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On the Efficiency of Profit Sharing and Labor Participation in Management

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  • Alfred Steinherr

Abstract

This paper attempts a generalization of both the theory of the labor-managed firm and that of the managerial firm by allowing all members of the firm to participate in decisionmaking and sharing of profits. We demonstrate that under rather plausible assumptions, and independently of the objective function of the firm, some profit sharing and participation in decisionmaking are required for Pareto efficiency. The allocation relations for factors of production that obtain under different decision-making structures are shown to be substantially different from each other and also different from what pure profit maximizing would indicate.

Suggested Citation

  • Alfred Steinherr, 1977. "On the Efficiency of Profit Sharing and Labor Participation in Management," Bell Journal of Economics, The RAND Corporation, vol. 8(2), pages 545-555, Autumn.
    • Handle: RePEc:rje:bellje:v:8:y:1977:i:autumn:p:545-555
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    Cited by:

    1. Estrin, Saul, 2021. "Introduction to symposium on the impact of employee influence," LSE Research Online Documents on Economics 110516, London School of Economics and Political Science, LSE Library.
    2. Saul Estrin, 2021. "Introduction to symposium on the impact of employee influence," British Journal of Industrial Relations, London School of Economics, vol. 59(4), pages 982-987, December.
    3. Felix FitzRoy & Kornelius Kraft, 2005. "Co‐determination, Efficiency and Productivity," British Journal of Industrial Relations, London School of Economics, vol. 43(2), pages 233-247, June.
    4. Vontalge, Alan L., 1991. "A feasibility study of swine producer management cooperatives," ISU General Staff Papers 1991010108000018168, Iowa State University, Department of Economics.
    5. repec:ilo:ilowps:453417 is not listed on IDEAS

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