Profit-Sharing And Productivity: An International Comparison

using a common estimating framework and comparable, primary data for two samples of firms in the British and West German engineering industries, the paper reports productivity differentials of 20-30% in favour of firms practising profit-sharing in West Germany, and 3-8% in Britain. Model selection procedures reveal important interactions between profit-sharing and other firm characteristics in both cases. We infer (a) that the observed differentials therefore capture the joint effects of a set of organisational choices of which profit-sharing is one element, and (b) that from a policy viewpoint, profit-sharing must be seen as part of a more general, organisational design process, rather than as an optional, add-on extra, as in some previous work and policy discussion. However, the characteristics of British and West German profit-sharers turn out to be quite different, indicating that there is evidently no single, stereotype formula for the effective use of profit-sharing.