The Impact of Economic Democracy: Profit-sharing and Employee Shareholding Schemes.

• Author: Williams, Robert B.

This volume represents the second in a two part study that examines the origins and consequences of profitsharing and employee-shareholding in British firms. The first volume, The Origins of Economic Democracy (published in 1989), examined the underlying causes for the development of different profit-sharing and employee-shareholding schemes. This second volume examines their impact on a wide variety of economic, industrial relations, and organizational factors. One should read the previous volume before reading this volume.

Both volumes report the findings of a Department of Employment-sponsored study of 303 British firms which have profit-sharing and employee shareholding plans. A smaller sample of 22 firms were then targeted for further study. The researchers conducted interviews with key management and trade union personnel, collected extensive company performance data over a ten year period, and completed a questionnaire on employee attitudes for each of the 22 firms. This volume reports the findings from this in-depth scrutiny of these 22 firms. Firms in the smaller sample were selected in order to get a balance of geographic location as well as the types of plans and their longevity.

Chapter One provides a lucid literature review on the potential impact of employee shareholding schemes. The authors organize the review in three areas: economic, industrial relations, and organizational issues. In the economic realm they include both such macroeconomic issues as wage flexibility, employment, and inflationary impacts and such microeconomic issues as profitability and productivity. In the area of industrial relations they include the impact on employee commitment to unions, the level of industrial conflict, the level of managerial authority, and the role of collective bargaining in the firm. In assessing the impact on the organization, they consider the degree of employee involvement, of employee identification with the firm, and of employee satisfaction and commitment to the firm, and of attitudes toward work. With the exception of the macroeconomic issues which cannot be evaluated due to the nature of the study, the authors have designed the study to examine the issues listed above.

In Chapter Two the authors present their model and their findings on the impact of employee sharing schemes on the firms' economic performance. Briefly put, their model suggests that a firm selects a particular scheme due to factors peculiar to the firm as...