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Shared Capitalism in the U.S. Economy: Prevalence, Characteristics, and Employee Views of Financial Participation in Enterprises

In: Shared Capitalism at Work: Employee Ownership, Profit and Gain Sharing, and Broad-based Stock Options

Author

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  • Douglas L. Kruse
  • Joseph R. Blasi
  • Rhokeun Park
Abstract
Between one-third and one-half of employees participate directly in company performance through profit sharing, gainsharing, employee ownership, or stock options. This flies in the face of concerns about the free rider problem and worker risk aversion in group incentives, and raises many questions about the effects on firms and workers. This paper lays out the major reasons we may see such "shared capitalism" plans, and reviews recent nationally representative surveys on the prevalence of these plans. We also introduce the NBER shared capitalism data, based on questions added to the 2002 and 2006 General Social Surveys (GSS) and more than 40,000 employee surveys from 14 companies with different combinations of shared capitalism plans. We find that while shared capitalism exists broadly throughout the economy, it is more likely in larger establishments. The free rider effect may be countered by the use of other policies to create productive teamwork and a cooperative culture: shared capitalism is positively linked to workplace decision-making, training, job security, teamwork, the ability to easily observe co-worker performance, and low levels of supervision. Also, more risk-averse employees avoid participating in several types of shared capitalism, but two-thirds of even the most risk-averse employees in these companies say they want shared capitalism as part of their pay package. The effects of these plans for both workers and firms are more fully explored in accompanying papers.
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Suggested Citation

  • Douglas L. Kruse & Joseph R. Blasi & Rhokeun Park, 2010. "Shared Capitalism in the U.S. Economy: Prevalence, Characteristics, and Employee Views of Financial Participation in Enterprises," NBER Chapters, in: Shared Capitalism at Work: Employee Ownership, Profit and Gain Sharing, and Broad-based Stock Options, pages 41-75, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberch:8086
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    Cited by:

    1. KATO Takao & MIYAJIMA Hideaki & OWAN Hideo, 2016. "Does Employee Stock Ownership Work? Evidence from publicly-traded firms in Japan," Discussion papers 16073, Research Institute of Economy, Trade and Industry (RIETI).
    2. Philip Mellizo & Jeffrey Carpenter & Peter Hans Matthews, 2014. "Workplace democracy in the lab," Industrial Relations Journal, Wiley Blackwell, vol. 45(4), pages 313-328, July.
    3. Alex Bryson & Richard B. Freeman, 2010. "To join or not to join? Factors influencing employee share plan membership in a multinational corporation," Advances in the Economic Analysis of Participatory & Labor-Managed Firms, in: Advances in the Economic Analysis of Participatory & Labor-Managed Firms, pages 1-22, Emerald Group Publishing Limited.
    4. Sami Adwan & Alaa Alhaj-Ismail & Ranko Jelic, 2022. "Non-executive employee ownership and financial reporting quality: evidence from Europe," Review of Quantitative Finance and Accounting, Springer, vol. 59(2), pages 793-823, August.
    5. Alex Bryson & Richard Freeman & Claudio Lucifora & Michele Pellizzari & Virginie Perotin, 2012. "Paying for Performance: Incentive Pay Schemes and Employees' Financial Participation," CEP Discussion Papers dp1112, Centre for Economic Performance, LSE.
    6. Anne-Laure P. Winkler & Jill A. Brown & David L. Finegold, 2019. "Employees as Conduits for Effective Stakeholder Engagement: An Example from B Corporations," Journal of Business Ethics, Springer, vol. 160(4), pages 913-936, December.
    7. Leonid Krasnozhon, 2011. "Property rights and farm efficiency: evidence from Ukraine," Economic Change and Restructuring, Springer, vol. 44(4), pages 279-295, November.
    8. Harry Markowitz & Joseph Blasi & Douglas Kruse, 2010. "Employee stock ownership and diversification," Annals of Operations Research, Springer, vol. 176(1), pages 95-107, April.
    9. Robert Buchele & Douglas L. Kruse & Loren Rodgers & Adria Scharf, 2010. "Show Me the Money: Does Shared Capitalism Share the Wealth?," NBER Chapters, in: Shared Capitalism at Work: Employee Ownership, Profit and Gain Sharing, and Broad-based Stock Options, pages 351-375, National Bureau of Economic Research, Inc.
    10. Livio, Luca & De Chiara, Alessandro, 2019. "Friends or foes? Optimal incentives for reciprocal agents," Journal of Economic Behavior & Organization, Elsevier, vol. 167(C), pages 245-278.
    11. KATO Takao & KODAMA Naomi, 2015. "Performance-related Pay and Productivity: Evidence from Japan," Discussion papers 15088, Research Institute of Economy, Trade and Industry (RIETI).
    12. Casey Ichniowski & Kathryn L. Shaw, 2009. "Insider Econometrics: Empirical Studies of How Management Matters," NBER Working Papers 15618, National Bureau of Economic Research, Inc.
    13. Belloc, Filippo, 2022. "Profit sharing and innovation across organizational layers," Journal of Economic Behavior & Organization, Elsevier, vol. 197(C), pages 598-623.

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    More about this item

    JEL classification:

    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • J54 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Producer Cooperatives; Labor Managed Firms
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production

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