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Does employee ownership improve performance?

Author

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  • 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
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    References listed on IDEAS

    as
    1. 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.
    2. 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, August.
    3. 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.
    4. 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.
    5. 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.
    6. 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.
    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.
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    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. Nguyen, Thu Ha & Pham, Man Duy (Marty) & Xiao, Yang, 2024. "How well is employee ownership working? Evidence from non-financial misconduct," Finance Research Letters, Elsevier, vol. 65(C).
    13. Michele Costa & Flavio Delbono & Francesco Linguiti, 2021. "Cooperative Movement and Prosperity across Italian Regions," Working Papers wp1161, Dipartimento Scienze Economiche, Universita' di Bologna.
    14. 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.
    15. Pablo Blanchard & Gabriel Burdín & Andrés Dean, 2023. "Property Rights and Effort Supply," Documentos de Trabajo (working papers) 23-01, Instituto de Economía - IECON.
    16. 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.
    17. 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.
    18. 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.
    19. 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.
    20. 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.
    21. 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.
    22. Eichhorst, Werner & Linckh, Carolin, 2019. "New Pay: Welche Anreize funktionieren überhaupt noch?," IZA Standpunkte 95, Institute of Labor Economics (IZA).

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    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

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