Does Profit Sharing Affect Productivity? / Douglas L. Kruse.

By:

Kruse, Douglas L

Contributor(s):

National Bureau of Economic Research

Material type: Text

TextSeries: Working Paper Series (National Bureau of Economic Research) ; no. w4542.Publication details: Cambridge, Mass. National Bureau of Economic Research 1993.Description: 1 online resource: illustrations (black and white)Subject(s):

J33 - Compensation Packages • Payment Methods

Online resources:

Available additional physical forms:

Hardcopy version available to institutional subscribers

Abstract: Existing research tends to show that profit-sharing plans for employees are associated with higher company productivity and profitability, though the causality and mechanisms are unclear. This study uses new data from a survey of 500 U.S. public companies, and panel data on corporate performance, to examine the relationship between productivity measures and the adoption and presence of profit sharing. Controlling for a variety of influences on productivity, profit sharing adoption is found to be associated with average productivity increases of 4-5%, with no subsequent positive or negative trend. The productivity increase is dispersed; it is found to be larger for small companies and for cash plans, and to be unaffected when controlling for personnel policies which may affect productivity. There is, however, no evidence on the mechanisms through which profit sharing may affect productivity, since there are no strong interactions with information-sharing or other policies in affecting productivity.

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Holdings
Item type	Home library	Collection	Call number	Status	Date due	Barcode	Item holds
Working Paper	Biblioteca Digital	Colección NBER	nber w4542 (Browse shelf(Opens below))	Not For Loan

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November 1993.

Existing research tends to show that profit-sharing plans for employees are associated with higher company productivity and profitability, though the causality and mechanisms are unclear. This study uses new data from a survey of 500 U.S. public companies, and panel data on corporate performance, to examine the relationship between productivity measures and the adoption and presence of profit sharing. Controlling for a variety of influences on productivity, profit sharing adoption is found to be associated with average productivity increases of 4-5%, with no subsequent positive or negative trend. The productivity increase is dispersed; it is found to be larger for small companies and for cash plans, and to be unaffected when controlling for personnel policies which may affect productivity. There is, however, no evidence on the mechanisms through which profit sharing may affect productivity, since there are no strong interactions with information-sharing or other policies in affecting productivity.