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Profit sharing and firm size: The role of team production

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  • Heywood, John S.
  • Jirjahn, Uwe

Abstract

This paper presents a model showing that profit sharing is subject to the 1/N problem in the case of independent worker productivity but not in the case of interdependent worker productivity. This implies the role of firm size on the likelihood of profit sharing will differ by the nature of the underlying technology. We test this implication using German establishment data and using a proxy for interdependent worker productivity. The results conform to the theory showing that firm size is associated with reduced profit sharing use when technology is independent but not when technology is interdependent.

Suggested Citation

  • Heywood, John S. & Jirjahn, Uwe, 2009. "Profit sharing and firm size: The role of team production," Journal of Economic Behavior & Organization, Elsevier, vol. 71(2), pages 246-258, August.
  • Handle: RePEc:eee:jeborg:v:71:y:2009:i:2:p:246-258
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Long, Richard J. & Fang, Tony, 2013. "Profit Sharing and Workplace Productivity: Does Teamwork Play a Role?," IZA Discussion Papers 7869, Institute for the Study of Labor (IZA).
    2. Uwe Jirjahn & Jens Mohrenweiser, 2015. "Performance Pay and Applicant Screening," Research Papers in Economics 2015-11, University of Trier, Department of Economics.
    3. Uwe Jirjahn, 2018. "The adoption and termination of profit sharing for employees: does management’s attitude play a role?," Applied Economics, Taylor & Francis Journals, vol. 50(2), pages 108-127, January.
    4. Thomas Cornelissen & John S. Heywood & Uwe Jirjahn, 2010. "Profit Sharing and Reciprocity: Theory and Survey Evidence," SOEPpapers on Multidisciplinary Panel Data Research 292, DIW Berlin, The German Socio-Economic Panel (SOEP).
    5. Thomas Cornelissen & John Heywood & Uwe Jirjahn, 2014. "Reciprocity and Profit Sharing: Is There an Inverse U-shaped Relationship?," Journal of Labor Research, Springer, vol. 35(2), pages 205-225, June.
    6. Göddeke, Anna & Haucap, Justus & Herr, Annika & Wey, Christian, 2011. "Stabilität und Wandel von Arbeitsmarktinstitutionen aus wettbewerbsökonomischer Sicht," DICE Ordnungspolitische Perspektiven 10, University of Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    7. Tony Fang, 2016. "Profit sharing: Consequences for workers," IZA World of Labor, Institute for the Study of Labor (IZA), pages 225-225, January.
    8. Uwe Jirjahn & Kornelius Kraft, 2010. "Teamwork And Intra-Firm Wage Dispersion Among Blue-Collar Workers," Scottish Journal of Political Economy, Scottish Economic Society, vol. 57(4), pages 404-429, September.
    9. Palsule-Desai, Omkar D. & Tirupati, Devanath & Chandra, Pankaj, 2013. "Stability issues in supply chain networks: Implications for coordination mechanisms," International Journal of Production Economics, Elsevier, vol. 142(1), pages 179-193.
    10. Chao, Hong & Croson, Rachel T.A., 2013. "An experimental comparison of incentive contracts in partnerships," Journal of Economic Psychology, Elsevier, vol. 34(C), pages 78-87.
    11. Petr Petera & Jana Fibírová, 2015. "Basic Approaches to Profit-Sharing and Ideas for Utilization," Český finanční a účetní časopis, University of Economics, Prague, vol. 2015(3), pages 97-117.
    12. Kornelius Kraft & Julia Lang, 2016. "Just a Question of Selection? The Causal Effect of Profit Sharing on a Firm's Performance," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 55(3), pages 444-467, July.

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