Board-level Employee Representation (BLER) and Firms’ Responses to Crisis

Aleksandra Gregoric, Marc Steffen Rapp

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We hypothesize that companies with board‐level employee representation (BLER) experience a lower probability of crisis‐induced dismissals than other firms. Theoretically, we link this effect to the employee directors’ ability to reduce the information asymmetry and moral hazard in employee–employer contracting, thereby facilitating the implementation of labor‐cost adjustments that are an alternative to workforce dismissals. We confirm our hypotheses by analyzing the behavior of Scandinavian public corporations with/without employee directors during the Great Recession.
Original languageEnglish
JournalIndustrial Relations
Issue number3
Pages (from-to)376-422
Number of pages47
Publication statusPublished - Jul 2019

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