Context, strategy and financial participation: A comparative analysis

Abstract

This article investigates where financial participation is most likely to be encountered, and explores its compatibility with collective forms of employee voice. It is based on the findings of a major international survey of human resource management (HRM) practices. We found that financial participation was not affected by collective employee voice, but that national context and associated HRM strategies had significant effects on its nature and extent. As financial participation is likely to make for greater variation in wage rates, it tends to weaken industry-level bargaining. By re-casting the fundamental determinants of wages, it is also likely to facilitate greater wage dispersion within the firm. Hence, it was found that financial participation is more commonly encountered in liberal market contexts, and in firms practising calculative HRM, where countervailing employee power is weak, whether or not collective bargaining is formally present.

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