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Profit-Sharing and Productivity: An Analysis of UK Engineering Firms

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  • Cable, John
  • Wilson, Nicholas
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    Abstract

    This paper reports productivity differentials of 3-8 percent in favor of profit-sharing firms in the U.K. engineering industry. The estimates come from equations in which profit sharing interacts with factor input levels and the firms' technological, organizational, and labor-force characteristics, and imply more than a simple incentive effect on work effort, or more "cooperative" behavior in given circumstances. A technological/labor-relations interpretation of the origin of the gains is suggested, which are found to be asymmetrically distributed. The results question policy measures to encourage profit sharing that do not take account of its significance in the process of organizational design. Copyright 1989 by Royal Economic Society.

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    Bibliographic Info

    Article provided by Royal Economic Society in its journal The Economic Journal.

    Volume (Year): 99 (1989)
    Issue (Month): 396 (June)
    Pages: 366-75

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    Handle: RePEc:ecj:econjl:v:99:y:1989:i:396:p:366-75

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    Cited by:
    1. Wolf, Elke & Zwick, Thomas, 2002. "Produktivitätswirkung von Mitarbeiterbeteiligung : der Einfluss von unbeobachteter Heterogenität (The effect of employee participation in asset formation on productivity : the influence of unobserve," Mitteilungen aus der Arbeitsmarkt- und Berufsforschung, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 35(1), pages 123-132.
    2. Bruce A. Rayton, 1996. "Rent-Sharing or Incentives? Estimating the Residual Claim of Average Employees," Labor and Demography 9603002, EconWPA, revised 09 Sep 1996.
    3. Martin J. Conyon & Richard Freeman, 2002. "Shared Modes of Compensation and Firm Performance: UK Evidence," CEP Discussion Papers dp0560, Centre for Economic Performance, LSE.
    4. repec:iab:iabmit:v:35:i:1:p:123-132 is not listed on IDEAS
    5. Cahuc, P. & Dormont, B., 1992. "Profit-Sharing: Does It Increase Productivity and Employment? A Theoretical Model and Empirical Evidence of French Micro Data," Papiers d'Economie Mathématique et Applications 92.45, Université Panthéon-Sorbonne (Paris 1).
    6. Tim R.L. Fry & Kelly Jarvis & Joanne Loundes, 2002. "Are Pro-Reformers Better Performers?," Melbourne Institute Working Paper Series wp2002n18, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    7. Hübler, Olaf, 1995. "Produktivitätssteigerung durch Mitarbeiterbeteiligung in Partnerschaftsunternehmen? (Increase in productivity through employee participation in partnership companies)," Mitteilungen aus der Arbeitsmarkt- und Berufsforschung, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 28(2), pages 214-223.
    8. Tim Jenkinson & Sandeep Bhargava, 1996. "Partage explicite ou implicite du profit dans la détermination des salaires," Économie et Prévision, Programme National Persée, vol. 126(5), pages 19-29.
    9. Yao, Shujie, 1997. "Profit Sharing, Bonus Payment, and Productivity: A Case Study of Chinese State-Owned Enterprises," Journal of Comparative Economics, Elsevier, vol. 24(3), pages 281-296, June.
    10. Xin Meng & Frances Perkins, 1996. "Behavioural Differences among Chinese Firms - From the Perspective of Earnings Determination," Trade and Development 96/9, Australian National University, Department of Economics.
    11. Engellandt, Axel & Riphahn, Regina T., 2004. "Incentive Effects of Bonus Payments: Evidence from an International Company," IZA Discussion Papers 1229, Institute for the Study of Labor (IZA).
    12. Joanne Loundes, 2000. "Management and Industrial Relations Practices and Outcomes in Australian Workplaces," Melbourne Institute Working Paper Series wp2000n12, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    13. repec:iab:iabmit:v:28:i:2:p:214-223 is not listed on IDEAS
    14. Möller, Iris, 2000. "Produktivitätswirkung von Mitarbeiterbeteiligungen (Productivity effect of employee participation in asset formation)," Mitteilungen aus der Arbeitsmarkt- und Berufsforschung, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 33(4), pages 565-582.
    15. FitzRoy, Felix R. & Kraft, Kornelius, 1995. "On the choice of incentives in firms," Journal of Economic Behavior & Organization, Elsevier, vol. 26(1), pages 145-160, January.
    16. Alex Bryson & Richard B. Freeman, 2007. "Doing the right thing? does fair share capitalism improve workplace performance," LSE Research Online Documents on Economics 4964, London School of Economics and Political Science, LSE Library.
    17. repec:iab:iabmit:v:33:i:4:p:565-582 is not listed on IDEAS

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