Using representative data from the IAB Establishment Panel, we show that the managerial environment has a strong influence on the introduction and survival of works councils. Employees in owner-managed establishments are less likely to introduce a works council. Moreover, in case of an introduction, the new works council is less likely to survive if the establishment is owner-managed. The pattern of results even holds in situations that involve positive economic effects of works councils. This suggests that owner-managers oppose works councils not primarily for economic reasons. Our findings are rather consistent with the hypothesis that owner-managers oppose co-determination because it reduces the utility they gain from being the ultimate bosses within the establishment. © 2015 John Wiley & Sons Ltd/London School of Economics.
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