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We present theoretical and empirical evidence challenging early studies that found unions were detrimental to workplace innovation. Under our theoretical model, unions prefer product innovation to labor-saving technological process innovation, thus making union wage bargaining regimes more conducive to product innovation than competitive pay setting. We test the theory with population-representative workplace data for Britain and Norway. We find strong support for the notion that local bargaining leads to product innovation, either alone or together with technological innovation.

Mark Klinedinst cuts straight to the chase with a chapter which examines the performance of commercial banks in the United States relative to credit unions which are financial cooperatives with democratic structures. Using panel data for the 1990s and early 2000s Mark shows that credit unions are more efficient than banks that are comparable in size, the metric being the assets per dollar of salary managed by the organization. Given that credit unions in the United States have not required a massive taxpayer bailout, the chapter offers food for thought as to what shape financial institutions should take in the United States going forward.

Ownership of shares by employees in their own firm has grown substantially in the advanced world. In the past two decades, it increased in Britain (Pendleton, Whitfield, & Bryson, 2009), the United States (Kruse, Freeman, & Blasi, 2010), and in many EU countries (Pendleton, Poutsma, van Ommeren, & Brewster, 2005; European Federation of Employee Share Ownership, 2009). By 2004, one-fifth of British workplaces had share ownership plans covering one-third of private sector employees (Bryson & Freeman, 2010). In the United States in 2006, an estimated 18% of workers had shares in their own firm, some held through collective employee stock ownership plans, some bought through employee stock purchase plans that give employees a discount on shares, and some through their 401k retirement savings Plan money. In addition to owning shares, 9% of US employees had stock options with the firm. Taking account of the overlap, 24% had an ownership stake through shares or options (Kruse, Blasi, & Park, 2010, Table 1).

CEO incentive contracts are commonplace in China but their incidence varies significantly across Chinese cities. We show that city and provincial policy experiments help explain this variance. We examine the role of two policy experiments: the use of Special Economic Zones (SEZs) to attract Foreign Direct Investment (FDI), and the privatisation of State-Owned Enterprises (SOEs). The introduction of SEZs is found to be uncorrelated with the prevalence of CEO incentive contracts. However, firms are more likely to use such contracts in areas that saw rapid SOE privatisation, irrespective of the firm’s own current ownership status and irrespective of the size of the SOE sector in the late 1970s. The positive effect of privatisation is robust to various estimation techniques and model specifications. These findings suggest that domestic privatisation policies have been more influential than FDI in driving the expansion of incentive contracts in China.

All that we know about the Chief Executive Officer (CEO) labour market in China comes from the studies of public listed companies and State-owned Enterprises (SOEs). This is the first attempt to examine the operation of the CEO labour market across all industrial sectors of the Chinese economy. We find that the influence of the State extends beyond SOEs into many privately owned firms. Government is often involved in CEO appointments in domestic firms and, when this is the case, the CEO has less job autonomy and is less likely to have pay linked to firm performance. Nevertheless, we find that incentive schemes are commonplace and include contracts linking CEO pay directly to firm performance, annual bonus schemes, the posting of performance bonds, and holding company stock. The elasticity of pay with respect to company performance is one or more in two-fifths of the cases where CEOs have performance contracts, suggesting many face high-powered incentives. We also show that State-owned and domestic privately owned firms are more likely than foreign-owned firms to use incentive contracts.