IDEAS home Printed from https://ideas.repec.org/a/iza/izawol/journl2022n311.html
   My bibliography  Save this article

Does employee ownership improve performance?

Author

Listed:
  • Arnaud Chevalier

    (Royal Holloway, University of London, UK, and IZA, Germany)

Abstract

Employee ownership has attracted growing attention for its potential to improve economic outcomes for companies, workers, and the economy in general, and help reduce inequality. Over 100 studies across many countries indicate that employee ownership is generally linked to better productivity, pay, job stability, and firm survival—though the effects are dispersed and causation is difficult to firmly establish. Free-riding often appears to be overcome by worker co-monitoring and reciprocity. Financial risk is an important concern but is generally minimized by higher pay and job stability among employee owners.

Suggested Citation

  • Arnaud Chevalier, 2022. "Does employee ownership improve performance?," IZA World of Labor, Institute of Labor Economics (IZA), pages 311-311, May.
    • Handle: RePEc:iza:izawol:journl:2022:n:311
    as

    Download full text from publisher

    File URL: https://wol.iza.org/uploads/articles/311/pdfs/does-employee-ownership-improve-performance.pdf
    Download Restriction: no
    File URL: https://wol.iza.org/articles/does-employee-ownership-improve-performance
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Kruse, Douglas L. & Freeman, Richard B. & Blasi, Joseph R. (ed.), 2010. "Shared Capitalism at Work," National Bureau of Economic Research Books, University of Chicago Press, number 9780226056951.
    2. Joseph Blasi & Richard Freeman & Douglas Kruse, 2016. "Do Broad-based Employee Ownership, Profit Sharing and Stock Options Help the Best Firms Do Even Better?," British Journal of Industrial Relations, London School of Economics, vol. 54(1), pages 55-82, March.
    3. Douglas Kruse & Joseph Blasi & Dan Weltmann & Saehee Kang & Jung Ook Kim & William Castellano, 2022. "Do Employee Share Owners Face Too Much Financial Risk?," ILR Review, Cornell University, ILR School, vol. 75(3), pages 716-740, May.
    4. E. Han Kim & Paige Ouimet, 2014. "Broad-Based Employee Stock Ownership: Motives and Outcomes," Journal of Finance, American Finance Association, vol. 69(3), pages 1273-1319, June.
    5. Richard B. Freeman & Joseph R. Blasi & Douglas L. Kruse, 2010. "Introduction to "Shared Capitalism at Work: Employee Ownership, Profit and Gain Sharing, and Broad-based Stock Options"," NBER Chapters, in: Shared Capitalism at Work: Employee Ownership, Profit and Gain Sharing, and Broad-based Stock Options, pages 1-37, National Bureau of Economic Research, Inc.
    6. Fathi Fakhfakh & Virginie Pérotin & MÓnica Gago, 2012. "Productivity, Capital, and Labor in Labor-Managed and Conventional Firms: An Investigation on French Data," ILR Review, Cornell University, ILR School, vol. 65(4), pages 847-879, October.
    7. Douglas L. Kruse & Richard B. Freeman & Joseph R. Blasi, 2010. "Shared Capitalism at Work: Employee Ownership, Profit and Gain Sharing, and Broad-based Stock Options," NBER Books, National Bureau of Economic Research, Inc, number krus08-1.
    8. Joo Hun Han & DuckJung Shin & William G. Castellano, & Alison M. Konrad & Douglas L. Kruse & Joseph R. Blasi, 2020. "Creating Mutual Gains to Leverage a Racially Diverse Workforce: The Effects of Firm-Level Racial Diversity on Financial and Workforce Outcomes Under the Use of Broad-Based Stock Options," Organization Science, INFORMS, vol. 31(6), pages 1515-1537, November.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. David Ellerman & Tej Gonza & Gregor Berkopec, 2022. "European Employee Stock Ownership Plan (ESOP): the main structural features and pilot implementation in Slovenia," SN Business & Economics, Springer, vol. 2(12), pages 1-20, December.
    2. Guido Caselli & Michele Costa & Flavio Delbono, 2022. "What do cooperative firms maximize, if at all? Evidence from Emilia‐Romagna in the pre‐Covid decade," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 93(4), pages 821-847, December.
    3. Maria Bastida & Alberto Vaquero García & Luisa Helena Pinto & Ana Olveira Blanco, 2022. "Motivational drivers to choose worker cooperatives as an entrepreneurial alternative: evidence from Spain," Small Business Economics, Springer, vol. 58(3), pages 1609-1626, March.
    4. Carmen GUZMAN & Francisco J. SANTOS & María de la O BARROSO, 2020. "Cooperative Essence And Entrepreneurial Quality: A Comparative Contextual Analysis," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 91(1), pages 95-118, March.
    5. Oliver Stettes & Melanie Arntz & Terry Gregory & Ulrich Zierahn & Katharina Dengler & Daniel Veit & Werner Eichhorst & Ulf Rinne, 2017. "Arbeitswelt 4.0: Wohlstandszuwachs oder Ungleichheit und Arbeitsplatzverlust – was bringt die Digitalisierung?," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 70(07), pages 03-18, April.
    6. Fidan Ana Kurtulus & Douglas Kruse, 2018. "An Empirical Analysis of the Relationship between Employee Ownership and Employment Stability in the US: 1999–2011," British Journal of Industrial Relations, London School of Economics, vol. 56(2), pages 245-291, June.
    7. Burdin, Gabriel & Garcia-Louzao, Jose, 2023. "Employee-Owned Firms and the Careers of Young Workers," IZA Discussion Papers 15880, Institute of Labor Economics (IZA).
    8. Douglas Kruse & Joseph Blasi & Dan Weltmann & Saehee Kang & Jung Ook Kim & William Castellano, 2022. "Do Employee Share Owners Face Too Much Financial Risk?," ILR Review, Cornell University, ILR School, vol. 75(3), pages 716-740, May.
    9. Marina Albanese & Cecilia Navarra & Ermanno Tortia, 2017. "Equilibrium unemployment as a worker insurance device: Worker insurance and wage setting in worker owned enterprises," DEM Working Papers 2017/09, Department of Economics and Management.
    10. 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).
    11. Kruse, Douglas L. & Blasi, Joseph & Weltmann, Dan & Kang, Saehee & Kim, Jung Ook & Castellano, William, 2019. "Do Employee Share Owners Face Too Much Financial Risk?," IZA Discussion Papers 12303, Institute of Labor Economics (IZA).
    12. Michele Costa & Flavio Delbono & Francesco Linguiti, 2021. "Cooperative Movement and Prosperity across Italian Regions," Working Papers wp1161, Dipartimento Scienze Economiche, Universita' di Bologna.
    13. Marina Albanese & Cecilia Navarra & Ermanno Tortia, 2019. "Equilibrium unemployment as a worker insurance device: wage setting in worker owned enterprises," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 36(3), pages 653-671, October.
    14. Pablo Blanchard & Gabriel Burdín & Andrés Dean, 2023. "Property Rights and Effort Supply," Documentos de Trabajo (working papers) 23-01, Instituto de Economía - IECON.
    15. Cox, Caleb A. & Stoddard, Brock, 2024. "Inequality and the allocation of collective goods," Journal of Economic Behavior & Organization, Elsevier, vol. 220(C), pages 756-767.
    16. David P. Ellerman & Tej Gonza, 2020. "Coronavirus Crisis: Government Aid That Also Promotes Employee Ownership," Intereconomics: Review of European Economic Policy, Springer;ZBW - Leibniz Information Centre for Economics;Centre for European Policy Studies (CEPS), vol. 55(3), pages 175-180, May.
    17. Michele Costa & Flavio Delbono & Francesco Linguiti, 2023. "Cooperative movement and widespread prosperity across Italian regions," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 94(2), pages 475-494, June.
    18. Thomsen, Stephan L, 2018. "Die Rolle der Computerisierung und Digitalisierung für Beschäftigung und Einkommen," Hannover Economic Papers (HEP) dp-645, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät.
    19. Abdelnour Joseph & Aubert Nicolas & Campa Domenico, 2022. "Does employee ownership decrease agency costs? Evidence from French listed companies [L'actionnariat salarié réduit-il les coûts d'agence? Le cas des entreprises françaises cotées]," Post-Print hal-03723164, HAL.
    20. 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.
    21. Eichhorst, Werner & Linckh, Carolin, 2019. "New Pay: Welche Anreize funktionieren überhaupt noch?," IZA Standpunkte 95, Institute of Labor Economics (IZA).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. 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.
    2. 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.
    3. 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.
    4. Stefania Cardinaleschi & Mirella Damiani & Fabrizio Pompei, 2020. "Knowledge-intensive sectors and the role of collective performance-related pay," Industry and Innovation, Taylor & Francis Journals, vol. 27(5), pages 480-512, May.
    5. Pablo Cotler, 2020. "Does it pay to cooperate? The case of cooperatives in the Mexican manufacturing sector," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 91(4), pages 497-517, December.
    6. 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).
    7. Kruse, Douglas L. & Blasi, Joseph & Weltmann, Dan & Kang, Saehee & Kim, Jung Ook & Castellano, William, 2019. "Do Employee Share Owners Face Too Much Financial Risk?," IZA Discussion Papers 12303, Institute of Labor Economics (IZA).
    8. Uwe Jirjahn, 2018. "The adoption and termination of profit sharing for employees: does management’s attitude play a role?," Applied Economics, Taylor & Francis Journals, vol. 50(2), pages 108-127, January.
    9. Prince, Nicholas R. & Bruce Prince, J. & Kabst, Rüediger, 2020. "National culture and incentives: Are incentive practices always good?," Journal of World Business, Elsevier, vol. 55(3).
    10. Nicolas Aubert & Alexander Kern & Xavier Hollandts, 2017. "Employee stock ownership and the cost of capital," Post-Print halshs-01502001, HAL.
    11. Anne-Laure P. Winkler & Jill A. Brown & David L. Finegold, 2019. "Employees as Conduits for Effective Stakeholder Engagement: An Example from B Corporations," Journal of Business Ethics, Springer, vol. 160(4), pages 913-936, December.
    12. Hristos Doucouliagos & Patrice Laroche & Douglas L. Kruse & T. D. Stanley, 2020. "Is Profit Sharing Productive? A Meta‐Regression Analysis," British Journal of Industrial Relations, London School of Economics, vol. 58(2), pages 364-395, June.
    13. Hongfeng Sun & Chang Liu, 2023. "Employee Stock Ownership Plans and Corporate Environmental Performance: Evidence from China," IJERPH, MDPI, vol. 20(2), pages 1-19, January.
    14. Peter Cappelli & Martin Conyon & David Almeda, 2020. "Social Exchange and the Effects of Employee Stock Options," ILR Review, Cornell University, ILR School, vol. 73(1), pages 124-152, January.
    15. 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.
    16. David Ellerman & Tej Gonza & Gregor Berkopec, 2022. "European Employee Stock Ownership Plan (ESOP): the main structural features and pilot implementation in Slovenia," SN Business & Economics, Springer, vol. 2(12), pages 1-20, December.
    17. Douglas Kruse & Joseph Blasi & Dan Weltmann & Saehee Kang & Jung Ook Kim & William Castellano, 2022. "Do Employee Share Owners Face Too Much Financial Risk?," ILR Review, Cornell University, ILR School, vol. 75(3), pages 716-740, May.
    18. Ross Brown & Ronald McQuaid & Robert Raeside & Matthew Dutton & Valerie Egdell & Jesus Canduela, 2019. "Buying into Capitalism? Employee Ownership in a Disconnected Era," British Journal of Industrial Relations, London School of Economics, vol. 57(1), pages 62-85, March.
    19. Dow,Gregory K., 2019. "The Labor-Managed Firm," Cambridge Books, Cambridge University Press, number 9781107589650, September.
    20. Urtzi Uribetxebarria & Alaine Garmendia & Unai Elorza, 2021. "Does employee participation matter? An empirical study on the effects of participation on well-being and organizational performance," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 29(4), pages 1397-1425, December.

    More about this item

    Keywords

    employee ownership; profit sharing; economic performance; economic stability; unemployment; economic inequality;
    All these keywords.

    JEL classification:

    • J54 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Producer Cooperatives; Labor Managed Firms
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects
    • M54 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Labor Management
    • P13 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Cooperative Enterprises
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:iza:izawol:journl:2022:n:311. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Institute of Labor Economics (IZA) (email available below). General contact details of provider: https://edirc.repec.org/data/izaaade.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.