Organizations are involving employees to help reduce costs to succeed in the intensely competitive marketplace. However, many researchers have been skeptical of the value of participation. This study uses Deutsch's theory of cooperation and competition to examine the critical mediating variable of the interaction as employees discuss how to reduce costs. Results of structural equation analyses on data collected from interviews when employees participated in reducing costs indicate that cooperative goals contributed to constructive discussion among employees that resulted in productive work and stronger relationships, which in turn led employees to be committed to reducing costs. Competitive goals were negatively correlated with dynamics and outcomes. These results suggest that researchers and managers can agree that employee involvement has potential but employees need cooperative goals and skills to discuss issues open-mindedly and constructively to realize these benefits.
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