Employee Participation in Profit and Ownership – Impact on Work Efficiency


In the vast theoretical literature, a number of arguments have been put forward in favor of employee financial participation schemes. Although traditionally the main arguments were spurred by objectives such as greater equality in the distribution of income and wealth and improving relations between workers and capitalist owners, today employee financial participation schemes are considered as part of industrial relations based on innovative managerial strategies and more flexible remuneration policies, which should ultimately result in increased enterprise efficiency. Because share ownership and profit sharing schemes are undoubtedly the most popular schemes, emphasis has been put on showing the multidimensional relationships between employee financial ownership and economic results, as well as on proving that the relationship between employee ownership and productivity involves an inherently complex interaction.

The purpose of this paper is to present selected views and attitudes toward the relationship between employee participation and company results. The theoretical view and empirical research both indicate that after many years of conducting empirical research on the benefits resulting from the implementation of financial participation plans, the information provided, almost entirely by reports, is not yet sufficient to make any unequivocal conclusions concerning the influence on the results (productivity) achieved by companies. Obtaining such a consensus is additionally hindered because of the lack of clear-cut data concerning the extent to which implemented participation schemes contribute to changes in financial results. In conclusion, both the previous theory as well as the research conducted so far do not convincingly explain the relationship between financial participation schemes and the results achieved owing to their implementation, which demonstrates that there is a need to conduct further research in this field. In this case any empirical approach should concentrate on qualitative, not quantitative research, the latter of which, although broad based, does not identify the above mentioned relationships precisely enough. Another conclusion that can be drawn is the necessity to conduct further research based on larger samples of companies, taking into account the specificity of their business and working environment. It seems that some other aspects should be also taken into consideration, such as the type of the financial participation scheme introduced, because this decision may also have an influence on future results. Research should begin a long time prior to the introduction of a scheme in the company, which would allow for making future comparisons and evaluations of the influence of a given scheme on productivity.

If the inline PDF is not rendering correctly, you can download the PDF file here.

  • Biagioli M. and S. Curatolo (1999), Microeconomic determinants and effects of financialparticipation agreements: An empirical analysis of the large Italian firms of the engineeringsector in the eighties and early nineties, Economic Analysis (2)2

  • Black S.E. and L.M. Lynch (2001), How to compete: The impact of workplace practices andinformation technology on productivity, The Review of Economics and Statistics, (83)3

  • Blasi J., M. Conte and D.L. Kruse (1996), Employee stock ownership and corporate performanceamong public companies, Industrial and Labor Relations Review, 50(1)

  • Blanchflower D.G., A.J. Oswald (1988), Profit-related pay: Prose discovered?, Economic Journal, (98)392

  • Cable J. and N. Wilson (1989), Profit-sharing and productivity: An analysis of UK engineeringfirms, 'Economic Journal, (99)396

  • Carstensen V., K. Gerlach and O. Hübler (1995), Profit sharing in German Firms, [in:] Friedrich Buttler, Wolfgang Franz, Ronald Schettkat, David Soskice (eds.), Institutional Frameworks andLabour Market Performance: Comparative Views on US and German Economies, Routledge, London and New York

  • Cooke W.N. (1994), Employee participation programs, group-based incentives, and companyperformance: A union-nonunion comparison, Industrial & Labor Relations Review, (47)4

  • Drago R. and J.S. Heywood (1995), The choice of payment Schemes: Australian establishmentdata, Industrial Relations, (34)4

  • Estrin S., V. Pérotin, A. Robinson and N. Wilson (1999), Profit-sharing revisited: British andFrench experience compared, London Business School, International Labour Office, Bradford University and Leeds University Business School, mimeo, Leeds

  • Fakhfakh F. and V. Pérotin (2002), France: Weitzman under State Paternalism?, [in:] Michelle Brown and John S. Heywood (eds.), Paying for Performance. An International Comparison, M.E. Sharpe, Armonk NY

  • Fakhfakh F. (1998), Sharing schemes and productivity: An empirical analysis based on largeFrench firms using production functions and frontiers, “Advances in the Economic Analysis of Participatory and Labor-Managed Firms”, vol. 6

  • Freeman R.B. and E.P. Lazear (1995), An economic analysis of works councils, [in:] Joel Rogers and Wolfgang Streeck (eds.), Works Councils - Consultation, Representation, and Cooperation inIndustrial Relations, National Bureau of Economic Research, Comparative Labor Markets Series, University of Chicago Press, Chicago

  • Heywood J.S. and U. Jirjahn (2002), Payment systems, gender and industrial relations inGermany, Industrial Labor Relations Review, (56)1

  • Jirjahn U. (2002), The German experience with performance pay, [in:] Michelle Brown and John S. Heywood (eds.), Paying for Performance. An International Comparison, M.E. Sharpe, Armonk NY, (German research)

  • Jones D.C. and T. Kato (1995), The productivity effects of employee stock ownership plans andbonuses: Evidence from Japanese panel data, American Economic Review, (85)3

  • Jones D.C. (1999), The nature and the effects of worker participation, employee ownership andprofit sharing on economic performance: A review of empirical evidence for transitionaleconomies, paper presented at the Conference on Democracy, Participation and Economic Development, Columbia University, April

  • Kato T. and M. Morishima (2000), The nature, scope and effects of profit sharing in Japan:Evidence from new survey data, mimeo, Colgate University, New York

  • Kato T. (2002), Financial participation and pay for performance in Japan, [in:] Michelle Brown and John S. Heywood (eds.), Paying for Performance. An International Comparison, M.E. Sharpe, Armonk NY, (Japanese research)

  • Kruse D.L. and J.R. Blasi (1997), Employee ownership, employee attitudes and firm performance:A review of the evidence, [in:] DawidLewin, Daniel J.B. Mitchell and Mahmood A. Zaidi (eds.), The Human Resource Management Handbook, Part 1, JAI Press, Greenwich, CT, US, (American research)

  • Kruse D.L. (1992), Profit sharing and productivity: Microeconomic evidence from the UnitedStates, Economic Journal', (102)410

  • Kruse D.L. (1993), Profit-Sharing: does it Make a Difference? The Productivity and StabilityEffects of Employee Profit-Sharing Plans, W.E. Upjohn Institute for Employment Research, Kalamazoo, Michigan

  • Long R.J. (2002), Performance pay in Canada, [in:] Michelle Brown and John S. Heywood (eds.), Paying for Performance. An International Comparison, M.E. Sharpe, Armonk NY, (Canadian research)

  • Mathieu M. (2009), Annual Economic Survey Of Employee Ownership in European Countries2008, European Federation of Employee Share Ownership, Brussels, May

  • Möller I. (2000), Produktivitätswirkung von Mitarbeiterbeteiligung, ʻMitteilungenaus derArbeitsmarkt- und Berufsforschungʼ, InstitutfürArbeitsmarkt- und Berufsforschung, Nürnberg, (33)4

  • OECD (1995), Profit Sharing in OECD Countries, 'Employment Outlook', Paris, July

  • Ohkusa Y. and F. Ohtake (1997), The productivity effects of information sharing, profit sharingand ESOPs, Journal of the Japanese and International Economics (11)3

  • Osterman P. (1994), How common is workplace transformation and who adopts it?, Industrial and Labour Relations Review, (47)

  • Pendleton A. (1997), Characteristics of workplaces with financial participation: Evidence fromthe Workplace Industrial Relations Survey, Industrial Relations Journal, (28)2 (British research)

  • Pérotin V. and A. Robinson (2000), Employee participation and equal opportunities practices:Productivity effects and potential complementarities, British Journal of Industrial Relations, (38)4

  • Pérotin V. and A. Robinson (2002), Employee Participation in Profit and Ownership: A Review ofthe Issues and Evidence, Leeds University Business School, Maurice Keyworth Building, The University of Leeds, Leeds, December

  • Pérotin V. and A. Robinson (1998), Profit-sharing and productivity: Evidence from Britain,France, Germany and Italy, Advances in the Economic Analysis of Participatory and Labor- Managed Firms, vol. 6

  • Robinson A. and N. Wilson (2001), Employee participation, ownership and productivity: Anempirical re-appraisal, Leeds University Business School, mimeo, Leeds

  • Shields J. (2002), Performance related pay in Australia, [in:] Michelle Brown and John S. Heywood (eds.), Paying for Performance. An International Comparison, M.E. Sharpe, (Australian research), ch. 7

  • Uvalić M. and D. Vaughan-Whitehead (eds.) (1997), Privatisation Surprises in TransitionEconomies: Employee-Ownership in Central and Eastern Europe, Edward Elgar/International Labour Organisation, Cheltenham (UK) and Geneva (Switzerland)

  • Wadhwani S. and M. Wall (1990), The effects of profit sharing on employment, wages, stockreturns and productivity: Evidence from UK micro-data, 'Economic Journal, Vol. 100, No. 399, March

  • Weitzman M.L. (1984), The Share Economy, Harvard University Press, MA, Cambridge


Journal + Issues