Do Consumers Value Employee Ownership? Evidence from an Experimental Auction - CLEO Skip to main content



The purpose of this paper is to evaluate how the public at large perceives employee ownership, and how public perceptions of employee ownership translate into consumer valuation of goods and/or services produced by employee-owned firms. To the extent that consumer interest regarding the governance and ownership structure of firms matters in their purchasing decision, an employee-owned certification label could be an instrument by firms to segment consumer demand, differentiate products and potentially realize a competitive advantage.


Three specific questions are evaluated using the fifth price, experimental Vickrey valuation auction. First, the author obtains estimates of willingness to pay (WTP) premia for a specific item (coffee) differentiated in a controlled setting by the certifications labels that signal various non-market attributes. Specifically, the author examines the WTP premium for coffee that is eligible for the Certified Employee-OwnedSM label, the Fair Trade CertifiedTM Certified label, as well coffee that qualifies for both labels. Second, the author introduces a treatment to evaluate how the provision of information produced by the third party certifiers affects WTP estimates. And third, the author exploits the use of a controlled setting to evaluate how passive sensory information (i.e. taste) may influence the WTP valuation of the labels.


WTP premia for coffee carrying only the EO label only increase by 67 cents relative to conventional coffee, which was not significantly different from zero. Bids for both FT and EO&FT labeled coffee were, however, positive ($1.22 and $2.17, respectively) and are also statistically significant. The circulation of information to subjects about the certification programs resulted in increased bids. These bid differences were statistically significant for FT and EOFT coffee, but again, not for EO labeled coffee. Finally, differences in tastes did not appear to drive significant differences in bidding behavior, suggesting that WTP consumer decisions are strongly influenced by non-market attributes.


Marketers, economists and others have an interest in determining the monetary value individuals place on non-market goods for a variety of reasons; from forecasting new product success to understanding consumer and individual behavior. Unfortunately, many currently available stated preference techniques suffer from hypothetical bias while revealed preference techniques rely on indirect measures. Experimental auctions mitigate some of these issues since they involve individuals exchanging real money for real goods in an active market. WTP valuation has been conducted on a wide variety or products, but none that capture consumer valuation of employee ownership.