Using panel data from German establishments, this study finds that performance pay is associated with increased productivity only when it is coupled with a high-wage policy. This holds for individual-based performance pay, group-based performance pay and profit sharing.

Examinations on the determinants of profit sharing usually focus on objective firm characteristics. Using data from manufacturing firms in Germany, this study shows that managers' subjective attitudes towards profit sharing also play an important role in the adoption and termination of this...

Using German establishment data, this study finds that the share of blue-collar workers, an outdated production technology and a high-wage policy increase the probability that employers regard the threat of dismissal as a suitable incentive. A participatory HRM policy, the incidence of a works...