IDEAS home Printed from https://ideas.repec.org/a/pal/palcom/v10y2023i1d10.1057_s41599-023-01585-2.html
   My bibliography  Save this article

Dynamic value sharing based on employee contribution as a competitiveness-enhancing device

Author

Listed:
  • Zuomiao Xie

    (Minzu University of China)

  • Shiqi Yuan

    (Minzu University of China)

  • Jinjing Zhu

    (St. Bonaventure University)

  • Alistair Palferman

    (Keele University and Beijing Foreign Studies University)

Abstract

As the era of the knowledge economy has firmly established itself, the ability of firms to attract, motivate, and retain talents in order to realize stable and sustainable value creation, is increasingly critical. This paper proposes a dynamic value-sharing mechanism (DVS), based on human capital contribution, which combines the advantages of distribution fairness and dynamicity, to enhance firm value and profitability. As an instrument of analysis, this paper uses evolutionary game theory to study the feasibility of DVS and analyzes the impacts of key factors on the dynamic evolution game process and result. Evolutionary results show that: (1) DVS has the function of screening high-capability employees, and the high-capability employees ultimately dominate the value sharing under this mechanism; (2) DVS more stably promotes value creation, and the firm’s value increases to a greater extent than it would do without this mechanism and in the traditional static value sharing (SVS) model; (3) enterprises with a high proportion of talented employees have inherent advantages in implementing DVS, such as those involved in high-tech industries; and (4) the relationship between the ratio of overall profit sharing and the time of evolution to equilibrium is non-monotonic.

Suggested Citation

  • Zuomiao Xie & Shiqi Yuan & Jinjing Zhu & Alistair Palferman, 2023. "Dynamic value sharing based on employee contribution as a competitiveness-enhancing device," Palgrave Communications, Palgrave Macmillan, vol. 10(1), pages 1-13, December.
    • Handle: RePEc:pal:palcom:v:10:y:2023:i:1:d:10.1057_s41599-023-01585-2
    DOI: 10.1057/s41599-023-01585-2
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1057/s41599-023-01585-2
    File Function: Abstract
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1057/s41599-023-01585-2?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Drew Fudenberg & Luis Rayo, 2019. "Training and Effort Dynamics in Apprenticeship," American Economic Review, American Economic Association, vol. 109(11), pages 3780-3812, November.
    2. Page, T. Beau, 2018. "CEO attributes, compensation, and firm value: Evidence from a structural estimation," Journal of Financial Economics, Elsevier, vol. 128(2), pages 378-401.
    3. Gary S. Becker, 1962. "Investment in Human Capital: A Theoretical Analysis," NBER Chapters, in: Investment in Human Beings, pages 9-49, National Bureau of Economic Research, Inc.
    4. Evgeny Kagan & Stephen Leider & William S. Lovejoy, 2020. "Equity Contracts and Incentive Design in Start-Up Teams," Management Science, INFORMS, vol. 66(10), pages 4879-4898, October.
    5. Oyer, Paul & Schaefer, Scott, 2005. "Why do some firms give stock options to all employees?: An empirical examination of alternative theories," Journal of Financial Economics, Elsevier, vol. 76(1), pages 99-133, April.
    6. Torsten Jochem & Tomislav Ladika & Zacharias Sautner, 2018. "The Retention Effects of Unvested Equity: Evidence from Accelerated Option Vesting," The Review of Financial Studies, Society for Financial Studies, vol. 31(11), pages 4142-4186.
    7. Ansgar Richter & Susanne Schrader, 2017. "Levels of Employee Share Ownership and the Performance of Listed Companies in Europe," British Journal of Industrial Relations, London School of Economics, vol. 55(2), pages 396-420, June.
    8. James S. Ang & Rebel A. Cole & James Wuh Lin, 2000. "Agency Costs and Ownership Structure," Journal of Finance, American Finance Association, vol. 55(1), pages 81-106, February.
    9. Krista J. Li & Sanjay Jain, 2016. "Behavior-Based Pricing: An Analysis of the Impact of Peer-Induced Fairness," Management Science, INFORMS, vol. 62(9), pages 2705-2721, September.
    10. Armin Falk & Andrea Ichino, 2006. "Clean Evidence on Peer Effects," Journal of Labor Economics, University of Chicago Press, vol. 24(1), pages 39-58, January.
    11. Todd R. Zenger, 1994. "Explaining Organizational Diseconomies of Scale in R&D: Agency Problems and the Allocation of Engineering Talent, Ideas, and Effort by Firm Size," Management Science, INFORMS, vol. 40(6), pages 708-729, June.
    12. Yunchuan Liu & Sunil Gupta & Z. John Zhang, 2006. "Note on Self-Restraint as an Online Entry-Deterrence Strategy," Management Science, INFORMS, vol. 52(11), pages 1799-1809, November.
    13. Min Zhang & Yinan Qi & Hangfei Guo, 2017. "Impacts of intellectual capital on process innovation and mass customisation capability: direct and mediating effects," International Journal of Production Research, Taylor & Francis Journals, vol. 55(23), pages 6971-6983, December.
    14. Francisco Brahm & Joaquin Poblete, 2018. "Incentives and Ratcheting in a Multiproduct Firm: A Field Experiment," Management Science, INFORMS, vol. 64(10), pages 4552-4571, October.
    15. Aldatmaz, Serdar & Ouimet, Paige & Van Wesep, Edward D, 2018. "The option to quit: The effect of employee stock options on turnover," Journal of Financial Economics, Elsevier, vol. 127(1), pages 136-151.
    16. Russ, Meir, 2016. "The probable foundations of sustainabilism: Information, energy and entropy based definition of capital, Homo Sustainabiliticus and the need for a “new gold”," Ecological Economics, Elsevier, vol. 130(C), pages 328-338.
    17. Geert Braam & Erik Poutsma, 2015. "Broad-Based Financial Participation Plans and Their Impact on Financial Performance: Evidence from a Dutch Longitudinal Panel," De Economist, Springer, vol. 163(2), pages 177-202, June.
    18. Ji, Shou-feng & Zhao, Dan & Luo, Rong-juan, 2019. "Evolutionary game analysis on local governments and manufacturers' behavioral strategies: Impact of phasing out subsidies for new energy vehicles," Energy, Elsevier, vol. 189(C).
    19. Michael Spence, 1973. "Job Market Signaling," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 87(3), pages 355-374.
    20. Meng, Rujing & Ning, Xiangdong & Zhou, Xianming & Zhu, Hongquan, 2011. "Do ESOPs enhance firm performance? Evidence from China's reform experiment," Journal of Banking & Finance, Elsevier, vol. 35(6), pages 1541-1551, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Yuhang Han & Yi Zhou & Sarah Carr & Jiaoyan Jiang, 2024. "Lifelong learning in the workplace: the knowledge management role of corporate universities in China," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-11, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Edward P. Lazear, 1995. "Personnel Economics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262121883, December.
    2. Thomas Zimmerfaust, 2018. "Are Workers Willing To Pay To Join A Better Team?," Economic Inquiry, Western Economic Association International, vol. 56(2), pages 1278-1295, April.
    3. Eva Labro & James D. Omartian, 2023. "Managing Employee Retention Concerns: Evidence from U.S. Census Data," Working Papers 23-07, Center for Economic Studies, U.S. Census Bureau.
    4. Edward P. Lazear & Paul Oyer, 2012. "Personnel Economics [The Handbook of Organizational Economics]," Introductory Chapters,, Princeton University Press.
    5. Liu, Baohua & Zhang, Nihui & Chan, Kam C. & Chen, Yining & Qiu, Xuemei, 2024. "Executive equity incentive plans: Effective golden handcuffs?," International Review of Economics & Finance, Elsevier, vol. 91(C), pages 83-97.
    6. Maïlys Korber, 2019. "Does Vocational Education Give a Labour Market Advantage over the Whole Career? A Comparison of the United Kingdom and Switzerland," Social Inclusion, Cogitatio Press, vol. 7(3), pages 202-223.
    7. Benson, Rebecca & von Hippel, Paul T. & Lynch, Jamie L., 2018. "Does more education cause lower BMI, or do lower-BMI individuals become more educated? Evidence from the National Longitudinal Survey of Youth 1979," Social Science & Medicine, Elsevier, vol. 211(C), pages 370-377.
    8. Oyer, Paul & Schaefer, Scott, 2011. "Personnel Economics: Hiring and Incentives," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 4, chapter 20, pages 1769-1823, Elsevier.
    9. Hongbin Li & Huan Wang & Claire Cousineau & Matthew Boswell, 2023. "What Can Students Gain from China's Higher Education?," Asian Economic Policy Review, Japan Center for Economic Research, vol. 18(2), pages 287-304, July.
    10. Shaun M. Dougherty, 2018. "The Effect of Career and Technical Education on Human Capital Accumulation: Causal Evidence from Massachusetts," Education Finance and Policy, MIT Press, vol. 13(2), pages 119-148, Spring.
    11. Stefano DellaVigna, 2009. "Psychology and Economics: Evidence from the Field," Journal of Economic Literature, American Economic Association, vol. 47(2), pages 315-372, June.
    12. Bergemann, Annette & Mertens, Antje, 2004. "Job Stability Trends, Layoffs, and Transitions to Unemployment: An Empirical Analysis for West Germany," IZA Discussion Papers 1368, Institute of Labor Economics (IZA).
    13. Anders Stenberg & Xavier Luna & Olle Westerlund, 2012. "Can adult education delay retirement from the labour market?," Journal of Population Economics, Springer;European Society for Population Economics, vol. 25(2), pages 677-696, January.
    14. Sabrina T Howell & J David Brown, 2023. "Do Cash Windfalls Affect Wages? Evidence from R&D Grants to Small Firms," The Review of Financial Studies, Society for Financial Studies, vol. 36(5), pages 1889-1929.
    15. Lei Zhou & Feng Wei & Yu Kong, 2022. "Do Employee Stock Ownership Plans Affect Corporate Social Responsibility? Evidence from China," IJERPH, MDPI, vol. 19(3), pages 1-19, January.
    16. Yamauchi, Futoshi, 2003. "Are experience and schooling complementary?," FCND briefs 166, International Food Policy Research Institute (IFPRI).
    17. Vladimirov, Vladimir, 2021. "Financing Skilled Labor," CEPR Discussion Papers 15751, C.E.P.R. Discussion Papers.
    18. Aina, Carmen & Baici, Eliana & Casalone, Giorgia & Pastore, Francesco, 2019. "Delayed Graduation and University Dropout: A Review of Theoretical Approaches," IZA Discussion Papers 12601, Institute of Labor Economics (IZA).
    19. Niklas Engbom & Christian Moser, 2017. "Returns to Education through Access to Higher-Paying Firms: Evidence from US Matched Employer-Employee Data," American Economic Review, American Economic Association, vol. 107(5), pages 374-378, May.
    20. Jason J Sandvik & Richard E Saouma & Nathan T Seegert & Christopher T Stanton, 2020. "Workplace Knowledge Flows," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 135(3), pages 1635-1680.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pal:palcom:v:10:y:2023:i:1:d:10.1057_s41599-023-01585-2. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: https://www.nature.com/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.