Using a large panel data set we investigate whether works councils act as sand or grease in the operation of German firms. Stochastic production frontier analysis indicates that establishments with and without a works council do not exhibit significant differences in efficiency.

A growing number of econometric examinations show that works councils substantially shape the personnel policy of firms in Germany. Firms with works councils make greater use of various HRM practices. This gives rise to the question of whether employers view the shaping of personnel policy...

This paper measures the productivity impact of management-led participative establishment practices. On the basis of a representative German establishment data set, the IAB establishment panel, the study finds that the presence of team-work, a reduction of hierarchies and autonomous work groups...