Forms of Profit Sharing and Firm Performance: Theoretical Foundations and Empirical Problems

Abstract

Explicit profit sharing and rent-seeking as a form of efficiency wage are theoretically closely related though their respective literatures have made little contact. A number of theoretical models provide good foundations for both kinds of sharing. Attempts to quantify the "effects" of sharing, though almost unanimous in finding a positive productivity relationship, are less convincing on various methodological grounds. In particular, selection bias has been neglected, but suggests that adoption of profit sharing (without flanking measures) by firms that have not chosen to do so hitherto might be less advantageous than existing schemes. Copyright 1992 by WWZ and Helbing & Lichtenhahn Verlag AG