Financial Participation in Europe-Determinants and Outcomes

This article's objective is to analyse determinants and outcomes of financial participation in Europe. It starts off with a definition of the instruments, a review of the literature in the field of financial participation and a discussion on the relevance of financial participation in selected European countries. Choosing a rather inductive approach, the authors develop a model for financial participation. Based on the Cranfield data, the significance of the variables used in the model is tested. Union density, number of employees, public limited company status, geographical market and policy regarding pay and benefits came out as significant determinants for financial participation at company level. The environment, however, also bears influence. Organizations in Germany, France, Great Britain and Sweden show significantly different practices. Employee share ownership and profit sharing cannot only increase financial performance but also allow for efficient human resource management. Profit sharing increases profits and decreases absenteeism as well as staff turnover. The findings for employee share ownership are not that straightforward.