Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/88692
Authors: 
Aerts, Kris
Kraft, Kornelius
Lang, Julia
Year of Publication: 
2013
Series/Report no.: 
ZEW Discussion Papers 13-114
Abstract: 
We investigate the effect of profit-sharing on product and process innovation. Profit-sharing is a credible commitment of the companies to let the employees participate in any efficiency gain. Resistance against technical progress becomes less plausible. Moreover, employees are stimulated to share their specific information advantage on possibilities to optimize the production process and products with the management. We take account of possible selectivity effects and using survey data on German companies with and without profitsharing in a conditional difference-in-differences framework, we test our hypothesis by comparing measures of innovativeness. Based on matching (selectivity on observable covariates) in a static comparison firms with a share system show both more product and process innovations. In a dynamic setting, we find that the introduction of profit-sharing only spurs product innovation.
Subjects: 
Profit Sharing
Innovation
Matching
Difference-in-Differences
JEL: 
L23
L25
O31
O32
Document Type: 
Working Paper

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