N. R. A. 1996. Diversity management: Triple-loop learning. Chicester: Wiley.
44. The Breman model illustrates how triple-loop learning can be organized. Other examples of such triple-loop organizations are the Dutch company Endenburg and the Quaker communities. See, for example, Romme, A.G.L., & Witteloostuijn, A. van. 1999. Circular organizing and triple-loop learning. Journal of Organizational Change Management, 12: 439-453; and Louis, M. R. 1994. In the manner of friends: Learning from Quaker practice for organizational renewal. Journal of Organizational Change Management, 7: 42-60.
45. The Breman model illustrates how triple-loop learning can be organized. Other examples of such triple-loop organizations are the Dutch company Endenburg and the Quaker communities. See, for example, Romme, A.G.L., & Witteloostuijn, A. van. 1999. Circular organizing and triple-loop learning. Journal of Organizational Change Management, 12: 439-453; and Louis, M. R. 1994. In the manner of friends: Learning from Quaker practice for organizational renewal. Journal of Organizational Change Management, 7: 42-60.
46. Boone, C.A.J.J., et al. 2004. The genesis of top management team diversity: Selective turnover within management teams in the Dutch newspaper publishing market in 1970-1994, Academy of Management Journal (forthcoming); Jehn, K. A., & Mannix, E. A. 2001. The dynamic nature of conflict: A longitudinal study of intragroup conflict and group performance. Academy of Management Journal, 44: 238-251; and Pelled, L. H., Eisenhardt, K. M., & Xin, K. R. 1999. Exploring the black box: An analysis of work group diversity, conflict, and performance. Administrative Science Quarterly, 44: 1-28.
47. Boone, C.A.J.J., et al. 2004. The genesis of top management team diversity: Selective turnover within management teams in the Dutch newspaper publishing market in 1970-1994, Academy of Management Journal (forthcoming); Jehn, K. A., & Mannix, E. A. 2001. The dynamic nature of conflict: A longitudinal study of intragroup conflict and group performance. Academy of Management Journal, 44: 238-251; and Pelled, L. H., Eisenhardt, K. M., & Xin, K. R. 1999. Exploring the black box: An analysis of work group diversity, conflict, and performance. Administrative Science Quarterly, 44: 1-28.
48. Boone, C.A.J.J., et al. 2004. The genesis of top management team diversity: Selective turnover within management teams in the Dutch newspaper publishing market in 1970-1994, Academy of Management Journal (forthcoming); Jehn, K. A., & Mannix, E. A. 2001. The dynamic nature of conflict: A longitudinal study of intragroup conflict and group performance. Academy of Management Journal, 44: 238-251; and Pelled, L. H., Eisenhardt, K. M., & Xin, K. R. 1999. Exploring the black box: An analysis of work group diversity, conflict, and performance. Administrative Science Quarterly, 44: 1-28.
49. See, for example, Shapiro, C., & Varian, H. R. 1999. Information rules: A strategic guide to the network economy. Boston, MA: Harvard Business School Press.
50. See for an overview, for example, Carter, N. 1987. Consciousness and change: A study of the development process of a worker co-operative. Bath: University of Bath.