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Firm Democracy and Performance Masaryk University Faculty of Study: Economics and Administration Business Management FIRM DEMOCRACY AND PERFORMANCE Master’s Thesis Thesis Supervisor: Author: Ing. Ondřej ČÁSTEK, Ph.D. Shota DZNELADZE Brno, 2019 MASARYK UNIVERSITY Faculty of Economics and Administration MASTER’S THESIS DESCRIPTION Academic year: 2018/2019 Student: Shota Dzneladze Field of Study: Business Management (Eng.) Title of the thesis/dissertation: Firm democracy and performance Title of the thesis in English: Firm democracy and performance Thesis objective, procedure and methods used: Goal: The thesis aims to research the adoption of Firm Democracy by a chosen company Description: Author will compare traditional and modern organi- zation structures, which use so-called firm democracy. The author will choose aspects, in which these two differentiate (e.g., motivation, decision-making, leadership, formalization), will analyze, how can be the firm democracy defined, and will examine the effect of specific aspects of firm democracy on firm performance in a chosen company. Extent of graphics-related work: According to thesis supervisor’s instructions Extent of thesis without supplements: 60 – 80 pages Literature: BERNSTEIN, Ethan, John BUNCH and Niko CANNER. Beyond the holacracy hype. Harvard Business Review, Boston: Harvard Business School Press, 2016, roč. 94, 7/8, s. 38-49. ISSN 0017-8012. CARNEY, Brian M and Isaac GETZ. Freedom, Inc.: How Corporate Liberation Unleashes Employee Potential and Business Performance. , Argo-Navis, 2016. SAGIE, Abraham and Meni KOSLOWSKY. Participation and em- powerment in organizations: Modeling, effectiveness, and applicati- ons. , Sage Publications, 1999. PAUSCH, Markus. Workplace democracy: From a democratic ideal to a managerial tool and back. The Innovation Journal, 2014, roč. 19, č. 1, s. 1-26. FOLEY, Janice R and Michael POLANYI. Workplace democracy: Why bother?. Economic and Industrial Democracy, 2006, roč. 27, č. 1, s. 173-191. Thesis supervisor: Ing. Ondřej Částek, Ph.D. Thesis supervisor’s department: Department of Corporate Economy Page 1 of 2 Thesis assignment date: 2018/04/05 The deadline for the submission of Master’s thesis and uploading it into IS can be found in the academic year calendar. In Brno, date: 2019/05/13 Page 2 of 2 Author’s Name: Shota Dzneladze Thesis Title: Firm Democracy and performance Department: Department of Corporate Economy Thesis Supervisor Ing. Ondřej Částek, Ph.D. Year: 2019 ABSTRACT Although the subject of the approach to firm management has been the focus of debates over the decades, no consensus has been reached on the most appropriate management approach. One of the management approaches that has been increasingly implemented by firms is the democratic management approach. The objective of this thesis was to determine the relationship between firm democracy and firm performance of a software firm in the Czech Republic. The study data was collected using questionnaires. The study first evaluated the principles of firm justice that were in use in the organisation. The policies included meaning and vision, dialogue and listening fair play and honour, transparency, responsibility, involvement, co-decision, integrity, decentralisation, and reflection and assessment. The study then investigated the effect of these principles which were used to indicate firm democracy on the performance of the firm. The thesis established that the firm implemented the principles of firm democracy in it’s the day- to-day operations. However, the dimensions implemented had variations to those stipulated in the theories. The study established that the use of a firm democracy management approach had a positive and statistically significant effect on firm performance. Keywords: Firm Democracy, Performance, Holocracy, Workers Cooperatives, Sociocracy, Performance, Management Author’s Declaration „I certify that I have written the Master’s Thesis FIRM DEMOCRACY AND PERFORMANCE by myself under the supervision of Ing. Ondřej Částek, Ph.D. and I have listed all the literary and other specialist sources in accordance with legal regulations, Masaryk University internal regulations, and the internal procedural deeds of Masaryk University and the Faculty of Economics and Administration.“ Brno, Author’s signature Acknowledgement I extended my sincerest thanks and gratitude to my thesis supervisor Ing. Ondřej Částek, Ph.D. I would like to thank him for agreeing to read numerous drafts of my study and offering suggestions on how to make it better. I would like to offer thanks to my classmates for their support and suggestions. I would also like to thank my family for their support and encouragement. Table of Contents INTRODUCTION ......................................................................................................................... 10 1 LITERATURE REVIEW ........................................................................................................... 12 1.1 Firm Democracy .................................................................................................................. 12 1.1.1 Characteristics of Firm Democracy .............................................................................. 13 1.2 Theoretical Review .............................................................................................................. 14 1.2.1 Theory of Democratic Firm .......................................................................................... 14 1.3 Models of Firm Democracy ................................................................................................. 15 1.3.1 Sociocracy ..................................................................................................................... 15 1.3.2 Workers Cooperatives ................................................................................................... 16 1.3.3 Holacratic Management ................................................................................................ 18 1.3.4 Employee Stock Ownership Plans ................................................................................ 20 1.4 Challenges of Work Place Democracy ................................................................................ 21 1.5 Company Performance ........................................................................................................ 23 1.6 Empirical Literature Review ................................................................................................ 25 1.7 Summary .............................................................................................................................. 26 2 RESEARCH METHODOLOGY ............................................................................................... 27 2.1 Conceptual Framework and Research Questions Formulation ............................................ 27 2.1.1. General Framework ...................................................................................................... 27 2.1.2 Conceptual Framework and Hypotheses Formulation .................................................. 28 2.2 Definition of Study Variables .............................................................................................. 30 2.3 Research Design and Method .............................................................................................. 31 2.4 Sampling .............................................................................................................................. 32 2.4.1 Profile of Firm Studied ................................................................................................. 32 2.5 Data Collection Instrument .................................................................................................. 32 2.5.1 Validity of Questionnaire .............................................................................................. 33 2.6 Data Collection Procedure ................................................................................................... 33 3 DATA PRESENTATION AND ANALYSIS ............................................................................ 34 3.1 Response Rate ...................................................................................................................... 34 3.2 Respondents Characteristics ................................................................................................ 34 3.2.1 Respondents’ Gender .................................................................................................... 34 3.2.2 Respondents’ Level of Education ................................................................................. 35 3.2.3 Respondents Length of Service..................................................................................... 36 3.2.4 Respondents Age .......................................................................................................... 36 3.3 Management Responses ...................................................................................................... 37 3.3.1 Reason for Use of Firm Democracy ............................................................................. 37 3.3.2 Elements of Firm Democracy Applied in the Firm....................................................... 38 3.3.3 Implementation of Firm Democracy ............................................................................. 39 3.3.4 Advantages of Using Firm Democracy ......................................................................... 40 3.3.5 Disadvantages of Using Firm
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