Financial impact of management by self-determination: Empirical evidence from Finland

The aim was to examine the mechanisms involved when applying self-determination as a management concept. We called such an approach Management by Self-Determination (MbSD). We particularly wanted to examine the financial effects of MbSD. We formulated a model in which the financial performance of MbSD is mediated by the determinants of personnel productivity. We collected survey data from 252 randomly selected Finnish enterprises from all major branches of industry and all company sizes. We defined MbSD as (1) personnel related management values, (2) supervisor support, and (3) employee decision-making latitude. Together they formed the MbSD-index. Motivation, competence and work-ability were determinants of personnel productivity. Relative operating profit % indicated financial performance. We found some support for our model, which to some extent explains how self-determination operates as a management tool. We also found that there is some relationship between MbSD and the financial performance of the company. Management values and employee decision-making latitude seem to be particularly important. The direction of causality remained still open, however.