Context, strategy and financial participation: A comparative analysis

Abstract

This article investigates where financial participation is most likely to be encountered, and explores its compatibility with collective forms of employee voice. It is based on the findings of a major international survey of human resource management (HRM) practices. We found that financial participation was not affected by collective employee voice, but that national context and associated HRM strategies had significant effects on its nature and extent. As financial participation is likely to make for greater variation in wage rates, it tends to weaken industry-level bargaining. By re-casting the fundamental determinants of wages, it is also likely to facilitate greater wage dispersion within the firm. Hence, it was found that financial participation is more commonly encountered in liberal market contexts, and in firms practising calculative HRM, where countervailing employee power is weak, whether or not collective bargaining is formally present.

Who uses employee financial participation in an adverse environment? The case of Estonia

“…In our study, some evidence for complementarity was there for profit-sharing, but not for share ownership, which corresponds to what Poutsma et al (2006) and Croucher et al (2010) have found. In those companies where profit-sharing was introduced, employees were more often informed and consulted on strategic issues such as prospective decisions on organisational structure or work organisation.…”

“…The evidence tends to support the view that the bigger the company the more likely it is that profit-sharing or share ownership is enabled for employees (Croucher et al, 2010;Festing et al, 1999;Gevers and Cludts, 2002;. The study by Welz and Fernandez-Macias (2008) covering 27 EU countries revealed that in bigger companies the likelihood of the incidence of financial participation was as much as four times higher compared to smaller companies.…”

“…Positive relationships with profit-sharing and share ownership (Kraft and Ugarkovic, 2006;Pendleton, 1997, respectively), negative (Poutsma et al, 2003) as well as insignificant (Croucher et al, 2010) relationships have been found.…”

“…Individual or team-based incentive such as pay-for-performance, which is typically stipulated in the employment contract (Croucher et al, 2010) is not the subject of the current study.…”

Employee stock ownership and financial performance in European countries: The moderating effects of uncertainty avoidance and social trust

“…For instance, at the organizational level, organizational practices (e.g., employee participation, empowerment) and contexts (e.g., trustworthy climate, span of control) alter the effectiveness of employee stock ownership (Blasi, Freeman, & Kruse, 2016; A. M. Robinson & Wilson, 2006). At the country level, institutional contexts such as (de)centralization of pay determination and collective bargaining coverage affect the adoption (Croucher, Brookes, Wood, & Brewster, 2010;Kalmi, Pendleton, & Poutsma, 2012) and the effectiveness (Williams, 2018) of employee stock ownership.…”