Employee ownership: does firm's size matter ?

Marc-Arthur Diaye (), Amal Hili () and Rim Lahmandi-Ayed
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Marc-Arthur Diaye: EPEE, Université d’Evry Val d’Essonne, https://www.univ-evry.fr/recherche/unites-de-recherche/sciences-humaines-et-sociales/centre-detudes-des-politiques-economiques-epee.html
Amal Hili: Laboratoire d’Ingénierie Mathématique - Ecole Polytechnique de Tunisie, FDSEPS Sousse and GREQAM, Université de la Méditerranée

No 12-02, Documents de recherche from Centre d'Études des Politiques Économiques (EPEE), Université d'Evry Val d'Essonne

Abstract: A theoretical model is considered in a monopoly setting, where the production cost of the firm depends on the efforts of employees who may receive a positive part of the capital if the shareholders find profitable to do so. We specify the condition under which at Nash equilibrium the firm distributes a positive part of its capital to employees, and analyze the effects of this employee ownership strategy on social welfare. We show that the conditions under which shareholders attribute a positive share of capital to employees, is related jointly to the firm’s size and effort disutility, which makes the novelty of our paper relative to the previous papers considering the firm’s size alone. This joint role is tested empirically, using a French data base “REPONSE 2004-2005”. Our paper may allow to explain why in the empirical literature there is no consensus regarding the relationship between firm’s size and employee ownership implementation.

Keywords: employee ownership; employees’ efforts; firm’s size; effort disutility; social welfare; absenteeism (search for similar items in EconPapers)
JEL-codes: C25 C7 M5 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2012-05
New Economics Papers: this item is included in nep-bec
References: View references in EconPapers View complete reference list from CitEc
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