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Beyond the short-term: the effects of broad-based employee ownership on labor productivity in family and nonfamily firms

Frank Mullins (Department of Management and Marketing, The University of Alabama in Huntsville, Huntsville, Alabama, USA)

International Journal of Entrepreneurial Behavior & Research

ISSN: 1355-2554

Article publication date: 16 August 2022

Issue publication date: 17 January 2023

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Abstract

Purpose

This study investigates whether broad-based employee ownership (BBEO), in isolation and in conjunction with cash profit sharing (CPS), can enhance labor productivity in family firms over nonfamily firms.

Design/methodology/approach

Hypothesis testing was conducted using cross-sectional time-series regression with a matched sample of 393 family and nonfamily firms listed on the US S&P 500 over a five-year timeframe.

Findings

Overall, the findings indicate that BBEO does not increase labor productivity more in family firms compared to nonfamily firms in the short term; however, BBEO does enable family firms to experience greater labor productivity relative to nonfamily firms beyond the short term. Moreover, when BBEO is combined with CPS, labor productivity improves more for family firms than nonfamily firms both in the short term and beyond.

Originality/value

While prior studies have relied largely on agency theory, this study contributes to the literature on family firms and employee incentives by being amongst the first to draw upon temporal motivation theory to distinguish between family and nonfamily firms regarding the incentive effect of BBEO on labor productivity.

Keywords

Acknowledgements

The author would like to thank action editor Domingo Ribeiro Soriano and two anonymous reviewers for the valuable and constructive feedback. Also, the author is grateful for the support of the Institute for the Study of Employee Ownership and Profit Sharing at Rutgers University through the Louis O. Kelso Fellowship.

Citation

Mullins, F. (2023), "Beyond the short-term: the effects of broad-based employee ownership on labor productivity in family and nonfamily firms", International Journal of Entrepreneurial Behavior & Research, Vol. 29 No. 1, pp. 195-217. https://doi.org/10.1108/IJEBR-12-2021-0970

Publisher

:

Emerald Publishing Limited

Copyright © 2022, Emerald Publishing Limited

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