The Strategic Role of Gainsharing*

Gainsharing is reported to greatly enhance organizational performance, but there is little empirical research that explains how gainsharing works and why companies adopt it. We employ a human resource control framework to examine the role gainsharing plays within the organization. Our analysis of 802 organizations suggests that gain-sharing plans are used to enhance employee participation in organizations that employ market-based control methods. Organizations that use bureaucratic or clan controls are not likely to adopt gainsharing; they are more likely to use participation initiatives that do not involve a group bonus.