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Reciprocity and Profit Sharing: Is There an Inverse U-shaped Relationship?

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  • Thomas Cornelissen
  • John Heywood
  • Uwe Jirjahn

Abstract

Free-riding potentially limits the effectiveness of profit sharing in motivating workers. While reciprocity can mitigate this problem, it need not be uniformly productive. We show that the probability of receiving profit sharing takes an inverse U-shape as detailed individual survey measures of reciprocity increase. This is consistent with moderate but not extreme reciprocity stimulating productivity. We support one potential causation path by showing that extreme positive (negative) reciprocity is associated with extremely high (low) socializing and among workers receiving profit sharing, an intermediate degree of socializing is associated with the maximum amount of paid and unpaid overtime, a productivity proxy. Copyright Springer Science+Business Media New York 2014

Suggested Citation

  • 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.
    • Handle: RePEc:spr:jlabre:v:35:y:2014:i:2:p:205-225
    DOI: 10.1007/s12122-014-9179-3
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    Cited by:

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    3. Galashin Mikhail & Popov Sergey V., 2016. "Teamwork Efficiency and Company Size," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 16(1), pages 337-366, January.
    4. Arsham Farzinnia & Corine Boon, 2024. "An Analytical Approach to (Meta)Relational Models Theory, and its Application to Triple Bottom Line (Profit, People, Planet) -- Towards Social Relations Portfolio Management," Papers 2402.18764, arXiv.org.
    5. 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.

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    More about this item

    Keywords

    Profit sharing; Free-riding; Positive reciprocity; Negative reciprocity; D03; J33; M52;
    All these keywords.

    JEL classification:

    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects

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