Strategic co-determination in business model development: An empirical analysis of the German automotive supplier industry in the twin transition

Abstract

The twin transition in the automotive industry is driving profound changes for its suppliers. Their future viability and employment prospects are increasingly dependent on them actively reshaping their business models. Despite undergoing radical transformation processes, many automotive suppliers still lack future strategies. Where such reorientation initiatives do exist, they often overlook employment-related concerns. Consequently, trade unions and works councils are increasingly recognising the need to engage in business model development to safeguard jobs. However, co-determination actors have no formal decision-making power in this domain within the context of European industrial relations. This paper therefore explores the following questions: How does active participation by co-determination actors in business model development unfold and what role can they play? What challenges do co-determination actors face in the process, and what skills are they developing? Drawing on a cross-comparative analysis of three qualitative case studies in the German automotive supplier industry, the paper shows that active participation by co-determination actors is not only possible but can also be of considerable strategic relevance under certain conditions. The study’s examination of the challenges faced and the skills developed provides valuable insights for ongoing EU-level discussions on a “Just Transition” directive.

Introduction

The “twin transition” (Muench et al., 2022) in the automotive industry is bringing about significant changes for its suppliers (Blöcker et al., 2020; Krzywdzinski, 2024). In order to maintain their market share and employment levels, incumbent suppliers must invest in products for e-mobility and evolve their software and electronics offerings for so-called “software-defined vehicles” amid uncertain market ramp-up and geopolitical turmoil. Meanwhile, OEMs following electric vehicle “upstarts” such as Tesla or BYD are thwarting suppliers’ efforts by attempting to expand their vertical integration, and new competitors from the technology, semiconductor, and electronics industries are entering or widening their activities in the sector (Krzywdzinski et al., 2025).

The future and employment prospects of automotive suppliers, therefore, no longer depend primarily on perfecting their existing product portfolios and processes. Instead, it has become increasingly important for them to drive forward reconfigurations of their business models. When working on their business models, companies redesign the interplay between the value propositions, value creation structures, and revenue models that constitute their business’s core logic (Magretta, 2002). A great deal is at stake here: If suppliers fail to future-proof their business models for automotive or to establish alternatives outside the automotive industry, the industrial regions in which they are based face the loss of many attractive jobs with potential spill-over effects (Bosch, 2023; Dupuis et al., 2024).

However, trade union surveys have revealed that many companies in the automotive supplier industry and adjacent industrial sectors still lack future strategies and transition plans, despite undergoing radical transformation processes. And where such reorientation initiatives do exist, they often overlook employment-related concerns (Gerst 2020). Consequently, trade unions and works councils are increasingly recognising the need to proactively contribute to the development of business models (Strötzel and Brunckhost, 2019).

In European industrial relations, however, co-determination actors have no direct decision-making power over companies’ business strategies. This raises the question of how to influence business strategies, in order to secure locations and jobs as part of a “just transition” (Clarke and Lipsig-Mummeé, 2020; Dupuis et al., 2024).

To date, few studies have analysed such initiatives and the challenges faced by co-determination actors. This article aims to explore business model development as an area of activity for co-determination actors in the twin transition of the automotive industry. The following two sets of questions are addressed:

(1) How does active participation by co-determination actors in business model development unfold and what role can they play?

(2) What challenges do co-determination actors face in the process, and what skills are they developing?

These questions are analysed based on three case studies in which the business model development activities of co-determination actors at German automotive suppliers were subjected to a qualitative analysis.

The paper is structured as follows: Section two provides an overview of the presuppositions that enable co-determination actors to engage in this field of activity within German industrial relations, and the current state of research. Section three details the research design and methods employed. Section four presents the findings from the three case studies. Section five then compares and discusses these findings in relation to the research questions, and gives a brief outlook.

Overview and state of the research

In dealing with the twin transition in the automotive industry and its effects on the workforce, co-determination actors have operated most prominently at the level of industrial policy (Thomas and Doerflinger, 2020). Trade unions, in particular, have participated in social dialogue formats on European, national, and regional levels and formulated comprehensive demands for policymakers, aiming to improve structural conditions for the OEMs and the supplier industry (IG Metall, 2023; industriAll Europe, 2024). However, within the German dual system of industrial relations, the company and plant levels have increasingly emerged as critical arenas of activity at automotive suppliers, too.

This development is closely linked to the institutional framework established by the Works Constitution Act and the Co-Determination Act. These Acts provide formal channels for employee participation in corporate governance, which are mostly not present or less pronounced in other European countries (Haipeter et al., 2024). Additionally, the 2004 Pforzheim Agreement provided social partners with a standardised framework for negotiating company-level social pacts that derogate from regional collective agreements, with the aim of safeguarding employment during a crisis (Whittall and Trinczek, 2019).

Nevertheless, in Germany too, the scope of co-determination remains institutionally constrained in matters of strategic business direction. While the Works Constitution Act offers mechanisms for consultation and proposal-making, it does not endow works councils with binding co-determination rights (Gerst, 2020). At the supervisory board level, the Co-Determination Act grants employee representatives formal parity with shareholder representatives in companies with over 2000 employees. Yet, the provision that grants the chairperson, who is selected from the shareholder side, a casting vote in the event of a tie, limits their influence (Scholz and Vitols, 2019). This asymmetry effectively prevents co-determination actors from exercising substantive decision-making power over key strategic issues related to the direction of the business, as management interests can prevail in cases of disagreement (Behrens, 2022).

In practice, however, co-determination actors especially in times of crisis have engaged in activities at company level, attempting to influence the strategic direction of their companies. One notable example is the “Besser statt billiger” (Better instead of cheaper) campaign, which was launched by IG Metall in 2005 in North Rhine-Westphalia, amidst a wave of job relocations and cost reductions due to globalisation. This campaign aimed to empower works councils to proactively challenge company management, by developing alternative “high road” industrial strategies. Haipeter et al. (2011), who provide a detailed account of the campaign, summarise the practices developed by co-determination actors as a fundamentally new form of interest representation, for which they coined the term “strategic co-determination.” Until recently, these forms of strategic co-determination have focused primarily on organisational innovations and incremental product innovations that largely remained within the confines of the established business models (Haipeter et al., 2011: 94).

Against the background of the twin transition, in the German automotive industry and adjacent industries such forms of “strategic co-determination” are becoming increasingly prevalent with regard to business model development. This is partly due to the changing market environment requiring the reconfiguration of value propositions, value creation architectures, and revenue models in the automotive industry (Krzywdzinski et al., 2025). It is also partly due to the emergence of new institutional arrangements. In 2020, IG Metall has succeeded in supplementing the reactive instrument of social pacts on job security with the proactive instrument of the so-called future collective agreement (FCA) in collective bargaining negotiations. FCAs can be concluded at the company level on a voluntary basis and are intended to provide a framework for social partnership cooperation in order to collaborate on securing the future of locations (Boewe and Schulten, 2025; Keil, 2025). However, a growing number of informal initiatives by co-determination actors can also be observed, particularly in smaller companies.

The study of strategic co-determination in European industrial relations remains a relatively new field of research. Much of the existing literature has focused on the institutional channels that employee representatives dispose of in order to influence corporate strategies (Haipeter et al., 2024; Lafuente Hernández, 2019). Empirical studies tracing how co-determination actors attempt to influence strategic business decision-making in practice are still limited. The few existing studies suggest that achieving proactive strategic influence requires substantial additional resources and expertise, as co-determination actors must develop their own strategic capabilities (Gnisa and Frey, 2024; Haipeter et al., 2011). This involves adapting their own organisational structures, for example, by reorganising committee work and strengthening coordination, while also mobilising external support from specialist advisors and incorporating employee expertise. It may also necessitate a more active division of labour between works councils and trade unions, the systematic utilisation of external knowledge and resources, and a redefinition of the self-perception of co-determination actors, alongside the development of new strategic skills (Haipeter, 2025).

While these insights provide an important foundation, knowledge about the underlying prerequisites remains limited. Against this background, the paper contributes to advancing the field by analysing how co-determination actors influence business model development in three case studies from the German supplier industry. Specifically, it examines the strategies employed, the challenges encountered, and the skills developed during these processes.

Method

The study is based on a qualitative investigation into the activities of co-determination actors across three case study companies. The cases were selected because they met three key criteria. Firstly, co-determination actors were actively engaging in business model development. Secondly, each case represented a different mode of engagement. Thirdly, the author had the opportunity to observe these processes for a given period of time. This research design enabled a close analysis of the business model development activities of co-determination actors.

To ensure confidentiality and clarity, the three cases were assigned codenames: Case 1 as Combustra, Case 2 as Touchonix, and Case 3 as Precitron.

In the case of Combustra, the data collection spanned a period of 19 months (April 2024–September 2025), during which seven interviews were conducted with co-determination stakeholders. In addition, three workshops were observed.

In the case of Touchonix, the data collection extended over 13 months (September 2024–September 2025) and included 11 interviews with members of management and employees as well as two group discussions with co-determination actors. Furthermore, participatory observations were carried out during a company tour, one employee mobilisation event and three workshops focusing on business model development.

In the case of Precitron, data collection occurred over 12 months (September 2023–September 2024). This involved five interviews with management and employees, and two group discussions with co-determination actors. Participant observation was conducted during seven workshops of a business model development project team, and an evaluation workshop with co-determination stakeholders. Additionally, eight workshops organised by the co-determination actors each involving the broader workforce in ideation processes related to the company’s future business model were observed.

All interviews and group discussions were conducted using semi-structured guidelines ranging in duration from 45 minutes to 120 minutes. They were audio-recorded and transcribed with the participant’s informed consent. Participant observations during workshops and events were documented through notes and protocols (for a full list, see the Appendix). The resulting qualitative data corpus was organised and analysed using an inductive coding approach, supported by the software MAXQDA, enabling thematic structuring and cross-case analysis. Within this process, specific codes were developed to capture both the challenges encountered by co-determination actors and the skills they described as necessary to address them. In addition, document analyses were conducted for all companies, including annual reports, workshop materials, and co-determination-related documentation, in order to prepare the interview guidelines as well as to contextualise and triangulate the interview and observational data.

The results were condensed into “industrial sociological case studies” (Pongratz and Trinczek, 2010), which are presented in the following section. All interview quotes have been translated from German.

Findings

Combustra – Business model development with a future collective agreement

The company in the twin transition

Combustra is a Tier-1 supplier. The company initially specialised in mass-producing components for combustion engines. Building on this, it continuously expanded its product portfolio, both organically through internal development – with the “production knowledge-based product innovation model” (Krzywdzinski, 2019: 221) being a particular strength – and by acquiring companies in neighbouring product segments. Today, Combustra employs several thousand people within a matrix organisation that has historically strong divisions. It generates revenues in the low double-digit billions. The company is owned by a foundation, has a strong co-determination culture, and is bound by regional collective agreements.

The decarbonisation of vehicle drive systems not only affects the original core business with combustion engine components. Many peripheral products like oil filters or exhaust gas recirculation systems are also no longer required in battery electric and fuel cell vehicles. At the same time, efforts initiated by OEMs to centralise software and electronics architectures in their vehicles are presenting Combustra with the challenge of ensuring the compatibility of its offerings. Therefore, many of Combustra’s existing products will either no longer be in demand or will be confronted with comprehensive new requirements. At the same time, the twin transition opens up opportunities for the company to tap into new product segments and services (e.g. thermal management for electric vehicles or charging solutions).

Co-determination initiative

Against the backdrop of these future challenges and uncertainties, it remained largely unclear at a plant level what management’s strategy for the twin transition would mean for individual plants and their workforce. In these circumstances, the co-determination actors at Combustra seized the new possibility presented by the future collective agreement (FCA) (see section 2) and initiated discussions with the management. The goal was to get management to proactively cooperate in a company-wide project on securing the future of the German locations. After intensive negotiations, management agreed to a FCA on the condition that the works council agreed to measures making working hours more flexible. ¹

As part of the FCA, shared targets and an approach were established at the company level. The primary goal is to develop concrete future concepts and measures for all German locations for the years 2028 and 2033. A project structure and procedure comprising two levels of action, at site and group level, was also determined. The project teams at each site are at the heart of the FCA. They develop the future concepts and measures for their own site and involve employees in the process. These teams are made up of members of local management and works councils. Their work is supported by a FCA support team from the Group’s HR department.

At group level, a steering committee has been set up with equal representation from the employer (e.g. divisional management) and the general works council. The committee’s responsibilities include aligning the project teams’ work at the locations with the divisions’ strategic orientation and monitoring the defined milestones. Additionally, a decision-making committee has been established with equal representation from group management, including the CEO, and co-determination actors. This committee serves as an escalation mechanism and is also responsible for the final approval of the future concepts and measures for the locations. Although the committee is composed on a parity basis, the final decision on the adoption of a future concept and the corresponding investments lies with the employer. The FCA runs for 2 years. During this period, redundancies for operational reasons are excluded.

The FCA project began in 2024 and was still ongoing at the time of the survey. However, from the perspective of the co-determination actors, the FCA had already had a positive impact on the company. This refers especially to informal side effects created by the company-wide project. For example, one interviewee described how the cross-divisional flow of information established through FCA meetings enabled one site to take over the production of a product that another site had been unable to produce successfully:

“(…) and then the local site team stepped in and said: Yes, actually, that would be something for us, and then the big calculations began. Is it even worth it, will the customer go along with it (…). Somehow, it all worked out. And now they’ve got the contract for two years, which is great. Without the FCA, without this new approach and without establishing these contacts, it would never have happened. The plant managers probably wouldn’t have dared to throw their hats in the ring because they are very limited in their options. We have now opened up completely new opportunities for them through the project teams” (IO3Co, 578-588).

Challenges for co-determination actors

The co-determination actors report that working on the FCA presents lots of challenges. Firstly, company structures have a strong influence on the project teams and make strategic reorientation difficult. As part of the initial agreement, it was concluded that all activities should align with Combustra’s group processes and its portfolio strategy. In practice, this limits the scope of possibilities:

“When colleagues want to get involved in this kitchen area, for example – you know, kitchens are becoming increasingly technical – then it’s a big hurdle for management to get involved and think more closely about whether they want to do something like that. Because [Combustra] doesn’t have any direct sales and for 50 or 60 years has only had contact with large customers. (…) If you want to get into this consumer area, we don’t have any structures for that” (I03Co, 450-459).

According to this interviewee, project teams are discouraged to develop ideas for products outside the established core business areas. This is seen as particularly problematic by the co-determination actors given that many automotive suppliers are currently looking to diversify into other sectors to stabilise their situation.

Secondly, when developing future concepts and measures for the locations, the works council members in the project teams must explicitly address strategic issues and think and act in an “entrepreneurial manner” (I03Co, 302). This requires not only a break with tayloristic hierarchies and roles but also the development of new skills. One interviewee illustrates this using the example of product cost calculation, which plays a central role in investment appraisal:

“If we are now going to focus more on the topic of product cost calculation, we need training for that, because it’s really not easy. If you want to produce a product, you have to ask yourself, what does production cost? And then there are 50 components that have to be taken into account, it’s unbelievable. And so that the works councils can understand this better and have a better say in the matter, we organise short training courses and workshops where we bring in experts from the central departments. They are usually a little surprised, but that has to be organised by the FCA support team” (I02Co, 523-531). ²

Moreover, the interviews demonstrate that it is very challenging for works councils to progress work on the FCA while adhering to their daily work routines at the respective locations. To support the works council members involved in the project teams, the trade union and the works council officers at Combustra have developed an organisational and communication concept. This includes preparatory workshops, central provision of documents, and regular, four-weekly meetings to exchange information. Nevertheless, the overall workload has increased.

Thirdly, the implementation of the FCA is taking place amid both cooperation and conflict with management. This carries the risk that, if no viable future prospects for the locations are found, the groundwork has ultimately been laid for decisions on job cuts or site closures, making a confrontational approach more difficult. One interviewee illustrates this dilemma as follows:

“You have to be really careful, because that’s also a danger we’ve always seen when you basically come to the conclusion together that the location has no future – what do we do then? It’s not that easy” (I03Co, 440-442).

However, due to the activities surrounding the FCA, the co-determination actors report that they now have much better information for conducting such disputes with management.

Despite all the challenges, the overall assessment of the FCA by the co-determination actors is positive at the current stage of the process. One interviewee draws the following interim conclusion:

“And what is now partly a struggle is ultimately getting the investment approved. (…) But that’s what we have, it was to be expected. But we’re just glad that (…) we can participate in the discussion and are in control of the situation thanks to this project structure and the FCA. The only thing is that we don’t have the final say, but nevertheless, we are now right in the middle of it, getting a lot of information that we didn’t have before, not even through the economic committee, to be honest. And we are also learning a lot in the process” (I02Co, 510-520).

As this statement points out, the FCA initiated a thorough learning process for co-determination actors, teaching them how to maximise their influence on business model development for the benefit of employees. Otherwise, they would have had to rely solely on reactive measures with regard to future investment decisions concerning the company’s German locations. With the FCA, however, it seems that they have at least a seat at the table.

Touchonix – Business model development against limits

The company in the twin transition

Touchonix is a Tier-1 supplier which re-entered the automotive industry in the 1980s specialising in electronics for car interiors. Over the following years, Touchonix successfully positioned itself as a supplier to premium OEMs, establishing long-term customer relationships. Together with its long-term employment relationships, this allowed the company to compete on quality and innovation and avoid pure price competition.

A decisive turning point in Touchonix’s history came when it was acquired by an Asian-based global automotive supplier in the early 2010s. The company was integrated into the group structure as an independent entity. A new CEO was appointed by the Group, and the company’s headquarters remained in Germany. Following the acquisition, Touchonix achieved double-digit annual growth rates and its workforce more than doubled. While growth primarily took place at locations outside Germany, the headquarters increasingly assumed the role of a centre of knowledge and innovation within the global production network. The company currently employs around 7000 people worldwide and has an annual turnover of over 1 billion. It is subject to co-determination and bound by regional collective agreements.

In light of the twin transition, Touchonix’s management viewed the company as a potential “transformation winner” (I07To, 66). On the one hand, its core business for vehicle interiors is expected to play an increasingly important role in end customers’ purchasing decisions. On the other hand, the company also identified e-mobility as an opportunity for growth by diversifying into supplying products based on power electronics and software for electric drive systems.

Co-determination initiative

After its initial success with this strategy, difficulties have increased for Touchonix in recent years. Given intensified competition and a highly volatile e-mobility ramp-up, the management’s expectations could not be met. Instead, they see Touchonix as being in danger of experiencing financial difficulties, especially at its headquarters. In this situation, the works council was confronted with the announcement of several hundred job cuts at the German headquarters.

In reaction to this, the works council and the trade union office devised a strategy to minimise the job losses and secure the future of the site. The goal of this strategy was to convince management to take a different course of action, by simultaneously wielding workforce mobilisation and developing concrete suggestions for new business opportunities. A trade union officer described the situation as follows:

“We have now entered into negotiations. We are currently still in the phase where the employer has to explain a lot of things to us. (…) They mainly specialise in electric mobility here at this location, or would like to do so. However, they are experiencing very difficult product launches and, as a result, very high costs (…). They are now looking for a way to use the plant to serve other business areas as well. There is nothing concrete yet. We are, of course, putting a lot of pressure on them to describe a target vision for how things can continue at the site by developing our own suggestions” (G01To, 86-100).

Shortly before the announcement by Touchonix management, the trade union office had started a region-wide publicity effective campaign because job reductions had been announced at other companies in the region and future prospects for industrial work were dimmed. In reaction to the company’s announcement of job cuts, the works council joined this campaign. As a first move, together they organised a human chain around the factory, which drew attention in the regional press as well as among regional and federal politicians who came to visit the site.

As part of the negotiations to reach an agreement on reconciling interests, ³ the co-determination actors got involved in business model development. They proposed concluding a “future pact” for the site and its employees. This included measures such as jointly developing future plans for each department and collaborating on the economic committee, but these were not taken up by management.

Furthermore, they participated in a research project initiated by the trade union office to develop concrete measures to secure industrial workplaces in regional companies. As part of the project, a group of works council members, employees, and local managers collaborated with a team of researchers to develop measures aimed at improving the situation at the location and leveraging the region’s resources. These measures were subsequently presented to the executive management, who gave due consideration to the suggestions and agreed with some of them. Ultimately, however, the matter was not pursued.

As part of this project, Touchonix’s works council also facilitated participation in a workshop with stakeholders from the region’s space sector. The workshop aimed to ascertain whether regional automotive suppliers such as Touchonix could potentially enter into the serial manufacturing of small satellites, and to connect the various stakeholders. A small group of managers from Touchonix’s research and development department participated alongside a works council representative. They assessed that Touchonix possesses almost all the necessary skills and technologies to do so. In the aftermath, a manager prepared a feasibility study for executive management. By the end of the investigation period, management had not responded to this proposal.

Challenges for co-determination actors

Despite all efforts so far, management has not taken up any of the initiatives by the co-determination actors to proactively shape the future of the location. The mood among the co-determination actors fluctuates between resignation and persistence. One member of the works council describes his assessment as follows:

“Economic decisions: zero. The Works Constitution Act doesn’t provide for anything in this regard (…) so you have the right to make suggestions or to be consulted. But what is that worth? You say, we can do it this way or that way, and then the employer says no. Then the matter is closed. (…) We just make a fuss, and the question is how the employer reacts to that. If they don’t want to lose face, then they do a little bit of what we want. Otherwise, it’s just a capitalist decision that goes against morality. That’s it…” (G02To, 124-131).

At the same time, the initial mobilisation from the workforce and regional stakeholders faded. Further forms of protest, such as a Future Day held during working hours in front of the location, attracted significantly fewer participants. A trade union secretary reflected on this as follows:

“When it became clear at [Touchonix] that they wanted to go ahead with cutting several hundred jobs, we organised a human chain around the factory within, I think, a week and a half. As the [trade union office], we are always able to do that. We have the previous experience and the power to mobilise people. What we find much more difficult (…) is maintaining this capacity for mobilisation over time, over months” (I03To, 959-972).

Interviewed co-determination actors reported that their engagement in business model development required the acquisition of new skills that go beyond the traditional, primarily reactive role of employee representation. This included technical, market, and business administration knowledge to be able to confront management “on their own terrain” by developing factual analyses and alternative proposals. They also highlighted networking competencies to mobilise external expertise from research institutions and actors in emerging industries. Campaign competencies, including the ability to build organisational power and sustain conflict when necessary, were also seen as crucial.

Overall, the combination of protest forms and business model development work could not contribute to improve the outlook for the headquarters location. Touchonix is facing uncertain times. There is a high risk of a downward spiral, in which the key resources of the business model and location could be depleted further. Without the expertise, motivation, and commitment of its engineers and skilled workers, the supposed transformation winner Touchonix will find it difficult to achieve long-term competitive advantages in terms of price-performance ratio.

Precitron – Driving business model development in a SME

The company in the twin transition

Precitron is a metal component supplier. This third-generation family business employs around 200 people. For many decades, its main sales sector has been the automotive industry. Over time, the company has specialised in producing complex transmission parts for drive systems with combustion engines. According to an interviewee, this niche strategy enables the company to “sell not just on price, but on performance” (I02Pr, 145). The company generates a turnover in the mid double-digit million range. Unlike many of its competitors, it is a co-determined company bound by regional collective agreements, with a high proportion of skilled workers, many of whom have completed their training within the company.

Following record sales in previous years due to the boom in automatic transmissions, the market environment for Precitron changed significantly in the second half of the 2010s. The electrification has fundamental impact on Precitron’s business model. Battery-powered and fuel cell electric vehicles generally do not require complex multi-speed transmissions. In response to this, management has made isolated and quiet attempts to diversify the product range. However, there has hardly been any systematic examination of developing new business areas. Instead, vocational training operations within the company were discontinued, with a decline in employment being accounted for as part of a “last man standing strategy.” This has led to increased uncertainty and deteriorating morale among the workforce.

Co-determination initiative

In this situation, the co-determination actors at Precitron took action. Guided by a transformation expert from the union’s district management office, the works council and the local trade union officer for the company conducted a workshop to assess Precitron’s future prospects. During the workshop, a significant need for business model reconfiguration was identified. The co-determination actors then presented the results to the management for discussion, together with the trade union expert. The management were convinced of the need for action by the argument that, without developing new business areas, Precitron would not only shrink, but rather disappear completely in the long term. In retrospect, an interviewee described this as follows:

“That was a huge topic in the discussion (…). The [management] saw it differently. But we made a pretty good case because we were well prepared. Because its strategy for dealing with the decline in combustion engines was: yes, we’ll simply shrink to 150 people. And our communication was: you can’t believe that yourself. The 150-person strategy will lead to a complete shutdown, and the good people, who can easily find work elsewhere (…) will simply leave. And then the efficiency of the company will disappear when you need it. And the company would race down to zero. And [the management] also showed respect in the face of this scenario” (G01Pr, 326-336).

Another important point was the works council’s situational awareness, namely that a succession in the management of the family business was imminent, and it succeeded in involving the designated successor with an interest in long-term stability in the discussion.

During the meeting, it was agreed on an informal basis that a social partnership project for business model development, with scientific support, would be carried out at Precitron. Specifically, the aim was to identify new product segments within the electromobility and hydrogen sectors. A team was formed to carry out the five-month project. This team included management, works council and trade union representatives, as well as employees from technical planning, quotations, production, and quality assurance. In addition, the project team included social and technical science research institutes, who were brought on board by the trade union and whose expenses were financed by a project grant.

Challenges for co-determination actors

Business model development work at Precitron presented a number of challenges. One of the initial challenges was to develop a shared understanding of the company’s business model within the project team. In retrospect, one participant described this process as follows:

“In the analysis phase, it took us a really, really long time to get to the heart of what [Precitron’s] product actually is. The product [of Precitron] is not gearbox components, but the product of [Precitron] is highly complex turned precision parts that it can produce in a wide variety of batches with the highest accuracy, zero defects and with difficult materials” (G07Pr, 471-476).

Taking into account the limited investment scope available to an SME and building on Precitron’s capabilities, search criteria were developed for analysing the e-mobility and hydrogen business areas. The project group then held workshops with external stakeholders from these new business areas to explore and test opportunities for Precitron. The results showed a concrete need for the production of complex turned parts in both business fields. Examples include components for thermal management, battery systems and parking locks in electric, and valves and compressors in fuel cell vehicles.

The direct involvement of employees from different specialist areas, which was insisted on by co-determination actors, benefited this process. Not only were employees able to contribute their expertise (e.g. regarding the manufacturability of components), but also to gain first-hand knowledge of the business areas, which they applied directly to the analysis of current requests for quotations in their day-to-day business.

The project also made it clear that a key challenge in developing new business areas is realigning sales activities within Precitron. As part of the niche strategy, sales had previously focused primarily on consolidating and expanding market share in the product segment involving turned parts for automatic transmissions. After a reference was successfully established with an initial customer, it was used to acquire further orders from competitors of that customer. The project team found that this approach falls short when the business model needs to be reconfigured. As one participant explained, the sales strategy will now be realigned:

“Sales is actually also a very important point, that we take part in various specialist events and trade fairs, simply to always think outside the box. We lacked that a bit before and I think it opened our eyes during the course of the project to the fact that it is very, very important to always keep up to date with the state of the art” (G07Pr, 274-278).

During the workshops, the co-determination actors emphasised this point, convincing the management to increase sales capacities and give selected employees the opportunity to build networks with stakeholders in new business areas. This could be achieved by visiting trade fairs, for example, and gradually improving knowledge of requirements and market developments.

Overall, however, it has become clear through the project that replacing the transmission parts business with components for electromobility or hydrogen on a one-to-one basis is unlikely. Instead, the company will need to adopt a more diversified approach in the medium term, possibly also including other sectors besides automotive, such as manufacturing and defence. By the end of the project, management and the works council had informally agreed to consolidate activities in business model development. A permanent “transformation team” consisting of members of the project group, management, and the works council has been formed at Precitron and will meet regularly to continue the work of developing new business areas.

The business model development activities also improved the mood among the rest of the staff. Due to the insistence of the co-determination actors, they were not only continuously informed about the progress of the project through General works meetings and updates on the company’s bulletin board but were also able to directly contribute their ideas and suggestions at workshops organised by the co-determination actors. The results of these workshops were then presented to the project team by the co-determination actors, building a strong case for continuing the work.

Following the period under review, Precitron successfully obtained their first major order from a new customer in the e-mobility sector. This case study therefore demonstrates how the involvement of co-determination actors in business model development can actually have a positive impact in terms of securing employment in the “twin transition.”

Discussion and outlook

The case studies provide a detailed account on how co-determination actors at German automotive suppliers attempt to influence business model development at their respective firms in the twin transition.

Regarding the question of how these attempts unfold in practice and what role co-determination actors can play, the cases provide a mixed picture. At Combustra, co-determination actors succeeded in setting up a cross-divisional project with the group management within the formal framework of a FCA. This will enable clear future prospects and measures to be developed for the individual German sites, giving the locations initiative in this process for the first time. At Precitron, co-determination actors conducted a systematic review of the current business model, which is heavily reliant on internal combustion engines, and convinced the management to support an informal social partnership project to access new product segments. The project ultimately contributed to attaining the first order in the field of e-mobility. At Touchonix, management has so far ignored the various initiatives of the co-determination actors. In response to the announcement of job cuts due to the difficult e-mobility ramp-up, the co-determination actors attempted to convince management of a different course, by developing their own proposals for the future development of the headquarters and even established contacts with actors in new business areas.

Moreover, the cases show that influencing the development of business models poses significant challenges for co-determination actors. Like management, they too face the fundamental strategic challenge of changing an established company with its structures, processes, and ways of thinking during ongoing operations and under conditions of deep uncertainty. In the supplier industry, organisational path dependencies are particularly strong due to its downstream position in the automotive value chain. Suppliers must always take into account the reactions of the OEMs, when making any new strategic decisions. To help develop viable alternatives, co-determination actors need to acquire comprehensive new skills, as previous studies have also indicated. The case studies provide more detail on these skills.

On the one hand, they relate to formal skills. When engaging in business model development, co-determination actors assume a task that traditionally has been considered the exclusive domain of management. The necessary skills to develop independent suggestions range from a thorough understanding of the company’s core competencies and matching them to current technological and market developments, to business administration skills such as investment appraisal, and business model development skills, including the use of relevant instruments and procedures. At the same time, it is crucial for co-determination actors to pair these skills with what can be termed “classic” co-determination “craftsmanship.” This includes having a precise knowledge of their co-determination rights and channels in order to gather the necessary information and voice their proposals, as well as organising skills.

Under the present regulatory environment, however, these formal skills are not sufficient. As the case studies indicate, co-determination actors must intelligently combine conflict and cooperation (Müller-Jentsch, 1991) in order to maximise their influence on business model development. At Combustra, for example, the fact that the co-determination actors were able to threaten to withhold their approval of a new overtime regulation was decisive for the conclusion of the negotiations on the FCA and the reaching of an agreement.

The second set of skills required of co-determination actors to influence business model development is informal and largely relates to what the sociology of work has described as “experience-based knowledge” (Böhle, 1994). In the case of Precitron, for example, the co-determination actors recognised the impending generational succession within the family-run business as an opportunity for change. In this regard, relevant skills include network competencies (e.g. trustful relations to internal and external experts), stakeholder visibility leverage (e.g. utilising employee awareness and external public scrutiny), situational awareness & strategic timing (e.g. recognising (un-)favourable conjunctures), indirect leverage (e.g. expanding negotiating leeway and mobilising power resources in other fields), investment coalition building (e.g. with plant management to influence higher-level corporate decisions), and articulation (e.g. integrating employee representatives into common strategies).

Figure 1 provides an overview of the skillsets. Combining these can help to maximise influence business model development. However, the relationship is not causal or deterministic; at best, they increase the probability that management will engage with and adopt elements of these proposals. Even when co-determination actors develop well-founded proposals and mobilise the workforce, the ultimate decision to adopt them depends on managerial goodwill. The example of Touchonix illustrates this. But it also remains true even in new institutional arrangements, such as FCAs, which create arenas for discussion but do not establish enforceable decision rights, as the example of Combustra shows. At the same time, Precitron’s case in particular demonstrates that developing credible proposals and mobilising employees can be of significant strategic relevance. Overall, therefore, the analysis shows that meaningful participation in the field of business model development in a system of industrial relations that does not structurally provide for it depends heavily on how the actors involved utilise the limited opportunities available to them.

Figure 1.

Influencing business model development: A competency framework for co-determinations actors.

While these findings are partly shaped by the institutional context of German industrial relations, they also have broader relevance for European industrial relations. In particular, they provide insights for ongoing EU-level discussions on a “Just Transition” directive, which would require companies to develop transition plans (Picard, 2025), and thereby highlight the importance of strategic co-determination at the company level in shaping such transformations. At the same time, the study reveals a broad range of skillsets that are not necessarily dependent on specific institutional arrangements. This makes the findings relevant for other national contexts where similar initiatives by co-determination actors aimed at influencing business model development are beginning to materialise.

Supplemental Material

Supplemental Material - Strategic co-determination in business model development. An empirical analysis of the German automotive supplier industry in the twin transition

Supplemental Material for Strategic co-determination in business model development. An empirical analysis of the German automotive supplier industry in the twin transition by Alexander Ziegler in European Journal of Industrial Relations.