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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. Martin J. Conyon & Richard Freeman, 2002. "Shared Modes of Compensation and Firm Performance: UK Evidence," CEP Discussion Papers dp0560, Centre for Economic Performance, LSE.
  2. Kochan, Thomas A., 1996. "What works at work : overview and assessment," Working papers 3886-96., Massachusetts Institute of Technology (MIT), Sloan School of Management.
  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, May.
  4. 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.
  5. repec:nsr:niesrd:319 is not listed on IDEAS
  6. 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.
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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. 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).
  2. Kato, Takao & Kauhanen, Antti, 2013. "Performance Pay and Enterprise Productivity: The Details Matter," ETLA Working Papers 21, The Research Institute of the Finnish Economy.
  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. Almudena Cañibano & David Marsden, 2009. "Participation in Organisations: Economic Approaches," CEP Discussion Papers dp0945, Centre for Economic Performance, LSE.
  5. 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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