Profit sharing in the nineteenth century: history of a controversial remuneration system

Purpose – This paper aims to focus on the deep‐seated ideological, economic, and social roots of the notion and practice of profit sharing in French enterprise, from a historical perspective. Although this practice is legally mandated in France today, this paper seeks to identify the historical roots of such practices and to locate them in the ideological, social, and economic domains of discourse. Design/methodology/approach – The authors provide a brief review of the literature on profit sharing and identify the current knowledge on the relationship between profit sharing and firm performance, in addition to the motivations for implementing profit sharing and its non‐financial consequences. Findings – From the mid‐nineteenth century onwards, profit sharing entailed more than just a few anecdotal experiments and actually raised a number of deep‐seated ideological, economic and social questions. The French practice of profit sharing has a profoundly “social responsibility” argument at its base. De Gaulle's argument for this was embedded in a broader rhetoric of finding a third alternative between unbridled capitalism and unrestricted socialism, and one that could ameliorate the human condition. Research limitations/implications – Psychological ownership among employees can be promoted through profit sharing and employee ownership programs. Practical implications – It is critical for managers to ensure the success of profit sharing schemes by providing for higher levels of employee voice and including employee involvement programs. Social implications – Whereas the ideological basis (social responsibility), had a dominant impact in France, in the evolution of such practices leading up to their legislation other countries focused more on the instrumental and utilitarian benefits. Originality/value – The authors use the approach of historical analysis of profit sharing practices in France to draw cross‐national lessons for today's managers around the globe.