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Explaining Breadth and Depth of Employee Voice across Firms: A Voice Factor Demand Model

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Abstract

This paper develops a model which explains breadth and depth of firms’ demand for employee voice. The theory innovation is to model employee voice as a factor input in production and derive a voice demand curve. Differences in voice productivity determinants across firms act as shift factors and cause cross-section variation in voice demand curves which translates into an empirically observable voice frequency distribution. Insights from institutional economics are incorporated to show that transition from a nonunion to union form of voice may cause a large discontinuity in the demand curve. Other contributions include: sharpened definition and delineation of the employee voice construct, use of the voice frequency distribution as a dependent variable in empirical research, graphical representation of the firm’s benefit-cost choice of voice, distinction between employee voice as communication and influence (muscle) and graphical demonstration of conditions under which one is preferred to the other, clarification of the participation/representation gap concept, and policy insights regarding pros and cons of the regulation of employee voice in American labor law.

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Notes

  1. Illustrative of the OB unitarist-orientation toward voice, Morrison (2011) states, “To summarize, the driving force behind voice is presumed to be the desire to bring about constructive change for the collective” (p. 384).

  2. In this article firms demand voice as an input and the supply comes from employees. Some authors (e.g., Farber and Krueger 1993) conceptualize the problem in the opposite direction; that is, workers demand voice and firms supply it. Typically voice models are partial equilibrium in the sense either the firm or the workers are theorized as the active decision-makers regarding voice and this side gets modeled as the demanders. In a general equilibrium model, firms and workers both demand and supply voice.

  3. Manager’s disutility can be transformed into a dollar equivalent, following the Becker (1957) model of discrimination, by specifying a “resistance” coefficient that represents a manager’s estimate of the cost of implementing voice as if it were foregone profit rather than personal disutility.

  4. Freeman and Lazear (1995)) posit a function τ = τ (x) where x is the level of voice and τ is the proportion of rents redistributed through bargaining power, with τ > 0. This is a reasonable representation but does neglect the distinction made here between the portion of τ that is an efficiency wage-like social cost versus a pure rent redistribution. This division is partly a function of the competitive structure of product and labor markets, as discussed with respect to Fig. 2. In this regard, Freeman and Medoff (1984) could have strengthened their case for an expansion of unionism if they had not framed the bargaining function of unions within a competitive labor market context since, without market failures or above-normal profits, union wage effects are inevitably a monopoly-like factor price distortion, as critics charge.

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Authors and Affiliations

  1. Department of Economics, Georgia State University, Atlanta, GA, USA

    Bruce E. Kaufman

  2. Centre for Work, Organization, and Wellbeing and Department of Employment Relations & Human Resources, Griffith University, Brisbane, QLD, Australia

    Bruce E. Kaufman

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Kaufman, B.E. Explaining Breadth and Depth of Employee Voice across Firms: A Voice Factor Demand Model. J Labor Res 35, 296–319 (2014). https://doi.org/10.1007/s12122-014-9185-5

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