Abstract
This paper discusses different motives for profit sharing adoption in the U.S., Canada and the U.K., and analyzes employment-based factors that could contribute to these differences. Motives for profit sharing are classified into two groups: motivational and non-motivational. A theoretical model is presented that suggests a firm’s ability to use profit sharing for non-motivational purposes is limited by the status of domestic employment-related factors. The analytical review indicates that the non-motivational use of profit sharing is limited by the status of employment-related factors in each of the studied countries. However, the non-motivational use of profit sharing is probable if higher labor productivity is expected through other means. Implication of the results is discussed for future studies in this area.
Highlights
T he use of employee profit sharing plans as an employee compensation scheme has increased significantly in the workplace
U.S firms have had fewer problems in finding qualified employees, and were able to use profit sharing for non-motivational purposes such as wage flexibility and lowering monitoring costs. This conclusion is in agreement with the evidence that profit sharing was not used for wage flexibility or lower monitoring costs purposes in the U.K., but it was used for these purposes in the U.S
This paper reviewed different motives for profit sharing adoption in North America and the U.K
Summary
T he use of employee profit sharing plans as an employee compensation scheme has increased significantly in the workplace. Accounting literature, including accounting textbooks, have little discussion of the effect that employee profit sharing has on the accounting system and financial statements The need for such a discussion is even more necessary for international accounting professionals and upper management since multinational companies are faced with different social and legal standards that may affect employees‘ opinions about profit sharing plans and their effectiveness on productivity. This paper brings this gap closer by discussing the motives for profit sharing adoption in North America (U.S and Canada) and the U.K. and the reasons for the differences among them.
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