The elusive ESOP—productivity link

Kumbhakar, Subal C.; Dunbar, Amy E.

doi:10.1016/0047-2727(93)90024-n

Cited by 58 publications

(11 citation statements)

References 3 publications

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“…On the other hand, there is extensive evidence that PSPs are associated with enhanced firm productivity, either measured as a firm's value‐added or as sales per employee: in other words, one dollar of labour resources in a firm with a PSP raises productivity by more than one dollar of labour resources in a firm without a PSP (e.g. Bell and Neumark, 1993; Cable and Wilson, 1990; Conte and Svejnar, 1988; Defourney et al, 1985; Fitzroy and Kraft, 1987; Kim, 1998; Kruse, 1991; Kumbhakar and Dunbar, 1993; Wadhwani and Wall, 1990). In a path‐breaking study, Kruse (1993) actually shows that profit‐sharing adoption can produce a one‐time increment in productivity that is maintained over time.…”

Section: The Effectiveness Of Profit Sharing In Financial Institutionsmentioning

confidence: 99%

The Impact of Profit Sharing on the Performance of Financial Services Firms*

Magnan¹,

St‐Onge

2005

J Management Studies

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Relying on macro theories (agency and organizational control) as well as micro theories (goal setting and expectancy), this study investigates the impact of profit-sharing plan (PSP) adoption on the value creation process of financial services firms. The study relies on a comprehensive methodological approach that is both quantitative, with a dual cross-sectional/longitudinal (pre-post) design that compares PSP adopters with a control group of PSP non-adopter firms, and qualitative through interviews with some adopting firms' managing directors. Results show that firms adopting a PSP enhance their profitability in comparison to both their own prior performance and to firms that are not adopting a PSP. Results also show that the adoption of a PSP: (a) positively influences only profit drivers that are under employee control; and (b) is more likely to have a long term, positive impact on external profit drivers than on internal profit drivers. Qualitative data from field interviews corroborate and enrich these quantitative findings.

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Section: The Effectiveness Of Profit Sharing In Financial Institutionsmentioning

confidence: 99%

The Impact of Profit Sharing on the Performance of Financial Services Firms*

Magnan¹,

St‐Onge

2005

J Management Studies

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“…Kruse, 2002), the evidence in support of this positive link is probably less robust than for profit sharing. Again there is evidence that employee stock ownership can be positively associated with enhanced business performance in a variety of institutional settings including Japan (Jones and Kato, 1995) and the U.S. (Kumbhakar and Dunbar, 1993).…”

Section: Conceptual Framework and Previous Empirical Workmentioning

confidence: 99%

The productivity effects of stock option schemes: evidence from Finnish panel data

Jones

Kalmi²,

Mäkinen³

2009

J Prod Anal

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Abstract:While theorists differ sharply on the expected economic impact of stock options, typically empirical work has found a positive association between option schemes and firm productivity. However, existing data are limited and may not enable reliable investigation of the productivity effects. New panel data for all Finnish publicly listed firms during 1992-2002 enable us to distinguish plans that are broad based and others limited to particular employees and address issues of endogeneity concerning inputs and options. Diverse specifications are estimated including dynamic panel data models with a GMM estimator. For broad-based option scheme indicators the key result is that different estimators consistently find statistically insignificant associations with firm productivity. For selective option schemes, the baseline fixed effects estimator suggests a 2.1-2.4% positive and statistically significant effect on firm productivity. However, in empirical models in which endogeneity and dynamics are taken into account, no evidence is found of a link with firm productivity. Thus our findings are consistent with hypotheses that predict negligible effects of option plans for enterprise performance, such as those based on free riding, or psychological expectancy theory or accounting myopia. However, by finding weak evidence for productivity effects of targeted schemes (and none for broad-based plans) our findings tend not to support hypotheses based on managerial rent seeking.

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“…However, opposite conclusions are drawn by a competitive strand of studies finding that the presence of employee share ownership enhances both the company profitability and the shareholder returns (Kruse and Blasi 1997;Kumbhakar and Dunbar 1993;Mitchell et al 1990;Park and Song 1995;Sengupta et al 2007).…”

Section: Classification Aim and Scholarly Debate On Employee Particmentioning

confidence: 99%

Employee Participation/Ownership

Saggese

2020

Encyclopedia of Sustainable Management

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The elusive ESOP—productivity link

Cited by 58 publications

References 3 publications

The Impact of Profit Sharing on the Performance of Financial Services Firms*

The Impact of Profit Sharing on the Performance of Financial Services Firms*

The productivity effects of stock option schemes: evidence from Finnish panel data

Employee Participation/Ownership

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