Profit sharing, technical efficiency change and finance constraints

Ornella W. Maietta, Vania Sena

Research output: Chapter in Book/Report/Conference proceedingChapter (peer-reviewed)

Abstract

This paper analyses the mechanisms through which profit-sharing schemes may induce debt constrained firms to improve technical efficiency over time to guarantee positive profits. This hypothesis is first formalised in a partial equilibrium framework and then is tested on a sample of Italian traditional and cooperative firms. Technical efficiency change indexes are computed by DEA. These are regressed on a measure of finance constraints to analyse their impact on firms’ efficiency growth. The results support the hypothesis that a restriction in the availability of financial resources can affect positively the growth in efficiency in firms with profit-sharing schemes.
Original languageEnglish
Title of host publicationEmployee participation, firm performance and survival
EditorsVirginie Perotin, Andrew Robinson
PublisherEmerald
Pages149-167
Number of pages19
ISBN (Electronic)978-1-84950-277-1
ISBN (Print)978-0-76231-114-9
DOIs
Publication statusPublished - 2004

Publication series

NameAdvances in the economic analysis of Pparticipatory & labor-managed firms
PublisherEmerald
Volume8
ISSN (Print)0885-3339

Keywords

  • profit-sharing schemes
  • debt constrained firms
  • technical efficiency
  • positive profits
  • partial equilibrium framework
  • Italian
  • traditional firms
  • cooperative firms
  • efficiency growth

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  • Cite this

    Maietta, O. W., & Sena, V. (2004). Profit sharing, technical efficiency change and finance constraints. In V. Perotin, & A. Robinson (Eds.), Employee participation, firm performance and survival (pp. 149-167). (Advances in the economic analysis of Pparticipatory & labor-managed firms; Vol. 8). Emerald. https://doi.org/10.1016/S0885-3339(04)08007-X