The paper “Navigating uncertainty: Employee participation dynamics in times of crisis” by Alexander Lammers and Marek Giebel examines how the Global Financial Crisis (GFC) influenced the creation and dissolution of employer-led internal communication committees (ICCs) in German establishments. These committees—such as roundtable conferences or employee spokespersons—facilitate knowledge sharing and crisis management. Using data from the German IAB Establishment Panel (2004–2018), the study employs a difference-in-differences approach to analyze how crisis exposure affected ICC dynamics.
Key Findings
Crisis Impact on ICC Introduction
- Negatively affected establishments (those reporting adverse GFC impacts) were significantly more likely to introduce ICCs during the crisis response phase (2008–2009), with probability increases of 1.8–2.0 percentage points. This aligns with the need for efficient internal communication to mitigate crisis effects.
- Positively affected establishments (benefiting from the GFC) showed a reduced likelihood of introducing ICCs (decreases of 2.0–2.4 percentage points), suggesting less urgency to enhance internal communication.
- No significant effects were found on the abolition of existing ICCs for either group, indicating their sustained relevance post-crisis.
Role of Works Councils
- The effects were stronger in establishments without statutory works councils. For negatively affected firms lacking works councils, ICC introduction surged by 2.2 percentage points during the crisis.
- In establishments with works councils, ICC introduction effects were smaller or insignificant, highlighting a substitutive relationship between statutory and voluntary representation.
Temporal Dynamics
- ICC adoption peaked during the acute crisis phase (2008–2009) but faded in post-crisis years, underscoring their role as short-term adaptive tools.
Methodology
- Data: German IAB Establishment Panel (23,744 establishment-year observations).
- Identification: Compared establishments reporting positive/negative GFC impacts to unaffected ones, controlling for size, industry, workforce composition, and fixed effects.
- Robustness checks: Included parallel-trend validation, alternative ICC definitions, and entropy balancing to address selection bias.
Implications
- Practical: ICCs act as crisis countermeasures to improve information flow, reduce uncertainty, and support decision-making—particularly in firms lacking formal employee representation.
- Theoretical: Complements collective voice theory by showing voluntary committees fill gaps when statutory institutions (e.g., works councils) are absent or less effective.
- Policy: Highlights the importance of flexible communication channels during economic turbulence, beyond traditional labor institutions.
Conclusion
The GFC spurred German firms to deploy ICCs as agile tools for internal coordination, especially when negatively impacted and lacking formal representation. These committees served as temporary resilience mechanisms during uncertainty but were less relevant for crisis-insulated firms. The study underscores the value of adaptable communication structures in navigating economic shocks, offering insights for organizational crisis management strategies.
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