Profit Sharing and the Cycle of Control

Abstract

Profit sharing has recently returned to public prominence and is becoming increasingly popular in British industry. Although it is commonplace to view the previous incidences of profit sharing in terms of the cycle of control thesis, this perspective cannot explain the present enthusiasm. This paper re-examines the cycle of control theory's ability to predict the timing, the contextual conditions and the managerial motives for the introduction of profit sharing. Two case studies are presented in order to show ways in which management have used profit sharing; these studies raise serious doubts about the explanatory value of the cycle of control thesis.