Summary
This Teaching Module was authored by Dr. Maureen Scully, Professor of Management, University of Massachusetts-Boston.
Entrepreneurship issues have roots in many disciplines, including finance, strategy, and human resource management. Employee ownership (EO) is similarly an issue that has implications for funding an enterprise, differentiating it, and motivating and retaining talented employees.
A third of the workers in the highly entrepreneurial computer services and software industry have employee ownership and broad-based stock options, according to the 2006 General Social Survey of the University of Chicago. Many entrepreneurs have chosen this approach in an innovative industry, often in a way that is integral to their strategy for financing their enterprise and motivating an engaged workforce.
This Teaching module shows four areas in the entrepreneurship curriculum where teaching about employee ownership can 1) put a needed spotlight on this widespread and useful practice and 2) add conceptual value and rich examples for the course topics being taught. See our Closer Look (link) for ideas on where employee ownership is already being taught.
Between one-third and one-half of employees participate directly in company performance through profit sharing, gain sharing, employee ownership, or stock options’ (Rhokeun Park, Douglas Kruse, and Joseph Blasi, Shared capitalism: Prevalence, characteristics, and employee views of financial participation in enterprises, 2008).
Employee ownership is an under-appreciated means for funding new ventures and securing employee alignment with the enterprise. EO is found in start-ups and ‘built to last’ corporations. It harnesses employee motivation at every stage of organizational growth.
For each topic, a selection of relevant cases, articles, and books are suggested.
1. EO as a mechanism for new venture financing
2. EO as a vehicle for incentive alignment, motivation, retention, engagement
3. EO and the stability of growing firms – links to the economy-wide use of EO
4. EO and social entrepreneurship