BEYOND WORKS COUNCILS?: Social practices and cultures of employee participation in a regional high-tech cluster Open Access

Industrial relations in Germany have been changing rapidly over the last three decades (Müller-Jentsch and Weitbrecht 2003; Silvia and Schroeder 2007). From the 1980s onwards, collective bargaining started to retreat, making way for enterprise-based agreements. From the 1990s onwards, fewer businesses entered into collective agreements, which have thus become less widespread (Doellgast and Greer 2007). Quite often they are re-shaped into umbrella agreements with a choice of modifications and opt-out clauses for companies (Whittal 2005; Trinczek 2006). Furthermore, the overall number of formal employee participation schemes – especially works councils – is decreasing (Artus 2005; Ellguth 2006). In addition, the ratio of existing and potential works council members to the overall number of employees is falling. Some researchers suggest interpreting the transformation of industrial relations as a disintegration of or a shift in boundaries. The current discourse on the transformation of participation is focusing increasingly on the outcome of this ongoing diversification. If this trend persists, forms of direct participation will become more relevant because of a ‘systematic extension of the regulatory scope in the whole of participatory relationships’ (Abel et al. 2005: 34),¹ especially when highly qualified work is part of the equation. The service industry and the small- and medium-sized enterprise (SME) sector are said to ‘show new developments in interest representation ranging from the establishment of traditional works councils … to completely informal and individualised constructs’ (Deiß and Schmierl 2005: 309). Manfred Deiß and Klaus Schmierl presume that, instead of leading to a polarisation of forms, these developments are more likely to result in mélanges of divergent participatory elements.

This is the background against which we will analyse the practices of participation found in private SMEs in a microsystems cluster in Dortmund, a city in the Ruhr valley of Germany. We start from the hypothesis that employees in this cluster take an active role when it comes to participation. Our study shows that participation is largely determined by the social practices of employees and managements as well as existing business performance. Our first step is to describe the cluster development process in Dortmund (section 2). The next section outlines in detail the concept of participation using a practice-orientated approach (section 3). Then we give some explanations about our empirical methods and investigations (section 4). Based on these explanations, we discuss the existing practices of participation in the microsystems cluster studied (section 5). This is followed by an overview of activities aimed at the introduction of employee representations (section 6). Finally, we draw conclusions about the opportunities for and limitations to employee participation in our field of study (section 7).

From the point of view of regulatory theory, neo-liberal social policies are characterised by new forms of state intervention which reflect a model of a market-driven global economy. Their utilisation has meant a turn ‘from governments to market forces and partnership-based forms of governance’ (Jessop 2002: 454) which is increasingly intensifying the competition of regional and local sites and placing pressure on the political players. In North Rhine-Westphalia (Germany) regional and local governments are spending vast amounts of money to encourage the setting up of techno-economic clusters in the old industrial region of Dortmund. Their goal is to tackle unemployment – a problem which has been troubling the region since the collapse of large parts of the local beer, coal and steel industries. Apart from logistics and information technologies (IT), microsystems technology plays a vital role (Jonas and Berner 2002) in the Dortmund-project – a 10-year project initiative dedicated to regional development which started in 2000 (Jonas 2009). An efficient infrastructure for businesses in this technological field has been developed over the past years. It is part of the specific contextual local arrangement of individuals, organisations, artefacts and other entities prefiguring the activities of the individuals involved (Schatzki 2002). In 2004 this arrangement included almost thirty enterprises. While Dortmund's microsystems enterprises employed about 600 people in 1996, the number rose to 1,850 in 2005 (WF 2006). The fastest job growth occurs in companies moving from research and development (R&D) to mass production. In 2003, more than one in two employees had a university degree (WBF 2004: 20). In 2004, one half of the companies employed only 25 percent of production workers – an indicator for the strong R&D orientation in the field (WBF 2005: 31).

A more intensive survey of the empirical field shows that the companies being studied are not homogenous. In order to be able to distinguish the variations between the SMEs, it has turned out to be very helpful to set up an ideal taxonomy for different kinds of firms (Weber 1980). In the relevant research Al Rainnie's typology (Rainnie 1989) has made the running (Ram et al. 2001; Ram and Edwards 2003). This typology is based on the assumption that different product market circumstances govern the behaviour of firms. It includes four different types of small firms: those that are dependant on large firms, those that compete against large firms ‘often through intense exploitation of machinery and labour’ (Barrett and Rainnie 2002: 425), those that operate in market niches and those that are positioned in high-risk areas. Firms of the last type are labelled innovators, ‘which are those that operate in often founding or developing markets creating specialised and/or new products or markets’ (ibid.). Paul Edwards and his co-workers are critical on the grounds that ‘Rainnie's categories tend to be too deterministic in linking the market position to the behaviour of firms’ (Edwards et al. 2003: 33); according to them the result is that other significant factors are neglected and the assumption is that small firms are ‘prisoners of their market positions’ (ibid.: 34). If this line of thought is given credence, it seems plausible to use ideal types of small firms mainly as heuristic tools that help to mark the starting points of research and analysis of industrial relations and participation issues. Then it is possible to share Lorna Collins and Monder Ram's argument that SME research might concentrate its focus on management's response to market pressures and on ‘the role that workers play in shaping the management process’ (L. Collins and M. Ram, unpublished data).

The companies being studied can be regarded as knowledge-intensive firms, ‘where most work can be said to be of an intellectual nature and where well educated, qualified employees form the major part of the workforce’ (Alvesson 2000: 1001). Evaluating results from empirical studies on these kinds of companies (Robertson et al. 2003: 839ff.), it would appear that self-management, autonomy and egalitarianism are central aspects of the working conditions of the highly qualified employees in the microsystems cluster. The companies in the survey are strongly export-orientated while regional markets are of little importance to them. Generally, they are positioned in the market as suppliers of product or system components; only in a few cases do they act as suppliers of products for larger firms, for instance, for the automobile, the microelectronic or the pharmaceutical sector. Most of the buyers are German or European. All companies have the legal form of a ‘GmbH’ (a private limited company), with the exception of three joint-stock companies. Furthermore, borrowed capital and public funding play a pivotal role. Setting up a company in this sector creates a huge demand for capital and funding, which is generally supplied by banks or by venture capital companies.

The companies of the microsystems cluster differ from each other in relation to their age, size (in terms of the number of employees), hierarchical levels, workforce composition, regulation of wages, working hours, and – last but not least – R&D and production orientation. On the basis of our empirical data, it is possible to consider this heterogeneity with the help of three company subtypes of the previously mentioned SME-type knowledge-intensive, innovative firm which characterise different stages of development. These types can be labelled newcomer, invention-focused, and all-round company.²

The first subtype is called newcomer (see Table 1 ³ ). It includes very small companies such as spin-offs from regional companies and academic institutions, start-ups or marketing centres of companies outside the region. Businesses of this type have been established in the last 10 years. In most cases they orientate their work towards R&D projects. Usually they employ up to nine persons, in general highly skilled university graduates. Work is characterised by improvised communication processes. Business strategies are focused mainly on survival in the market. Although companies rely heavily on the individual knowledge of employees, the importance of personal training courses apart from those dealing with specialised academic topics is low. Salaries are often less than in established companies, working hours per week higher. High volume production can often only be accomplished by co-operating with partners.

The second subtype can be labelled invention company. Companies of this type were often set up in the middle of the 1990s and have been established in the market for some years. Now they concentrate their activities on the invention and development of microsystems components, choosing to concentrate their efforts in specific stages of value-added chains. Usually they collaborate with other SMEs to develop innovation networks which fill in gaps in the provision of skilled-based resources. The number of employees varies between 10 and 50 with few hierarchical levels. While all businesses of this type are research orientated, some have the capacity for the low-level production of certain products or product components. Furthermore, businesses either provide services or they develop and manufacture products in co-operation with their partners. Informal knowledge transfer is very important. Because of the relevance of R&D, it is mainly university graduates and – as a second group in the field under study – qualified workers (with a certified apprenticeship) who make up the bulk of the staff. Internal personal training and tacit knowledge are essentials. The organisation of work processes takes place at group, departmental or project level. Salaries are is higher than in newcomer firms. In most cases, the staff are able to decide on working-time systems or can influence the management decisions.

The third subtype of companies can be described as the all-round company. Companies of this type have set up cost intensive production capacities over the last years. These capacities are aimed at anything from the low-level to the mass production of components; production involves shift work. Yet all businesses keep a strong R&D orientation. Building up production infrastructures is only the first aspect of the reorganisation process accompanying the rapid growth of a firm. Secondly, communication channels and decision-making procedures within the company need to be reorganised and (further) formalised. Hierarchy levels are added to the usually existing flat hierarchy and the number of profit centres or departments is increased. Thirdly, because demand in the national and the European market is usually not sufficient for the production of cost-efficient quantities, expansion strategies can only be followed through if businesses manage to go international. Fourthly, staff have to become acquainted with the new production lines. This not only involves skill development for the existing personnel but also the training of new staff. And fifthly, quite often, new working-time regulations are needed because the new production lines can only be run efficiently on a 24-hour basis, which requires the implementation of a three or four shift system. Such companies normally employ between 51 and 600 people. Staff are composed of three groups: university graduates, skilled and unskilled workers. In some cases, companies use less qualified work forces recruited from temporary employment agencies. In this case staffs are not only split into the three qualification groups, but also into a permanent core and a powerless fringe; in other words, a primary and a secondary staff (Offe and Hinrichs 1977).

Labour participation and interest representation are rather broad terms. The team around the industrial sociologist Ludger Pries distinguishes between occupational relationships (the regulation of wages, working-time, holidays, and other contractual conditions), work relationships (formal and informal practices transforming work capabilities into work actions and referring to the question who controls whom) and participatory relationships (Abel and Pries 2007). All are essential aspects of the capital–labour relationship, which is characterised by a structural antagonism (between capital and labour) as well as by the fact that all the individuals involved depend on each other to achieve their objectives. Participatory relationships ‘relate to the formal and informal social practices of interaction through which the members of complex and differentiated output processes take part in everyday decision making concerning production and company strategies’ (Abel et al. 2005: 32). This not only defines the relationships between management and employees, but also links the terms to a praxeological perspective via the concept of social practices. This perspective is based on a variety of approaches which all use social practices as a point of reference. A social practice is generally understood to be ‘a temporally unfolding and spatially dispersed nexus of doings and sayings’ (Schatzki 1996: 89) or a ‘routinised type of behaviour which consists of several interconnected elements: forms of bodily activities, forms of mental activities, “things” and their use, a background knowledge in the form of understanding, know-how, states of emotion, and motivational knowledge’ (Reckwitz 2002: 249; cf. Cook and Brown 1999). Practices are embodied and expressed by individuals in their actions; they ‘are performed by knowledgeable, socially constituted subjects, although the outcomes of their actions may differ from those intended’ (Hudson 2005: 4). From a praxeological perspective, individual actions presuppose corresponding practices in which they can be realised. In this sense actions are part of a social practice. Practice-orientated approaches enable the explanation of action processes at a collective level by using social practices as the smallest possible unit and the starting point in the analysis of social processes and relationships. Social practices follow specific implicit and explicit rules, taking the form of rules, principles, injunctions, instructions, rules-of-thumb or warnings which may be formulated in part, completely or not at all (cf. Schatzki 2006; Schulz-Schaeffer 2000). Rules play an important role in the structuration of activities that generally have a situation-specific character (Wagenaar 2004). In this context Rowena Barrett and Susan Mayson argue that the question for small-firm researchers ‘should not just be whether rules do or do not exist … Instead their concern should be with the type of rules that exist, their logic and the outcomes in term of attitudes and behaviours’ (Barrett and Mayson 2008: 132). Working with this conception of social practices, the aim is to analyse the inner life of SMEs and their ‘often opaque and complex internal dynamics’ (Ram and Edwards 2003: 717).

We also distinguish between direct, representative and financial representation (Poutsma et al. 2003: 49). According to Keith Sisson (2000), direct participation can be divided into a delegative form of participation through occupational self-organisation and a consultative form of representation in which access to managerial planning and decision making processes are granted. Self-organisation and consultation require employees to have a certain degree of self-determination within work situations. On the other hand, both processes also relate to the opportunities to co-ordinate private and work requirements called for by certain practices. The discussion about indirect participation mainly revolves around the works council. The importance of works councils lies in their protective and control functions: they act as a collective voice in negotiations with the management and they bridge the gap between individual companies and trade unions. Works councils are authorised by the German Works Constitution Act as institutions of employee interest representation. They can choose from a range of participatory tools ranging from information and consultation rights to co-determination (Frege 2003). Apart from this legally regulated form of indirect participation, a variety of other forms can be found. Company-specific employee representations (Ellguth 2006), other representative bodies (Hauser-Ditz et al. 2006) or natural representatives do not have a legal basis. They largely depend on the managements’ acceptance and acknowledgement. There is also a choice of financial participation forms, for example employee share schemes. These forms mainly differ in the percentage of employees who hold shares, the number of shares given to them and the degree of decision-making granted in the process. In this case, it is probably useful to distinguish between forms of participation – such as works councils, project meetings, and financial grants–and other participation practices which characterise the ways and rules used and produced in such forms. Participation can vary widely in its intensity, so that it can be useful to interpret the notion of representation as a continuum. Aspects of this continuum include situations where employees are ‘given information about certain forthcoming issues and granted the right to give opinions; they are given a “voice” in that their opinions are given due or even equal weight in decision making’ (Collom 2003: 66).

Our study is linked to practice-orientated research in the field of human resource management (HRM) in SMEs. HRM is defined as the pattern of planned human resource deployments and activities used by companies to achieve their goals. Mayson and Barrett point out that ‘the practice of HRM in small firms can be characterized as ad hoc and informal’ (Mayson and Barrett 2006: 449). Work experience traineeships, for instance, are characterised by informal learning-by-doing activities in the companies. Performance appraisal practices ‘tend to be informal and continuous and often used for monitoring and control rather than development purposes’ (Barrett et al. 2008: 187). The authors point out that these results should be connected with the wider situation (for instance the companies’ market positions), contextualising SMEs in order to gain an adequate understanding of why these informal practices emerge as they do, how they are applied and how they are linked to formalisation processes. This argument shows that the formalisation of HRM practices in SMEs is influenced by a wider range of aspects such as growth processes, the recognition by managements ‘of the need for delegation and then the possibility of delegating that task …, the awareness of legislation and legal requirements on HRM and employment matters’ (Mayson and Barrett 2006: 451). The success of growth processes in SMEs depends significantly on their employees, their skills and motivations but also on pressure from large customer firms to formalize the above-mentioned practices.⁴

Our research is also linked to empirical research projects in Germany. These projects analyse the forms of participation and relationships found in SMEs by conducting research in companies of the New Economy and in traditional industries. Findings from the latter suggest that company founders, owners and management strongly influence working relationships. Authoritarian relationship patterns are quite dominant (Trinczek 2002: 10). Wolfgang Rudolph and Wolfram Wassermann (2006) explain that most SME businesses have developed various formal participation structures which are viewed as alternatives to statutory employee participation. Examples of participation forms include representatives involved in human resource issues or conflict resolution project teams. Management often try to keep political influences out of their companies. The result is that initiatives to implement works councils often cause ‘fierce resistance, including prosecutable offences like the dismissal of initiators’ (ibid.: 85). Generally, SMEs without works councils ar e characterised by the development and maintenance of a special social solidarity between entrepreneurs and employees in which various formal and informal practices and forms of participation are implemented.

Research on the New Economy in Germany, especially research on SMEs from the IT sector, often analyses changes of participation from a perspective inspired by cultural sociology. Klaus Dörre (2001) has analysed the conditions for employee participation in New Economy companies on the basis of extensive empirical studies in a variety of different fields and sectors. In the New Economy and within the context of communal work culture, direct participation ‘basically goes without saying’ (ibid.: 389f.). Dörre sees participation as an ‘organic part of grown work cultures’ (Dörre 2002: 178). Communal work culture provides the basis for the exchange of information and solutions and is the source of solidarity, which in turn provides structure and safety. In contrast, the management of corporate culture is interpreted as an attempt to ‘conserve a work climate of solidarity which no longer reproduces itself from within’ (Dörre 2001: 389). The prerequisites of employee influence in work cultures have been examined by research on non-works council participation, especially in the project ‘Regulation of work relations in works council-free businesses’ (Trinczek 2002; Artus 2005). The SMEs studied come from different industries. In contrast to companies from traditional industries, which take part in labour agreements, orientate themselves towards them or could be described as freeloaders, companies from the New Economy ignore collective agreements. The resulting power asymmetry in favour of management can, however, be redressed if employees hold primary power (Artus 2005: 396) which ‘is based on specific qualifications and skills, on a unique knowledge of production processes which makes it hard to replace employees and thus improves their bargaining position’ (Dörre 2001: 388).

A further empirical study was conducted. It examined management and staff in the new media sector (Abel and Ittermann 2006). The twelve SMEs studied were founded around the early 1990s. Staff are usually skilled and six to eight in ten employees have an academic background. Decisions are made on the basis of factual arguments and not according to the position of decision-makers within the hierarchy. The employees are seeking a long-term commitment to their company, putting up with disadvantages such as working overtime as long as the central aim of working at a high level of expertise is achieved and contributions are adequately acknowledged (ibid.: 40). Some companies even have works councils. However, individualised negotiation is still the dominant form for employee interest representation. Traditional core issues of worker or employee representation are generally not negotiated at a collective level. The authors conclude that participatory management concepts and ‘soft’ strategies to keep employees in the companies will remain important for re-organisation and rationalisation processes because participation is a central element not only in managerial strategies but also in the organisation of these companies, and because participation is taken for granted by highly skilled employees.

These findings shift the focus towards a combination of different forms of participation and onto the convergence factor of old and new forms of participation. But these particular studies still lack sufficient definition and clear-cut differentiation when it comes to the actual practices. One could say that they adopt a practice-orientated perspective without a comprehensive discussion of the existing social practices and their connection with the concept of culture. On the other hand, cultures of participation can be seen as bundles of homogeneous or heterogeneous social practices at concept level and consequently be used for further levels of theorisation (Reckwitz 2005), given that social practices are necessarily interrelated. Cultures of participation are defined as bundles of social practices that prefigure the doings and sayings of the individuals involved as well as the arrangements of things and artefacts that contextualize them (Schatzki 2002). Within this perspective, the focus primarily lies on the explanation of how social practices emerge, are organised, enable or impede participation, ‘and how they are assembled into relatively stable forms of organisational and institutional practice’ (Hudson 2005: 114).

This discussion is based on empirical data, which was gathered in three research projects, the first of which started in 1999.⁵ These particular projects analyse the processes and mechanisms behind the developing Dortmund microsystems cluster.⁶ The praxeological approach used involves aspects such as the relevance of co-operation and competition, the influence of governmental initiatives, the relevance and the workings of different cluster-internal action networks, as well as the development strategies and regulation of participation in the local microsystems companies (Jonas 2005, 2006). Methodologically, the approach taken in these projects follows the Grounded Theory (Strauss and Corbin 1990). Our empirical data consists of the results of research into relevant individuals involved in the cluster-building process on the Internet, relevant articles on cluster development taken from the local press from 2000 onwards, publications by individuals and organisations from the field studied, and a number of field trips to various companies. We also conducted 40 informal interviews in the field as well as with other social scientists. There are 30 short telephone interviews with company representatives on the subject of the institutionalisation of employee representation and 41 one- to three-hour semi-structured interviews which were recorded and transcribed (I1–I41).⁷ Most of the interviews, especially the interviews involving working regulations and participation, were recorded in the years 2003 and 2004. Taken as a whole, this analysis is a short-term empirical project which aims at providing some insight into the relevance of participation practices in the Dortmund microsystems cluster. The results are to form the basis of a longitudinal perspective which will be used in future research projects (Bresnen et al. 2003).

On this basis, the central questions to be answered are whether there is a correlation between company types and participation practices or even a work and participation culture which can be identified as being cluster-specific; that is, whether and at which level of the cluster homogenous bundles of social practices can be found. The current situation is thus that hardly any of the companies are members of employer associations. Employees are not particularly organised – union involvement or memberships are the exception rather than the rule. National tariffs are usually not applied but sometimes used as point of orientation. Wages are largely negotiated individually. Since all of the companies in Dortmund, regardless of any typology, are under pressure to perform, management and employees alike seem to consider aspects such as knowledge, experience, motivation, self-organisation and other informal skills as central resources in work processes. This, however, is mainly true for highly qualified employees, even if this concept also applies to less qualified workers in some cases. ‘We need’, said a skilled worker, ‘informed colleagues. This is the philosophy – well, maybe not at the bottom of the shop floor’ (I18). The reason for managers adopting this philosophy for the entire company is that a lack of concentration or inexperience in production processes or quality control causes high costs when producing highly sensitive microsystems components. Training periods are judged as relatively long and work-intensive, giving highly skilled graduates and craftsmen considerable leverage in negotiations about conditions. Flexitime schemes can be found in most companies. Working hours are not necessarily put on record. In particular, imminent deadlines prompt employees involved in projects to work overtime and sometimes even during weekends. This, of course, means that working time agreements may be abrogated in some situations. Conflicts, however, can be avoided if employees can also experience the benefits of flexitime. Nonetheless, administration and production personnel normally have to stay within regular working hours. Recalling Poutsma's distinction between participation levels (see section 3), it should be noted that employee representation is only practiced in a few cases. Considering the size of the companies in the local microsystems scene, it is not surprising that a works council could only be found in one company, which is one of the six companies belonging to the production-orientated type (see section 2). Financial participation in the form of flexible pay schemes is the exception rather than the rule: such schemes are usually only applied at middle or top management levels in the type all-round company. The low number of works councils and the limited access to financial participation opportunities are, however, not proof of the absence of participation. Most firms implement participation with the help of various practices and forms of direct participation. Additionally, there are fewer guaranteed, more indirect employee representations in three other companies of the production-orientated type. Insights into work-based participation opportunities can therefore only be gained by an analysis of direct participation and corresponding work relationships. At first glance, that is focusing on the extent to which direct participation forms are used, it seems that it would be plausible to construct typologies of participation. While in companies of the newcomer type, with their flat hierarchies, it is mostly staff and project meetings that exemplify this, businesses which can be seen as the invention company type usually have a wider choice of forms at their disposal, such as weekly steering committees, team or area meetings and quality circles. The widest range of participation forms can be found in production-orientated companies, where so-called production or development round tables, problem-solving teams, appraisal interviews – and, in some cases, mediation teams and staff surveys – can be found. The typology introduced (section 2) makes the correlation between the range of participation practices seem logical. This rather simple correlation does not however fully explain the character of the type-specific work and participation practices. Additionally, the empirical data does not really provide evidence of a single and homogenous participation culture. So, while the company type certainly has an influence on participation, we further distinguish between two cultures of direct participation as well as a culture in which participation is actively impeded by management, thus creating a tool to describe the homogeneities as well as the heterogeneities of work and participatory relationships at cluster level.

Management promote the loyalty of staff-members to their companies, and most of the companies in the Dortmund cluster use a comprehensive information policy to maintain employees’ motivation. Management teams from all kinds of companies believe that high performance cannot be achieved without the co-operation of the staff. Information and communication are vital elements in controlling a business. Supporting an open information policy, additional bundles of doings and sayings, covering aspects such as information flows across hierarchy levels, autonomy and self-organisation, and the explanation or legitimisation of decisions, form the basis for a culture of direct participation and working relationships which we label open communication culture. Practices in this culture differ as to the extent to which employees are allowed to voice an opinion and the extent to which their opinions and arguments are (formally) taken into account.

Providing relatively easy access to company figures enables employees to find out where costs arise and where company earnings end up. It seems to be rather important to employees that their work does not just result in bigger bonuses for the management, but that it benefits the company as a whole. Sales trends, order situations and balance sheets can all be part of the information provided. According to one CEO, ‘everything is transparent and that is what we preserve and communicate. So, this is a relatively open, informal structure where anyone is free to ask for detailed information’ (I28). These information practices can be most easily, but not exclusively, established and maintained in small companies (of the newcomer and some of the invention company types), where employees are in close physical proximity and communication takes place on a daily basis. In firms of the all-round company type such information practices are realised in more formalised production or development round tables and staff meetings, in which members of the middle management act as mediators. An important element to this is the rule of relative transparency. Managers stated that detailed questions about the company's finances were welcome as long as they did not concern confidential information like individual salaries.

Autonomy and self-organisation are central aspects in working relationships in companies, where individuals orientate themselves towards this culture. Time and cost intensive developments as well as the production of microsystems or microsystems components require the integration of multi- or interdisciplinary knowledge. As a rule, graduates and skilled workers show high levels of independence and self-organisation in their field of work. Management staff set approximate targets for employees to meet in their own individual way. Participation can therefore be said to take place via a delegation of responsibilities. Autonomy is restricted by the need to co-operate in order to pass on one's results to others and meet the target. So, at a collective level, this working style gives high priority to teamwork and requires the appropriate exchange processes between individuals. It is especially the case in small companies that rules for these exchanges are not necessarily codified or only roughly worked out. Larger companies formalise self-organisation and exchange processes. Fewer skilled workers are granted less autonomy (I19).

Acting against the will of the core staff is sometimes perceived as a necessary evil but usually avoided. It is still important to legitimise decisions before their implementation if an open culture is to be maintained. This process can only work if vertical information flow in both directions is sufficient. This is also a prerequisite for practices of legitimisation. Otherwise, the management's plans and arguments may not reach the staff, and managers lose useful feedback (I24, I29, I33). Another way of keeping this system working is responsiveness: information needs to reach everyone within an acceptable time span for reactions to be possible. This means that decisions and feedback should be communicated as quickly as possible, which is another basic communication rule. Small, development-orientated companies achieve this by applying two practices: the practice ofresponsiveness – the management welcomes and reacts to questions and criticisms at any time – and the practice ofaccessibility – which resembles an open-door policy (I24, I35). In larger companies (all-round company type), this responsibility no longer necessarily lies with the management but may be shifted to a HR department.

Some of the companies in our study – particularly companies belonging to the all-round company type – are not implementing an open information policy. Here, company founders are especially opposed to legitimisation processes. Participation in this culture is reduced to forms and practices, where employees are only given some general information about actual or forthcoming issues. Systematic information practices exist only in a rudimentary way. The exchange of detailed information happens almost exclusively at board level. Instead of using information as a means of motivation, managers use formulae such as ‘What's good for the company is good for the staff’ or ‘If we have a month without profits, we cannot hand out money’ (I32), mimicking authoritarian or patriarchal leadership precepts. These companies do not use an open-door policy. Accessibility can be limited to the management's round trips through the company. Self-organisation and autonomy are not abandoned, but heads of department usually exert more authority and control over their employees. Employees’ assessments of situations, for instance if a deadline is involved, are used as a planning tool. The emphasis seems to shift from keeping employees motivated to optimising processes and profits. Open communication is further restricted by control rules; these regulate access to departments. Development departments may, for example, have a very limited right of access (I30, I35). A common tool that increases competition between departments is the introduction of market mechanisms into companies, for example the principles of profit centres are applied to regular departments. Another example of this is the use of group incentives. In one case, one department was given a target, while the entire staff was promised a bonus on target completion. It is easy to see how motivational tools like this can be risky, since they can also exert pressure and even cause a rift between departments or even individual staff members. This restricted culture of participation may be suitable for leading companies which are developing slowly. However, in combination with a rapid increase in turnover and staff numbers – which renders the communication channels used in small companies obsolete – the risk of conflict increases. In one case of extreme growth, the company had only just undergone a transformation from R&D to production, and an interviewee noted growing dissatisfaction among employees: superiors actually no longer knew their employees and vice versa, and people were relocated from one department to another by the top management without the department head's consent or knowledge. Over time, the management's patriarchal style caused more and more problems, and conflicts ended in redundancies. This situation lasted for two years in which the company lacked any organisational structures that would have allowed employees to make themselves heard, and dismissals turned into a form of solution to various problems.⁸

A relatively open communication culture can also involve social practices of direct employee involvement in decision-making processes. These integrative practices increase direct participation opportunities. The respective corporate culture can then be characterised as a culture of co-determination, where an employee is given an equal say in many but not all processes leading to decisions. The ultimate responsibility remains with the management or CEO. Still, compared with other cultures, the culture of co-determination has a more egalitarian character. The analysis of our empirical data shows that this culture can only be found in a few companies. The type of the company does not seem to be significant.

Practices of (egalitarian) involvement in decisions are a significant instrument of integrating employees firmly into the company. One employee stated: ‘I think that the leadership style here basically puts us in a good position to say what we like and what we don't like’ (I22). Compared to the moderate open communication culture and taking into account working relationships, this involvement entails more than the autonomous organisation of work processes. Typically, decision-making processes can be based on a broader basis, in that employees take on the right to participate and accept responsibility regardless of their qualification level, status or position. Thus, participation is based on a rule of mutual respect and a rule of competence. Direct participation is then for example implemented in regular development or production round tables, where ‘the projects are under close scrutiny’ (I17) and where decisions regarding the finances of work stages are negotiated, including aspects involving individual employees. Contrary to the participation practices of moderately open communication cultures which often exclude less skilled workers, companies implementing co-determination practices use quality circles to include all staff members. The problem of quality management for the production of microsystems can then, for example, be tackled using the expertise and with contributions from all areas of the company. The advantage of this approach is that the people who have to put a plan into practice are also involved in the actual planning process, thus reducing the risk of impracticality. In the case of one production-orientated company, rules of interaction aimed at improving direct participation opportunities were developed when a quality management system was introduced. Examples for direct participation in larger, production-orientated companies include involvement in planning and designing new production lines or the assessment of the middle management in a company-wide employee survey.

Another feature of this culture is that a strong emphasis is placed on conflict resolution practices. As in the moderate open communication culture, communication is pivotal. Since the people involved in this communication are more diverse and the relative number of people involved is greater, a more sophisticated set of measures to optimise communication and cope with conflicts is needed. Awkward conflicts are steered towards a solution by developing and negotiating suitable action and communication rules as well as formalised working instructions. Conflicts are not concealed but intervention from third parties only takes place if no bilateral solution to the problem can be found. In this case, others get a chance to present their opinions. In small companies, the entire staff including the management can get together to solve the problem. This is, however, no longer possible in the larger R&D-orientated companies and virtually impossible in all-round companies. The latter handle social and work-related conflicts where they occur, for example within individual projects. This is only taken to a higher hierarchy level, for instance the departmental level, as a last resort. If no levels exist between the basic unit and the management, again, the CEO or HR head will be part of the conflict resolution process (I28).

Direct individual participation forms and practices can strengthen the identification with a company and have a motivational effect. Managers and staff alike welcome forms and practices of direct participation, while both sides are rather suspicious of indirect participation. But rapid employment growth within an enterprise not only limits access to communication opportunities, it also raises barriers to conflict resolution. As mentioned above, practices and forms of direct participation can be and are used to protect existing cultures of relative open communication and co-determination in some of the companies of the all-round company type. Regular meetings on specified topics or employee surveys can act as a substitute for small talk. Management staff in this kind of company, however, seem to neglect workers' participation in favour of increasing the influence of higher hierarchy levels. Another problem of direct participation is that the involvement of the complete staff requires a considerable amount of mutual trust. Management staff sometimes take on an advisory role. This may work in some cases but only as long as the management itself is not part of the problem in question and as long as barriers to accessing superiors are not too high. Both aspects are arguments for the introduction of representation. We draw a distinction between indirect representation through a member of the management and indirect employee representation. We define the latter as a person or group of persons who are not part of the (top) management and represent the employees’ interests. Many companies have natural representation: a person who is trusted by fellow employees as well as the management and takes on a conciliation function. Companies of the newcomer type seem to be usually too small to have anything but natural representation. It is worth noting that this is also true for companies of the invention company type.

In production-orientated companies in the Dortmund area, most staffs have discussed the introduction of works councils. But the outcome of these talks has never been in favour of a works council; instead other forms of employee representation have been implemented. Apart from works councils, we found a spokesperson, formally guaranteed representation and representation in the form of a consultancy. Around 2002/2003, in one of the production-orientated companies with a relative open communication culture, employees contemplated introducing a works council. According to the management, staff were told that there would be co-operation with a works council should this be the outcome of their decision (I38). After this statement, meetings were organised by the staff, which consisted mainly of less qualified workers. Union representatives, as well as one employee who took on the role of a mediator between management and staff, presented the staff with information on works councils. At the next meeting, a slim majority voted not only against the introduction of a works council, but also against an employee representation, because the production manager was elected as their spokesperson. The reason given for this decision was that employees were afraid of union interference in the company (I29).

An alternative to a spokesperson, which we found in the microsystems cluster, is an employee representation in form of a company-external consultancy, typically implemented by the management. The task of this person is to safeguard employees’ interests and make the relevant decisions. In order to do so, a certain amount of independence from the management and the right set of social skills are necessary. Members of the management of one production-orientated company, which implemented a culture of restricted participation, used an external consultant during the reorganisation of their internal structures and processes. The reorganisation had become necessary because the company was facing an internal crisis due to rapid growth. The position was introduced with the aim of implementing aspects of an open communication culture. As in other cases, the introduction of some sort of representation was used to improve the situation within the company, but it was also used to avoid the introduction of a works council.

A formal workers' representation can act as a substitute for a works council, especially if the management does not want unions to become involved. A group of employees tried to introduce a works council in a different company in 2002. This caused senior managers to publicly express their opposition to the plan at this meeting. The management suggested introducing a model of co-responsibility instead of one of co-determination. Employees were promised a ‘corporate constitution’ and an employee representation, even though the latter would have fewer guaranteed rights, as central elements of the management's concept. The management also implemented a public vote with a choice between the introduction of a works council and the establishment of a body incorporating the concept of co-responsibility. Three in four employees voted for the management's concept. To stay in control of the situation a constitution was drafted in the style of another constitution already in place in a different company. According to the management, another vote, this time confidential, resulted in 80 percent of employees voting for the new constitution. Afterwards, members for a committee for settling management/employee disputes were elected (I15); these members were generally close to the management. This could be interpreted as a consequence of the management's uncompromising intervention in the process.

The only works council in the area belongs to a subsidiary which adapted the concept from its parent company when a part of a company based in another city was re-established in Dortmund. The works council is involved in a number of activities including salary negotiations with superiors, negotiation of agreements, terms and conditions for on-call duties, attending committee meetings and other tasks. From the employee representatives’ perspective, the introduction of an economic committee provides special participation opportunities. Apart from guaranteed access to company figures, influence can be exerted on current and potentially strategic decisions. Co-operation with the management is seen as a mutual learning process. Information on how to draft company agreements is provided by union-orientated works councils of other companies. Overall, the works council views itself as a link between staff and management with the task of preserving and developing the sometimes fragile culture of co-determination. The works council safeguards those needs and interests of the staff which can no longer be passed on to the management via direct participation or which the employees involved would always have found difficult to address.

This is the point where we draw some conclusions about the state of participation in the companies studied of the microsystems cluster in Dortmund. Different forms and practices of direct and indirect participation are evolving within companies, creating mixtures of divergent participatory elements (see section 1). The results show that participation in the companies under study is undoubtedly influenced by their market position and by legal employment regulations. But it has to be stressed that market positioning as well as legal regulations are mediated by the different cultures of interconnected participation practices, which are actualised in the doings and sayings of the involved management staff and employees, and which prefigure the actual and future actions of the individuals (Schatzki 2002).

Firstly, various participation practices and cultures of participation can be found in the field of study. Participation in its weaker form (relative open communication culture) carries the risk that individual issues are integrated into the company-internal discourse on behalf of employees without a mutually beneficial co-ordination of interests. These cases, then, can be seen as examples of fake open communication cultures: rules of the participation practices exist but are ignored by all or by the important parties, because following them would be inconsistent with the ends of all or of part of the individuals and groups. In a culture of co-determination, energetic forms of conflict solution, information exchange and decision-making processes are more closely linked to one another and help to establish (more) equality between different individuals and qualification groups. Undoubtedly, management initiatives ‘have made common practice the use of teamwork, of performance review, of demands for continuous learning and improvement, and “brain-storming” sessions designed to extract creativity and the sharing of tacit knowledge’ (Casey 2004: 616). These initiatives of managed corporate culture enlarge the possibilities and chances of participation considerably. In contrast to both participation cultures just mentioned, the culture of restricted participation is based on practices, whose rules serve as a means of legitimating the management's right to sanction staff members or groups not only in areas of conflict, but also in the daily working processes without elaborate explanations. The introduction of strong competition between staff groups or the use of authoritarian leadership rules ‘substitute rather than complement employee commitment’ (Barrett and Mayson 2008: 133).

Secondly, the different types of participation practices and cultures are not automatically linked to corresponding business types. However, there are better prospects of advancing direct participation in companies belonging to the newcomer and invention company types than for the all-round company type. As mentioned above, direct informal and formal participation practices are generally limited for the latter type, even if further forms of direct participation are implemented, and generally have to be enriched by other, indirect, more formalised forms of employee representation and co-determination. Works councils are not necessarily a natural choice. Participation practices and forms are a management issue and the introduction of an institution similar to a works council is highly dependent on the management's preferences. But even in those cases where management do not oppose the introduction of a works council, a majority of the employees being in favour cannot be taken for granted.

Thirdly, our results correspond with those of human resource management research, which stresses that the ‘existence of formal HRM practices is desirable to help cope with the increase in complexity resulting from greater numbers of employees if growth is to be sustained’ (Barrett et al. 2008: 201). Formalisation of participation practices as well as human resource management practices can be interpreted as influenced by a wide range of factors including the often unconscious behaviours of management and staff, emergent conflicts between management and staff or between different parties or groups of individuals, but also by market position (and its fluctuations) as well as by external pressure, for example from larger client firms. In this sense formal and informal practices can coexist within SMEs; the degree of informality or formality should not be understood as ‘necessarily a function of firm size’ (Barrett and Mayson 2008: 132).

Fourthly, in this context, meetings between workforces from individual enterprises, or their representatives, could be beneficial for the discourse on participation opportunities and different types of participation practices and cultures. But in contrast to the good performance of networks on management level, there are only a few contact networks for employees in this regional arrangement. The number of organised employees is very small compared to the number of organised management groups. This is intensified by the low probability of contact taking place between employees of different companies: most employees are very loyal to their companies and management, in turn, make an effort to maintain loyalty. Knowledge workers and primary staff are considered to be key resources and need intensive – and therefore expensive – vocational adjustment. This means that they are to be kept within the company as long as possible. To align the needs of employees with the needs of companies, ‘an interdependence between employer and employee is … created and in this respect there seems to be a degree of autonomy within work provided for’ (L. Collins and M. Ram, unpublished data). workers' representations also display a lack of flexibility. Negotiations and agreements about work issues are hardly ever based on examples taken from neighbouring companies. Management is normally responsible for suggesting which model to use. Clearly, the possibilities of initiating communication processes between workforces as well as between workers' representations have not yet been given sufficient attention. Since business growth and development are closely linked to participation, both management and employees have a vital interest in developing its as yet only partly realised potential.

The authors would like to thank the working group steps at the IHS, S. Haslinger, M. Kampshoff, L. Kane, O. Katenkamp, K. Kock, H. Neuendorff, S. Nover, U. Schumm-Garling, their interview partners as well as the reviewers and editor of the journal for their help and constructive criticism.

Michael Jonas works as a Senior Researcher at the Institute for Advanced Studies (IHS) in Vienna.

Marion Berner is a graduate of the University of Dortmund where she majored in sociology.