Integrating Macro and Micro Perspectives on Profit-Sharing in China

Despite considerable interest in the adoption of profit-sharing plans in small firms in China, there lacks a comprehensive theoretical framework to explore why these plans are adopted. Much of the literature on profit-sharing originates from a pure economic perspective based upon agency theory. However, when profit-sharing is adopted in small firms at the discretion of the CEO, often psychological mechanisms become an important factor. This paper provides an integrated theoretical framework combining the economic perspective with the psychological perspective to investigate the reason why CEOs in Chinese private firms choose to adopt profit sharing schemes. Specifically, we develop a model examining both internal and external factors specific to the individual and the firm. We then theorize whether the reasons for using the profit-sharing plans will ultimately lead to improved firm performance.     

Profit Sharing, Risk Sharing, and Firm Size: Implications of Efficiency Wages

By taking account of output fluctuations, this paper constructs a synthesis of profit-sharing and efficiency-wage models to highlight the role of the risk attitudes of the firm and its employees. We show, contrary to the traditional efficiency wage theory, that in a profit-sharing economy unemployment is no longer a necessary device to induce work effort and, consequently, the labor market equilibrium may be characterized by full employment. Such a result is more likely to be true when the economy is characterized by small-sized firms. In addition, we also provide a preliminary sketch of the situations in which the firm chooses a profit-sharing program or a fixed-wage one, and discuss how a firm determines its pay parameters and employment in response to output fluctuations.     

Foreign Direct Investment,Productivity, Demand for Skilled Labour and Wage Inequality: An Analysis of Uruguay

This study seeks to identify the causal effects of foreign ownership on productivity, the demand for skilled labour and wage inequality. With this aim, we use differences‐in‐differences techniques for a panel of Uruguayan manufacturing firms in the period 1997–2005. Our results seem to indicate that FDI causes higher productivity and increased demand for skilled labour. Furthermore, although average wages are higher in foreign‐owned firms than in domestic ones, the wage gap between skilled and unskilled workers is wider. It follows that promoting foreign investment enhances productivity. In addition, due to the greater demand for skilled workers, policies such as training schemes would be conducive to raising productivity still further, while other social policies could help to mitigate the wage inequality effects.     

‘Productivity on the Cheap’? The ‘More Looms’ Experiment and the Lancashire Weaving Industry during the Inter-War Years

Two major debates in the literature, productivity performance and the decline of the cotton industry, are joined in the analysis presented in this article on the attempts to raise productivity through the introduction of the more looms per weaver system in cotton weaving in the inter-war years. We find that the limited resultant changes were the outcome of understandable predisposition to maintain co-operative behaviour which meant that productivity enhancing schemes with long term potential were sacrificed for more modest schemes which preserved consensus in the short term.     

Small and Medium Enterprises in Thailand: Recent Trends

This paper reviews the evolution of small and medium firms in Thailand in recent years. It shows that such firms did not preserve their share of total employment during the period 1987–96; indeed, their share fell from 60% to 52% over this period. Much of this decline was felt in the category of very small firms (with less than 10 workers). This aspect is explored further by looking at small firm employment shares in three sub-periods of varying overall economic growth rates. It is found that when overall economic growth is high, the share of small firms tends to contract possibly because many small firms become medium in size and others disband because their owners can find more remunerative employment in larger firms. In slower growth periods, the employment share of small firms appears to rise probably because larger firms may be taking in less new workers or even laying off workers. The paper also calculates productivity measures (technical efficiency and total factor productivity) and shows that different measures give different rankings by size of firm.     

Profit Related Pay and the U.K. Small Firm Labour Market

This paper critically examines the relevance of profit related pay (PRP) for the U.K. small firm sector. Since 1986, the U.K. government has actively encouraged PRP, which attracts generous tax breaks, because it believed that PRP would make pay more flexible downwards and would significantly improve employee identification, morale and productivity. An analysis of the theoretical arguments and the assumptions made regarding the nature of the U.K. small firm sector that underlay these claims suggests, however, that the likelihood of achieving either of these alleged benefits is small. An appraisal of the available empirical evidence on the practical implementation and operation of PRP schemes suggests that the tax relief simply encourages firms to introduce cosmetic schemes that have no appreciable impact upon the behaviour of either firms or employees. Moreover, the experience of some firms that adopted PRP schemes indicates that, far from increasing morale and productivity, PRP often creates new tensions and conflict between owners and employees. These and other unintended consequences illustrate the inherent difficulties of government attempts to use the tax system to alter the behaviour of agents engaged in a wide variety of complex and very heterogeneous bargaining situations.     

Productivity Dynamics of Small and Medium Enterprises in Taiwan

Using firm level data from Taiwan, this paper examines the link between firm size, growth and productivity. It shows that firms grow because they are more productive and not because they are larger in size. Indeed, the statistical analysis shows that while employment growth among Taiwanese firms was positively related to initial levels of total factor productivity, it was negatively related to initial size. The paper also shows that the productivity-size relationship has a virtuous cycle built in. More productive firms get larger and, in the process, obtain access to resources and information which enables them to become more productive. One implication of these results is that public policies should target productivity rather than size and should support reforms that make it possible for market mechanisms to weed out low productivity firms while facilitating the entry or growth of high productivity firms. Taiwan's ability to keep entry and exit costs low is one reason why productivity gains there have been high.     

Managing Corporate Portal Usage with Recommender Systems

Corporate portals are supposed to support a company’s business model and to increase productivity of the employees. However, the productivity gain that can be achieved by corporate portals is often undermined because the users of the portal are not sufficiently informed about the portal’s capabilities. This is of particular concern for large corporate portals whose service portfolio is constantly evolving and to which new users are added frequently. In the article, we propose a recommender system for corporate portals in order to increase service awareness and usage. Following the design science methodology, a suitable recommender concept is developed and several implementation options are evaluated in a field experiment at one of Germany’s largest companies. It is found that the recommender system increases the number of newly visited services as well as the number of newly used services in the corporate portal by about 20 %.     

A service sector classification scheme using economic data

Using economic data, this paper recreates a previously published service industry classification scheme that was derived using discursive data from interviews with industry experts. It triangulates the earlier results using a different methodology, and extends earlier classification schemes in a comprehensive, objective way. A principal component analysis of six sector parameter sets from a regression analysis of a productivity data set covering 14 countries produces three sector factors, the ‘capital type’, the ‘innovation type’ and the ‘quality type’, which form the basis of the classification scheme. A high degree of conformity is found between this and the previously published discursive-based scheme.     

Economic issues in copying easily reproducible goods

The illegal copying of easily reproducible goods (audio and video tape copying, photocopying publications, and duplicating computer software) has received considerable attention by the industries concerned. Each area has also drawn limited attention from economists, who have debated the merits of stifling creativity by allowing copying (lessening creators' rewards) versus lowering productivity by preventing copying, over the past decade. While the copying problem is common to all of these media, the economic welfare consequences and justifications for prohibitions are quite different. This is because several of the products involved are primarily consumer goods, while others may be considered capital goods (e.g., software), and yet others (e.g., photocopied journals) are employed to improve the stock of human capital. This paper surveys and synthesizes the economic literature on reproducible goods and derives policy conclusions that differ as a function of the purposes and uses of the goods being reproduced or copied. It is proposed, for example, that because of widespread copying, professional journals should price discriminate among university libraries, with price a direct function of the number of students and faculty at the institution. Another conclusion is that enforcement of copy protection schemes on computer disks puts the enforcing nation (e.g., the European Community), at a clear competitive disadvantage against nations that do not attempt to enforce such laws.     

The Impact of Foreign Technology and Embodied R&D on Productivity in Internationally Oriented and High-Technology Industries in Egypt, 2006–2009

This paper investigates the domestic productivity and spillover effects of foreign technology and embodied R&D on Egyptian manufacturing industries, 2006 to 2009. It also analyses the heterogeneous sectoral effects of technology transfer by focusing specifically on the productivity effects on highly internationalized and technology-intensive industries. These are expected to have greater absorptive capacity with respect to foreign technology and therefore larger productivity effects because of their greater exposure to foreign competition and greater technological capacity respectively. This study is the first to analyse the efficiency effects of foreign technology by classifying industries in this manner. It finds that foreign technology and embodied R&D have positive and significant industry-specific effects on domestic productivity and TFP in technology-intensive industries but that these are weaker in internationally oriented industries. The study suggests that only technological-intensive industries in Egypt have sufficient absorptive capacity to assimilate foreign technology effectively. The paper’s findings highlight the key role of foreign technology in domestic productivity growth, subject to the absorptive capacity of the domestic labour force, and the need for improved policies to promote the domestic benefits of technology transfer through the accumulation of local technological competences.

     

Double Deflation and the Measurement of Output and Productivity in UK Manufacturing 1979–89

The objective of this paper is to examine the impact of applying double deflation methods to the measurement of productivity growth in UK manufacturing between 1979 and 1989. A number of alternative indicators of output growth are considered and it is argued that double deflated value added is the superior concept to employ for the measurement of productivity. It is shown that output measured by double deflated value added fell by 0.05% over the period between 1979 and 1989 whereas the official series indicates that output rose by 12.2% over the period. Measuring productivity as output per person employed, the double deflated value added measure indicates that between 1979 and 1989productivity increased by 34%> whereas the official series indicates an increase of 51 %. Whereas the latter may indicate a productivity miracle the former does not     

Does vertical specialisation increase productivity?

This paper investigates the impact of global value chain (GVC) participation on productivity. It uses data on trade in value‐added from the World Input‐Output Database. The results based on a panel estimation covering 13 sectors in 40 countries over 15 years suggest that participation in GVCs is a significant driver of labour productivity. Backward participation in GVCs, that is, the use of imported inputs to produce for exports, emerges as particularly important. An increase by 10% in the level of GVC participation increased average productivity by close to 1.6%.     

Goods-market competition and profit sharing: a multisector macro approach

This paper develops a theoretical model that relates the degree of goods-market competition with the extent of profit sharing. Our multisector framework indicates that increased competition in goods markets leads to an increased weighting on firm profits in an optimally indexed contract. Consequently, our model predicts that a rising extent of profit-sharing arrangements in the United States should accompany an increase in the degree of goods-market competition. Available, but limited, data on profit sharing in the United States are generally consistent with this fundamental implication of the model.     

珠江模式的产权分析

"珠江模式"的产权制度的建立是从放权让利开始逐步进入各种生产要素的产权的改革,最终形成政府产权与企业产权并存模式.由于政府的公司主义化,社会的公共产品供给不足;高级生产要素产权保护不足,企业创新意识薄弱,导致当前的"珠江模式"的产权改革陷入新困境.服务型政府能否建立是"珠江模式"产权改革能否继续深入的关键.     

Picking cherries or lemons: A unified theory of cross‐border mergers and acquisitions

This article provides a theoretical framework that enhances understanding of empirical evidence suggesting that international mergers and acquisitions, a key source of foreign direct investment, seemingly target in‐country firms that are at the extremes of the productivity spectrum—either high‐productivity firms, so‐called cherries, or low‐productivity firms, the “lemons.” The framework demonstrates that foreign firms with intermediate inputs seek high‐productivity domestic firms, while foreign firms with managerial expertise seek low‐productivity domestic firms. We also show that because of the difference in available outside options, high‐productivity domestic firms can demand a significantly higher portion of profits in the partnership than low‐productivity domestic firms.     

Asymmetric Collusion with Growing Demand

We characterize collusion sustainability in markets where demand growth triggers the entry of a new firm whose efficiency may be different from the efficiency of the incumbents. We find that the profit-sharing rule that firms adopt to divide the cartel profit after entry is a key determinant of the incentives for collusion (before and after entry). In particular, if the incumbents and the entrant are very asymmetric, collusion without side-payments cannot be sustained. However, if firms divide joint profits through bargaining and are sufficiently patient, collusion is sustainable even if firms are very asymmetric.     

The Trade-Off Between Supervision Cost and Performance Based Pay: Does Gender Matter?

The study adds to the literature by providing new empirical evidence consistent with efficiency wage theory,and by providing estimates of the average cost of supervising a worker by industry. This research uses the 1996 wave of the NLSY and incorporates estimates of supervision cost computed from industry classifications. We further detect presence of no gender differences neither in risk-averseness nor in productivity gains associated with cost of supervision and performance-based pay. While the findings imply that employers should consider the incentive effects of supervision and performance based pay when constructing pay schemes, there is no need for employers to devote resources to constructing gender-specific payment mechanisms. Our evidence suggests that profit-maximizing firms should treat males and females equally and develop gender-neutral pay schemes.     

The design of licensing contracts: Chemicals,pharmaceuticals, and electrical engineering in imperial Germany

The article investigates a sample of 180 technology licensing contracts closed by German chemical, pharmaceutical, and electrical engineering companies between 1880 and 1913. The empirical results suggest that strategic behaviour is relevant for the design of licensing contracts, whereas inventor moral hazard and risk aversion of licensor or licensee seem to be less important. Moreover, the results suggest that uncertainty regarding the profitability of licensed technology influenced the design of licensing contracts. More specifically, profit-sharing agreements or producer milestones were often included in licensing contracts to solve this kind of problem.