When examining the relationship between employee attitudes and performance, it’s crucial to consider the direction of causality; while positive employee attitudes contribute to enhanced performance, enhanced performance also stimulates positive employee attitudes. This study addresses this interplay at the firm level, examining how collective employee attitudes and firm performance are interconnected. Building on existing theory and research, we argue that these two variables have a positive reciprocal relationship; firm performance has a positive, time-lagged effect on collective employee attitudes, and conversely, collective employee attitudes have a positive, time-lagged effect on firm performance. Drawing on the employee review data from an employee review website in Japan, we empirically test this time-lagged reciprocal relationship using cross-lagged panel model. The results of the analyses support our argument; there is a positive reciprocal relationship between collective employee reviews on organizational management (pay satisfaction, motivation, and justice) and firm performance (ROA, Tobin’s Q, and total shareholders’ return).
