Financial Participation in Finland: Incidence and Determinants

Type of Work

Article

Date

2012

Journal Title

The International Journal of Human Resource Management

Journal ISSN

0958-5192

Journal Volume

23

Journal Issue

8

First Page

1570

Last Page

1589

DOI

10.1080/09585192.2012.661990

Abstract

In this paper, we provide the first comprehensive analysis of financial participation in Finnish manufacturing companies. Compared to many developed economies, the incidence of profit sharing in Finland is found to be relatively high. Cash-based profit-sharing (CPS) scheme is the most commonly used method of financial participation, and around 40% of manufacturing companies had them in 2005. Share-based schemes and personnel funds are much less common. Moreover, CPS schemes were growing fast in the early 2000s, while the number of other forms of financial participation had stagnated. In analysing the determinants of financial participation, stakeholder ownership stands out. Firms that are owned by the state or co-operatives have over a 90% likelihood of having financial participation schemes, whereas the likelihood for other firms is only around 40%. Firms mainly owned by management are less likely to offer financial participation. The evidence of complementarities with other management practices is fairly weak, although there is some evidence that higher levels of workplace training and higher computer use are associated with higher levels of financial participation.

Hamilton Areas of Study

Economics

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