ABSTRACT
This chapter presents an account of cross-national diversity of employee financial participation poses challenges for international human resource management in international companies. It focuses on theoretical arguments for broad-based schemes, the attitudinal and behavioural effects of employee financial participation. The chapter also focuses on three theoretical arguments: the free rider effect, the risks perspective and the attitude of management towards sharing. It explores cross-national diffusion of employee financial participation and the role of multinational companies. Employee financial participation in individual enterprises generally has two principal objectives: to stimulate worker effort and improve labour management co-operation. The explanation of the adoption of employee financial participation is frequently based on the principal-agent theory, where the managers or employees are seen as opportunistic agents who should be monitored by the shareholding owners of the firm. The use of financial participation schemes may form a key part of a wider human resource management (HRM) strategy in creating a competitive advantage for the company.
