by: Kruse, Douglas
Source: Rutgers University
Employee ownership has attracted attention and interest for a wide variety of reasons. Much of the interest has focused on the potential for better economic performance, particularly through enhanced motivation and commitment from employees who have a direct stake in firm performance. Strong majorities of the public believe that employee-owners work harder and pay more attention to the quality of their work than non-owners, and are more likely than outside shareholders to vote their shares in the long-term interest of the company. There have also been social arguments for employee ownership, based on its potential to broaden the distribution of wealth, decrease labor-management conflict, and enhance social cohesion and equality by distributing the fruits of economic success more widely and equitably (Gates, 1998). The idea of employee ownership has attracted support across the political spectrum, often being seen as a form of economic democracy that complements our political democracy. Along with these positive views, however, there have been many concerns expressed about employee ownership particularly that it can expose workers to excessive risk and may in some cases increase labor management conflict and lower economic performance.
How much employee ownership exists in the United States, and what are the lessons from the accumulated evidence? There have been over 70 empirical studies on the effects of employee ownership in the past 25 years. These can be categorized into studies of: (a) employee attitudes and behavior; (b) firm performance; (c) employment stability, growth, and firm survival; and (d) employee wealth and wages. The studies have mostly been done on samples of United States firms and employees, although several have been done on firms in other Western industrialized countries. In this testimony I will first present data on the extent of employee ownership in the United States, and then briefly summarize the results from these studies and discuss some implications for public policy.
Link: Research Evidence on Prevalence and Effects of Employee Ownership
Publication Date: 2002-02-13