City Research Online

Abstract

There is probably no single economic topic of greater public concern in Britain at the present time than the efficiency of industry. As a high rate of inflation, low rates of productivity, investment, and growth, increasing unemployment, and the conflict between capital and labour continue to be major characteristics of the British economy, improving the economic performance of British industry is a matter of concern.

Several theoretical arguments have been recently advanced in the literature which suggest that the Value Added Concept may well make a significant contribution to the cure of British industrial disease suffered over the past three decades. One of the a priori arguments supporting these suggestions is that income reporting on a value added basis, coupled with a related organisational rewards system, would encourage the wealth creation, ensure its equitable distribution, create a better climate of cooperation and conditions which might facilitate effective participation and employee involvement, and motivate all levels of management to make decisions congruent with the long-term economic interests of the company and, eventually, of the economy.

To the best of the researcher's knowledge, however, no empirical studies aimed at testing these arguments have been reported. The major purpose of the present study is to fill this gap by providing empirical evidence on this paramount issue.

The methodology used mainly included extensive library research, a specially designed questionnaire which was mailed to randomly selected samples of 194 British industrial companies, and published data. Chi-square using contingency tables, the Mann-Whitney U test, and the t test were all employed in the statistical analysis. Multivariate techniques of partial correlations and multiple regression were also used to test some of the study's hypotheses.

The main findings of the study indicated that a statistically significant degree of differences exist among companies reporting value added and those which do not in terms of the wealth created, both labour productivity and capital productivity, and the funds retained for use in business. Furthermore, these findings demonstrated that operating value added productivity bonus schemes has generally resulted in greater involvement and cooperation, better communications, and higher levels of morale and productivity.

In general, the results of the study seem to support the alleged utility of the Value Added Concept, both in financial reporting and in incentive schemes.

Publication Type:	Thesis (Doctoral)
Subjects:	H Social Sciences > HD Industries. Land use. Labor
Departments:	Bayes Business School Doctoral Theses

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