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Employee ownership and firm performance: A variance decomposition analysis of European firms

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  • Kim, Kyoung Yong
  • Patel, Pankaj C.

Abstract

Employee ownership is of increasing interest to researchers, policymakers, and firms. Findings on the influence of employee ownership on performance, however, remain mixed, possibly due to differences in institutional/cultural factors, period-effects, between-industry differences, and firm-specific heterogeneity. To further shed light on performance gains from employee ownership attributable to the relative effects of country, year, industry, and firm, we draw on a sample of 12,648 firm-years from 1797 European firms from 2006 to 2014. We find that while the relative variance explained by employee ownership is not statistically significant, its joint effects with country, year, industry, or firm explain 2.25%, 0.12%, 0.51%, and 4.16% of variance in ROA, respectively. Similar effects are observed for workforce productivity as an outcome. These findings suggest that contextual factors, especially in line with previous research, firm-related factors are important for the effective utilization of employee ownership. This study has implications for strategic human capital theory and practitioners.

Suggested Citation

  • Kim, Kyoung Yong & Patel, Pankaj C., 2017. "Employee ownership and firm performance: A variance decomposition analysis of European firms," Journal of Business Research, Elsevier, vol. 70(C), pages 248-254.
    • Handle: RePEc:eee:jbrese:v:70:y:2017:i:c:p:248-254
    DOI: 10.1016/j.jbusres.2016.08.014
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    7. Kyoung Yong Kim & Pankaj C. Patel, 2021. "A Multilevel Contingency Model of Employee Ownership and Firm Productivity: The Moderating Roles of Industry Growth and Instability," Organization Science, INFORMS, vol. 32(3), pages 625-648, May.
    8. Sami Adwan & Alaa Alhaj-Ismail & Ranko Jelic, 2022. "Non-executive employee ownership and financial reporting quality: evidence from Europe," Review of Quantitative Finance and Accounting, Springer, vol. 59(2), pages 793-823, August.
    9. Su, Hsin-Ning & Moaniba, Igam M., 2020. "Does geographic distance to partners affect firm R&D spending? The moderating roles of individuals, firms, and countries," Journal of Business Research, Elsevier, vol. 106(C), pages 12-23.
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    13. Bilal Hassan, 2024. "Workplace democracy and democratic legitimacy in Europe," Economic and Industrial Democracy, Department of Economic History, Uppsala University, Sweden, vol. 45(2), pages 389-414, May.
    14. Park, Heejin & Noh, Jung-Hee & Pedersen, Melissa & Lee, Sora, 2022. "What are the determinants and managerial motivations for employee ownership in retirement pension plans?," The North American Journal of Economics and Finance, Elsevier, vol. 59(C).
    15. Kyoung Yong Kim & Pankaj C. Patel, 2020. "Broad‐Based Employee Ownership and Labour Productivity During the 2008 Recession: Evidence from Public Firms in Europe," British Journal of Industrial Relations, London School of Economics, vol. 58(2), pages 396-423, June.
    16. Steger, Thomas & Schubert, Christoph & Beisigel, Christina & Dietrich, Madeleine, 2019. "Mitarbeiterkapitalbeteiligung in KMU: Die Perspektive der Mitarbeiter/innen," Working Paper Forschungsförderung 129, Hans-Böckler-Stiftung, Düsseldorf.
    17. Peng, Xinyuan & Tang, Pengcheng & Yang, Shuwang & Fu, Shuke, 2020. "How should mining firms invest in the multidimensions of corporate social responsibility? Evidence from China," Resources Policy, Elsevier, vol. 65(C).

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