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.
This updated policy brief reviews the accumulated evidence to show that, despite the theoretical free-rider and financial risk objections, employee ownership is generally linked to a number of good outcomes for firms, workers, and potentially society as a whole.
Sections of the brief cover evidence on company performance; job security, firm survival, and economic stability; and inequality and broadly shared prosperity. Pros and cons are presented. The brief also includes links to a one page summary: https://wol.iza.org/articles/does-employee-ownership-improve-performance and a global “evidence map”: https://wol.iza.org/articles/does-employee-ownership-improve-performance/map.