Employee participation as a new frontier in corporate social responsibility: a review of the literature

Purpose: This paper examines the relationship between employee involvement in decision-making (in particular codetermination) and corporate social responsibility, i.e. extra-financial or environmental, social and governance (ESG) performance. Design/methodology/approach: Literature review was done based on the following methodology: synthesis of existing knowledge, bringing together and summarising published work on the relationship between codetermination and CSR; identification of potential gaps in the literature, highlighting what has been little studied in the field; assessment of the quality, relevance and limitations of existing studies and following citation standards to acknowledge the work of other researchers. Findings: Codetermination has a rather positive impact on extra-financial performance. The special status of employee directors, who combine independence (from management) with knowledge of the company and its sector, may generate better strategic choices and enhanced oversight of management action, with positive consequences for ESG performance overall. Regarding, more specifically, governance, although codetermination inevitably upsets the internal balances of corporate boards, it does not seem to pose a major risk to their operation. The possibility of blocking decisions remains theoretical, and codetermination does not necessarily lead to oversized boards. On the social side, codetermination would have a positive impact on wage and employment management. Finally, regarding the environment, no strong consensus has emerged so far on whether codetermination improves or deteriorates corporate environmental performance. Originality/value: The originality of our approach is to propose a review of the literature on the determinants and impact of employee participation in light of concerns and reflections on the nature and responsibility of firms, particularly about the ecological and environmental crisis that contributed to shifting the challenges to less operational and more strategic considerations. We thus question how the participation of employees in the decision-making process tends to delineate a democracy that is no longer merely liberal but also “social”. We examine, conceptually and empirically, the various forms that the participation of employees may take and their impact on firm performance.