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This study investigates the relationship between financial participation plans, that is profit sharing, share plans and option plans, and firm financial performance using a longitudinal panel data set of non-financial listed companies for the period 1992–2009 comprising 2,216 observations. In addition, it makes a distinction between financial participation plans that are narrow based, directed to top management and executives only, and broad based, targeted to all employees. The panel data also allow us to take into account time lag effects, as profit sharing is usually said to have short-term effects while stock options and share plans are more targeted to longer term impact. Our results show that broad-based profit-sharing plans and combinations of broad-based profit sharing and share plans are positively related with many firm financial performance indicators relative to companies without these plans. However, the results consistently show negative associations between both narrow- and broad-based option plans and firm financial performance.

This paper looks at the research to date on the future of broadly granted stock options (options granted to at least half the full-time employees of a company). In the U.S., granting options broadly became popular in the late 1990s, but has lost some of its appeal in the wake of stock market declines, accounting changes, and increased shareholder concerns about dilution. The data indicate a significant minority of companies will change their plans, but a substantial majority will keep them. The data also indicate changes in accounting rules will not affect stock prices and that broadly granted options are better for corporate performance than narrowly granted options.

Many firms in many countries started to issue stock option schemes to their employees in the 1990s (Murphy, 1999).¹ In the course of time, the mushrooming of schemes has generated a heated public debate on the pros and cons of this compensation method. In one camp are those who argue that stock options are nothing more but a compensation mechanism by which managers transfer excessive fortunes to themselves without a real enhancement in firm performance. On the other hand, proponents underline that options provide managers and employees financial incentives to make better decisions, work harder, and share valuable information in a way that enhance firm performance. Thus, they see options – more or less– as a major innovation in managerial and personnel compensation (or more generally in human resource management). However, at the moment there is no theoretical or empirical consensus how stock options and managerial equity ownership affect firm performance in economic literature (Core, Guay, & Larcker, 2003).

This chapter maps existing patterns of broad-based worker ownership and control in contemporary advanced capitalism and considers future possibilities for expanding democracy within firms. Section one discusses worker ownership and control arrangements in relation to different theories of the firm and shows how these arrangements map onto different national systems. Section two compares Germany, which is characterized by worker control without ownership, and the United States, which is marked by worker ownership without control. Section three explores three pathways through which broad-based worker ownership and control might be deepened and more strongly coupled in the future.

This chapter analyzes the determinants of adoption of sharing arrangements by companies. Using propositions from agency and strategic human resource management frameworks predicting the adoption of sharing arrangements, we test the relationships with a large international dataset. The study finds that adoption of sharing arrangements is related to human capital investments, individual incentives, involvement practices, and human resource management practices and that adoption is affected by country differences.

This chapter addresses employee ownership within a strategic human resource management (SHRM) framework that has gained increased attention. The study extends the configurational approach to SHRM and argues that the construct of the workforce philosophy is the primary factor that determines the coherence of HRM systems. In other words, the workforce philosophy propagates the idea that employees both deserve to be co-owners and must be taken seriously as such. In addition, the chapter argues that the HRM system should reflect this workforce philosophy: the HRM system should contain HRM practices that mirror the rights that comprise the very construct of “ownership.” We present the possible core HRM practices of the “ownership high-performance work system (O-HPWS),” which, similar to employee ownership, produces favorable outcomes. The chapter also addresses the important mediating role of employees’ perception and attributions related to employee share ownership in the relationship of the HRM system (with employee share ownership) to favorable outcomes.