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Edited by Chris Brewster and Wolfgang Mayrhofer
Andrew Pendleton and Erik Poutsma In recent decades many countries have witnessed an increase in the use of employee share ownership plans and profit sharing (‘financial participation’). Indeed, by the end of the twentieth century employee financial participation had come to be a widespread feature of human resource management and employment practices in large firms in some countries. In the UK, for instance, nearly all firms in the FTSE 100 (the 100 largest listed firms) had at least one all-employee share ownership plan. Nevertheless, pronounced differences remain between countries in the extent and significance of financial participation. In some countries, there is extensive statutory and fiscal support for financial participation; in others there is little or none. It has become clear from several surveys and comparisons (Lowitzsch, 2006; Poutsma, 2001; Uvalic, 1991; Vaughan Whitehead, 1995) that the availability of fiscal benefits to companies and employees are an extremely important, probably the most important, influence on the use of financial participation schemes. Appeals to promote financial participation have therefore typically called on governments to introduce or improve legislation and fiscal provisions. But a deeper question is why legislation has been more prevalent in some countries than others? This question has not been fully addressed in the literature on financial participation though many accounts touch on a broad set of reasons for national differences. Some years ago, Poole (1989) proposed that ‘favourable conjunctures’ could explain the popularity or growth of financial participation in given countries. This might be a combination of economic...
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