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Foundation ownership, reputation, and labour

Author

Listed:
  • Christa Børsting
  • Steen Thomsen

Abstract

A number of firms in northern Europe and especially in Denmark are owned by private foundations similarly to what would have been the case if the Ford Foundation had owned a majority of the shares in Ford Motor Company. Foundation-owned companies appear to perform surprisingly well in terms of profitability and growth, despite lacking governance mechanisms such as profit incentives or takeover threats. Given their non-profit ownership, they might be expected to behave more responsibly towards stakeholders, such as employees or customers (Hansmann, 1980), but so far there has been little empirical evidence to support this hypothesis. This paper presents new research on the reputation and responsibility of foundation-owned companies. In a panel of large Danish companies 2001–11 we find that foundation-owned firms have better reputations and are regarded as more socially responsible in corporate image ratings. Secondary evidence on labour market behaviour is consistent with these findings. Using matched employer–employee data we show that foundation-owned companies are more stable employers, pay their employees better, and keep them for longer. Altogether, the evidence indicates that foundation-ownership is associated with more responsible business behaviour towards employees.

Suggested Citation

  • Christa Børsting & Steen Thomsen, 2017. "Foundation ownership, reputation, and labour," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 33(2), pages 317-338.
    • Handle: RePEc:oup:oxford:v:33:y:2017:i:2:p:317-338.
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    File URL: http://hdl.handle.net/10.1093/oxrep/grx023
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    Cited by:

    1. Armouti-Hansen, Jesper & Cassar, Lea & Deréky, Anna & Engl, Florian, 2024. "Efficiency wages with motivated agents," Games and Economic Behavior, Elsevier, vol. 145(C), pages 66-83.
    2. María Lourdes Arco-Castro & María Victoria Lopez-Pérez & Sara Rodriguez-Gomez & Raquel Garde-Sánchez, 2020. "Do Stakeholders Modulate Philanthropic Strategy? Corporate Philanthropy as Stakeholders’ Engagement," Sustainability, MDPI, vol. 12(18), pages 1-18, September.
    3. Ann-Kristin Achleitner & Dmitry Bazhutov & André Betzer & Joern Block & Florian Hosseini, 2020. "Foundation ownership and shareholder value: an event study," Review of Managerial Science, Springer, vol. 14(3), pages 459-484, June.
    4. Lourdes Arco-Castro & Maria Victoria López-Pérez & Maria Carmen Pérez-López & Lázaro Rodríguez-Ariza, 2020. "Corporate philanthropy and employee engagement," Review of Managerial Science, Springer, vol. 14(4), pages 705-725, August.
    5. Block, Jörn & Jarchow, Svenja & Kammerlander, Nadine & Hosseini, Florian & Achleitner, Ann-Kristin, 2020. "Performance of foundation-owned firms in Germany: The role of foundation purpose, stock market listing, and family involvement," Journal of Family Business Strategy, Elsevier, vol. 11(4).
    6. Manuel Castriotta & Michela Loi & Elona Marku & Luca Naitana, 2019. "What’s in a name? Exploring the conceptual structure of emerging organizations," Scientometrics, Springer;Akadémiai Kiadó, vol. 118(2), pages 407-437, February.

    More about this item

    Keywords

    foundation ownership; reputation; labour; corporate governance;
    All these keywords.

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm
    • L31 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Nonprofit Institutions; NGOs; Social Entrepreneurship
    • J54 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Producer Cooperatives; Labor Managed Firms

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