Financial Participation and Productivity: Insights from Stochastic Frontier Estimation

Andrew Robinson and Nick Wilson
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Andrew Robinson: Leeds University Business School
Nick Wilson: Leeds University Business School

Economic and Industrial Democracy, 2006, vol. 27, issue 4, 609-635

Abstract: This article revisits the relationship between employees’ financial participation in the firm and productive efficiency. The most recent empirical work highlights a growing number of influences on the success (or otherwise) of financial participation - organizational and labour force characteristics as well as the operation of ‘bundles’ of participatory arrangements. Yet, to date the empirical literature has relied totally on the conventional production function specification to investigate these issues. This article is an attempt to move beyond this approach and consider the merits of an alternative specification of the production technology, the stochastic production frontier. For this study’s data at least, the findings confirm this potential, revealing an alternative interpretation of the effectiveness of financial participation and additional insights into their ability to improve the level and variability of technical inefficiency within firms.

Keywords: employee participation; employee share ownership; productivity; profit sharing; technical inefficiency; workplace characteristics (search for similar items in EconPapers)
Date: 2006
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Persistent link: https://EconPapers.repec.org/RePEc:sae:ecoind:v:27:y:2006:i:4:p:609-635

DOI: 10.1177/0143831X06069001

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