PROFIT-SHARING, TECHNICAL EFFICIENCY CHANGE AND FINANCE CONSTRAINTS

Ornella Maietta and Vania Sena

A chapter in Employee Participation, Firm Performance and Survival, 2004, pp 149-167 from Emerald Group Publishing Limited

Abstract: This paper analyses the mechanisms through which profit-sharing schemes may induce debt constrained firms to improve technical efficiency over time to guarantee positive profits. This hypothesis is first formalised in a partial equilibrium framework and then is tested on a sample of Italian traditional and cooperative firms. Technical efficiency change indexes are computed by DEA. These are regressed on a measure of finance constraints to analyse their impact on firms’ efficiency growth. The results support the hypothesis that a restriction in the availability of financial resources can affect positively the growth in efficiency in firms with profit-sharing schemes.

Date: 2004
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Working Paper: Profit-sharing, Technical Efficiency Change and Finance Constraints (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:eme:aeapzz:s0885-3339(04)08007-x

DOI: 10.1016/S0885-3339(04)08007-X

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