IDEAS home Printed from https://ideas.repec.org/p/ags/uwarer/268335.html
   My bibliography  Save this paper

Profit-Sharing And Productivity: An Analysis Of Uk Engineering Firms

Author

Listed:
  • Cable, John R.
  • Wilson, Nicholas

Abstract

The paper reports productivity differentials of 3-8% in favour of profit-sharing firms in the UK engineering industry. The estimates come from equations in which profit-sharing interacts with factor input levels and/or the firms' technological, organisational and labour-force characteristics, and imply more than a simple incentive effect on work effort, or more 'cooperative' behaviour in given circumstances. Model-selection tests reveal that these models dominate those used in previous work, where profit-sharing enters as a disembodied, Nicks-neutral shift in the production surface. A technological labour relations interpretation of the origin of the gains is suggested, which are found to be asymmetrically distributed. The results question policy measures to encourage profit-sharing which do not take account of its significance in the process of organisational design.

Suggested Citation

  • Cable, John R. & Wilson, Nicholas, 1988. "Profit-Sharing And Productivity: An Analysis Of Uk Engineering Firms," Economic Research Papers 268335, University of Warwick - Department of Economics.
    • Handle: RePEc:ags:uwarer:268335
    DOI: 10.22004/ag.econ.268335
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/268335/files/twerp300.pdf
    Download Restriction: no
    File URL: https://ageconsearch.umn.edu/record/268335/files/twerp300.pdf?subformat=pdfa
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.268335?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
    ---><---

    References listed on IDEAS

    as
    1. Felix R. FitzRoy & Kornelius Kraft, 1987. "Cooperation, Productivity, and Profit Sharing," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 102(1), pages 23-35.
    2. Kiviet, Jan F., 1985. "Model selection test procedures in a single linear equation of a dynamic simultaneous system and their defects in small samples," Journal of Econometrics, Elsevier, vol. 28(3), pages 327-362, June.
    3. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-838, May.
    4. Weitzman, Martin L, 1985. "The Simple Macroeconomics of Profit Sharing," American Economic Review, American Economic Association, vol. 75(5), pages 937-953, December.
    5. Weitzman, Martin L, 1983. "Some Macroeconomic Implications of Alternative Compensation Systems," Economic Journal, Royal Economic Society, vol. 93(372), pages 763-783, December.
    6. Gallant, A. Ronald & Jorgenson, Dale W., 1979. "Statistical inference for a system of simultaneous, non-linear, implicit equations in the context of instrumental variable estimation," Journal of Econometrics, Elsevier, vol. 11(2-3), pages 275-302.
    7. Meade, James E, 1972. "The Theory of Labour-Managed Firms and of Profit Sharing," Economic Journal, Royal Economic Society, vol. 82(325), pages 402-428, Supplemen.
    8. Blanchflower, David G & Oswald, Andrew J, 1987. "Profit Sharing--Can It Work?," Oxford Economic Papers, Oxford University Press, vol. 39(1), pages 1-19, March.
    9. Cable, John & Wilson, Nicholas, 1988. "Profit-Sharing And Productivity: An International Comparison," Economic Research Papers 268336, University of Warwick - Department of Economics.
    10. FitzRoy, Felix R & Kraft, Kornelius, 1986. "Profitability and Profit-Sharing," Journal of Industrial Economics, Wiley Blackwell, vol. 35(2), pages 113-130, December.
    11. Cable, J. & Wilson, N., 1988. "Profit-Sharing And Productivity: An International Comparison," The Warwick Economics Research Paper Series (TWERPS) 301, University of Warwick, Department of Economics.
    12. Wadhwani, Sushil B, 1987. "Profit-Sharing and Meade's Discriminating Labour-Capital Partnerships: A Review Article," Oxford Economic Papers, Oxford University Press, vol. 39(3), pages 421-442, September.
    Full references (including those not matched with items on IDEAS)

    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. Cable, J.R. & Wilson, N., 1988. "Profit-Sharing And Productivity: An Analysis Of Uk Engineering Firms," The Warwick Economics Research Paper Series (TWERPS) 300, University of Warwick, Department of Economics.
    2. Kornelius Kraft, 1990. "Licenciements, salaire aux pièces et participation aux bénéfices en tant qu'incitations," Économie et Prévision, Programme National Persée, vol. 92(1), pages 161-170.
    3. repec:zbw:bofrdp:1997_008 is not listed on IDEAS
    4. Jääskelä, Jarkko, 1997. "Incomplete insurance market and its policy implication within European Monetary Union," Research Discussion Papers 8/1997, Bank of Finland.
    5. Lin, Chung-cheng & Chang, Juin-jen & Lai, Ching-chong, 2002. "Profit sharing as a worker discipline device," Economic Modelling, Elsevier, vol. 19(5), pages 815-828, November.
    6. Noélie Delahaie & Richard Duhautois, 2019. "Profit‐Sharing and Wages: An Empirical Analysis Using French Data between 2000 and 2007," British Journal of Industrial Relations, London School of Economics, vol. 57(1), pages 107-142, March.
    7. Noélie Delahaie & Richard Duhautois, 2013. "L'impact des dispositifs collectifs de partage des bénéfices sur les rémunérations en France. Une analyse empirique sur la période 1999-2007," Working Papers halshs-00967479, HAL.
    8. Reizer, Balázs, 2022. "Employment and Wage Consequences of Flexible Wage Components," Labour Economics, Elsevier, vol. 78(C).
    9. Juan Carlos Bárcena-Ruiz, 2016. "Employee share ownership in a unionised duopoly," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 15(3), pages 173-195, December.
    10. Yao, Shujie, 1997. "Profit Sharing, Bonus Payment, and Productivity: A Case Study of Chinese State-Owned Enterprises," Journal of Comparative Economics, Elsevier, vol. 24(3), pages 281-296, June.
    11. Chong-En Bai & Chenggang Xu, 2001. "Ownership, Incentives and Monitoring," STICERD - Theoretical Economics Paper Series 413, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
    12. Gaetano Cuomo, 2015. "Imprese cooperative e democrazia economica," STUDI ECONOMICI, FrancoAngeli Editore, vol. 2015(116), pages 5-38.
    13. Jääskelä, Jarkko, 1997. "Incomplete insurance market and its policy implication within European Monetary Union," Bank of Finland Research Discussion Papers 8/1997, Bank of Finland.
    14. Chang, Juin-jen & Lai, Ching-chong & Lin, Chung-cheng, 2003. "Profit sharing, worker effort, and double-sided moral hazard in an efficiency wage model," Journal of Comparative Economics, Elsevier, vol. 31(1), pages 75-93, March.
    15. Siebert, Horst, 1987. "Kündigungsschutz und Sozialplanpflicht: Optimale Allokation von Risiken oder Ursache der Arbeitslosigkeit?," Discussion Papers, Series II 27, University of Konstanz, Collaborative Research Centre (SFB) 178 "Internationalization of the Economy".
    16. Cardoso, Renato Fragelli, 1997. "Mandatory profit sharing, entrepreneurial incentives and capital accumulation," FGV EPGE Economics Working Papers (Ensaios Economicos da EPGE) 318, EPGE Brazilian School of Economics and Finance - FGV EPGE (Brazil).
    17. Cardoso, Renato Fragelli, 1995. "Profit sharing with heterogeneous entrepreneurial prowess," FGV EPGE Economics Working Papers (Ensaios Economicos da EPGE) 265, EPGE Brazilian School of Economics and Finance - FGV EPGE (Brazil).
    18. Pablo González, 2002. "Profit Sharing Reconsidered: Efficiency Wages and Renegotiation Costs," Documentos de Trabajo 151, Centro de Economía Aplicada, Universidad de Chile.
    19. Cahuc, Pierre & Dormont, Brigitte, 1997. "Profit-sharing: Does it increase productivity and employment? A theoretical model and empirical evidence on French micro data," Labour Economics, Elsevier, vol. 4(3), pages 293-319, September.
    20. Vikram Kumar, 2019. "Profit Shares as Virtual Equity: Short-Run Isomorphism of Share & Wage Systems," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 11(7), pages 1-45, July.
    21. Michaelis, Jochen, 1997. "On the equivalence of profit and revenue sharing," Economics Letters, Elsevier, vol. 57(1), pages 113-118, November.

    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:ags:uwarer:268335. 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: AgEcon Search (email available below). General contact details of provider: https://warwick.ac.uk/fac/soc/economics/research/workingpapers/ .

    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.