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How Does Shared Capitalism Affect Economic Performance in the UK?

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  • Alex Bryson
  • Richard Freeman

Abstract

This paper uses nationally representative linked workplace-employee data from the British 2004 Workplace Employment Relations Survey to examine the operation of shared capitalist forms of pay - profit-sharing and group pay for performance, employee share ownership, and stock options—and their link to productivity. It shows that shared capitalism has grown in the UK, as it has in the US; that different forms of shared capitalist pay complement each other and other labour practices in the sense that firms use them together more than they would if they chose modes of pay and work practices independently; and that workplaces switch among schemes frequently, which suggests that they have trouble optimizing and the transactions cost of switching are relatively low. Among the single schemes, share ownership has the clearest positive association with productivity, but its impact is largest when firms combine it with other forms of shared capitalist pay and modes of organization.

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Bibliographic Info

Paper provided by Centre for Economic Performance, LSE in its series CEP Discussion Papers with number dp0885.

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Date of creation: Aug 2008
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Handle: RePEc:cep:cepdps:dp0885

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Web page: http://cep.lse.ac.uk/_new/publications/series.asp?prog=CEP

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Keywords: share ownership; payment systems; labour productivity;

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  1. Baker, George & Gibbons, Robert & Murphy, Kevin J, 1994. "Subjective Performance Measures in Optimal Incentive Contracts," The Quarterly Journal of Economics, MIT Press, vol. 109(4), pages 1125-56, November.
  2. Martin Conyon & Richard B. Freeman, 2004. "Shared Modes of Compensation and Firm Performance U.K. Evidence," NBER Chapters, in: Seeking a Premier Economy: The Economic Effects of British Economic Reforms, 1980-2000, pages 109-146 National Bureau of Economic Research, Inc.
  3. David Card & Richard Blundell & Richard B. Freeman, 2004. "Seeking a Premier Economy: The Economic Effects of British Economic Reforms, 1980-2000," NBER Books, National Bureau of Economic Research, Inc, number card04-1, October.
  4. Alex Bryson & Pendleton, A. and Whitfield, K., 2008. "The Changing Use of Contingent Pay at the Modern British Workplace," NIESR Discussion Papers 319, National Institute of Economic and Social Research.
  5. Kochan, Thomas A., 1996. "What works at work : overview and assessment," Working papers 3886-96., Massachusetts Institute of Technology (MIT), Sloan School of Management.
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Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Pitfalls in employee ownership
    by chris dillow in Stumbling and Mumbling on 2012-01-17 15:12:23
  2. Framing worker democracy
    by chris dillow in Stumbling and Mumbling on 2012-10-01 14:28:05
  3. Control: Osborne's missing word
    by chris dillow in Stumbling and Mumbling on 2012-10-08 13:56:53
  4. Supply-side socialism
    by chris dillow in Stumbling and Mumbling on 2013-03-11 14:32:11
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Cited by:
  1. Almudena Cañibano & David Marsden, 2009. "Participation in Organisations: Economic Approaches," CEP Discussion Papers dp0945, Centre for Economic Performance, LSE.
  2. Kato, Takao & Lee, Ju Ho & Ryu, Jang-Soo, 2010. "The Productivity Effects of Profit Sharing, Employee Ownership, Stock Option and Team Incentive Plans: Evidence from Korean Panel Data," IZA Discussion Papers 5111, Institute for the Study of Labor (IZA).
  3. Pouliakas, Konstantinos & Theodoropoulos, Nikolaos, 2011. "The Effect of Variable Pay Schemes on Workplace Absenteeism," IZA Discussion Papers 5941, Institute for the Study of Labor (IZA).
  4. Richard Belfield & David Marsden, 2009. "Institutions and the Management of Human Resources: Incentive Pay Systems in France and Great Britain," CEP Discussion Papers dp0941, Centre for Economic Performance, LSE.

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