Employee ownership: does firm's size matter ?
AbstractA theoretical model is considered in a monopoly setting, where the production cost of the firm depends on the efforts of employees who may receive a positive part of the capital if the shareholders find profitable to do so. We specify the condition under which at Nash equilibrium the firm distributes a positive part of its capital to employees, and analyze the effects of this employee ownership strategy on social welfare. We show that the conditions under which shareholders attribute a positive share of capital to employees, is related jointly to the firm’s size and effort disutility, which makes the novelty of our paper relative to the previous papers considering the firm’s size alone. This joint role is tested empirically, using a French data base “REPONSE 2004-2005”. Our paper may allow to explain why in the empirical literature there is no consensus regarding the relationship between firm’s size and employee ownership implementation.
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Bibliographic InfoPaper provided by Centre d'Études des Politiques Économiques (EPEE), Université d'Evry Val d'Essonne in its series Documents de recherche with number 12-02.
Length: 23 pages
Date of creation: May 2012
Date of revision:
employee ownership; employees’ efforts; firm’s size; effort disutility; social welfare; absenteeism;
Find related papers by JEL classification:
- C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
- C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
- M5 - Business Administration and Business Economics; Marketing; Accounting - - Personnel Economics
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