Sharing Ownership, Profits, and Decision-Making in the 21st Century: Volume 14

This paper examines job satisfaction and participation in decision making in three home health aide facilities with different organizational structures (worker-owned for-profit, for-profit with no participation or ownership by workers, and nonprofit).

More than 600 surveys were completed by home health aides across the three facilities. The author also engaged in participant observation during training sessions and other meetings and conducted a small number of interviews with caregivers and agency management.

Home health aides at the worker-owned, participative decision making organization were significantly more satisfied with their jobs than those at the other agencies. Results for the other agencies were not significantly distinguishable from one another.

This study involved respondents from one of each type of business. A study across several of each type of organization would allow more focus on the effects of the structural characteristics of the organizations.

In the United States, the work that home health aides perform provides a valuable service to society. On behalf of caregivers and those for whom they provide care, conditions of the work need improvement. If participative democratic workplaces provide better outcomes, they should receive more attention from lawmakers, the business community, and researchers.

This research highlights the working conditions of the people (primarily women) who perform this work. The poor compensation received is a reminder of inequality in opportunity for some workers and of the value placed on this type of caring labor.

This research is unique in its focus on work environment and outcomes in home health care across nonprofit, for-profit, and worker-owned for-profit organizations. The findings of different job satisfaction outcomes from the others in the worker-owned organization and similar outcomes in the nonprofit and conventional for-profit organizations are also unique.

Group incentive schemes have been shown to be positively associated with firm performance but it remains an open question whether this association can be explained by the motivating characteristics of the group-incentive scheme itself, or if this is due to factors that tend to accompany group-incentive schemes. We use a controlled experiment to directly test if group-incentive schemes can motivate sustained individual effort in the absence of rules, norms, and institutions that are known to mitigate free-riding behavior.

We use a controlled lab experiment that randomly assigns subjects to one of three compensation contracts used to incentivize an onerous effort task. Two of the compensation contracts are group-incentive schemes where subjects have an incentive to free-ride on the efforts of their coworkers, and the third (control) is a flat-wage contract.

We find that both group-incentive schemes resulted in sustained, higher performance relative to the flat-wage compensation contract. Further, we do not find evidence of free-riding behavior under the two group-incentive schemes.

Although we do find sustained cooperation/performance over the three work periods of our experiment under the group-incentive schemes, further testing would be required to evaluate whether group-incentive schemes can sustain cooperation over a longer time horizon without complementary norms, policies, or institutions that mitigate free-riding.

By unambiguously showing that group-incentive schemes can, by themselves, motivate workers to provide sustained levels of effort, this suggests that the “1/n problem” may be, in part, an artifact of the rational-actor modeling conventions.

To examine the nature and the determinants of the incidence and diffusion of a range of new technologies.

We collected new survey data in 2001 for medium sized establishments in upstate and central New York.

Our econometric findings suggest that the use of new technologies tends to be more extensive in firms in which greater use is made of flexible work practices and flexible compensation practices and when skill levels are high. We find that the use of IT, the intranet, and computer literacy training is greater when the average tenure of managers is low, which might reflect a greater comfort with new technologies by younger managers. Larger establishments tend to use the Internet more extensively, which may reflect the cost of setting up Internet billing and purchasing systems, and an intranet communication system. Managerial tenure does not affect the use of the Internet in general perhaps because these might be operations that are less central to the activities of more senior managers. Also, we find mixed evidence for our digital divide hypothesis that predicts that the use of new technologies would be greatest in metropolitan areas and least in rural locations.

We recognize it is potentially risky to draw inferences from a relatively small survey.

Some findings mesh with those contained in earlier studies (e.g., Black & Lynch, 2004) though, importantly, now finding emerge when a broader range of new technologies is being considered.

The purpose of this paper is to demonstrate that the conjecture that worker cooperatives (firms that practice participatory management and share profits broadly) suffer a competitive disadvantage relative to conventional firms is not supported by existing empirical research. It also considers alternative explanations for why such cooperatives are rare.

Historical analysis, literature survey, and survival analysis.

Studies of worker cooperatives in a variety of national settings indicate their failure rate is lower than conventional firms at least in the short and medium term. This contradicts the proposition that they are rare because they suffer a competitive disadvantage and focuses attention instead on their low formation rate.

The “liability of newness,” wealth and credit constraints, entrepreneurial rents, and collective action problems are cited as important barriers for the creation of worker cooperatives de novo, but these factors should be greatly reduced for those created through the conversion of an existing firm. Paradoxically, the overwhelming majority of cooperatives are created from scratch, and hence this explanation remains incomplete.

Existing policies incentivizing the creation of worker cooperatives, and current initiatives to promote them, do not encourage the creation of inferior economic institutions.

This paper contradicts the widely held belief that the distinctive features of worker cooperatives (participatory management and broadly shared profit) place them at a competitive disadvantage in a market economy. It also provides insight into why cooperatives are rare by challenging explanations based in presumed inefficiencies and focusing attention instead on barriers to creation.

Using a population study, we provide evidence on the important but understudied issue of company survival under employee ownership, as well as on the performance effects of employee ownership and the issue of whether employee ownership substitutes for other pension benefits.

Company survival and pension benefits are assessed using a unique dataset from Dun & Bradstreet of privately held Employee Stock Ownership Plan (ESOP) companies over the 1988–1999 period, matched to non-ESOP companies in the same industry. Performance is assessed using pre/post-comparisons of ESOP adopters in the 1988–1994 period.

Privately held ESOP companies in 1988 were only half as likely as non-ESOP firms to go bankrupt or close over the 1988–1999 period, and only three-fifths as likely to disappear for any reason. The ESOP companies had significantly higher post-adoption annual employment and sales growth, along with higher sales per employee. ESOP companies are four times more likely than their non-ESOP pairs to have defined benefit pension plan and other forms of defined contribution plans.

The greater survival was not explained by higher productivity, or by greater compensation flexibility. The higher survival may instead be tied to complementary policies adopted along with ESOPs to create a more committed and engaged workforce that contributes ideas to enhance survival and is more flexible when economic difficulties arise. The pension results are consistent with other studies on compensation under employee ownership, suggesting that employee ownership is generally used as a form of efficiency wage to provide above-market compensation.

Higher survival among ESOP companies could result in lower job loss and unemployment, potentially providing a public policy rationale for support of employee ownership.

The chapter provides the first examination of company survival in privately held ESOP companies, and one of the few examinations of how ESOPs relate to other pension benefits.

The Mondragon cooperatives are the most thoroughly studied and well-known example of worker cooperatives in the world. Yet while there has been much discussion and wide recognition of the empirical growth of the Mondragon co-ops, there is substantial confusion about the lessons we can draw from this case in thinking about workplace democracy more broadly.

The normative and empirical literature on Mondragon is carefully analyzed to draw out the main implications from this case study for the broader issue of workplace democracy.

I contend that Mondragon teaches us two main lessons. First, that workplace democracy can indeed operate in a way that is economically sustainable and socially superior to conventional firms. Second, Mondragon sheds light on the question of whether co-ops are doomed to degenerate.

This paper advances our understanding and conceptualization of workplace democracy.

This paper provides practitioners with an up-to-date and comprehensive analysis of the world’s most successful cooperative network.

This paper provides insight into the practical feasibility and normative desirability of alternative organizations of workplaces in the form of worker cooperatives.

This paper will be of particular interest to scholars and activists interested in democratic alternatives to conventional hierarchical firms by illustrating the strengths and weaknesses of the Mondragon cooperatives and drawing out the lessons that this specific yet influential example has for issues of workplace democracy more broadly.

The purpose of this article is to analyze the present state of employee ownership in Russia and reasons for its decline due to the drawbacks of economic reforms on the country.

The design of the article includes the analysis of the Russian model of ESOP and its differences from the U.S. analog. The author also describes the practical experience of the Russian people’s enterprises and the drawbacks in the legal foundations of their work.

The key finding of this work is that the correction of these drawbacks would lead to broader development of employee owned companies in Russia.

The author’s ideas of changing focus of the market reforms in Russia and facilitating the development of economic democracy in the country constitute the major social implication of her research.

It may have practical implications both for developed market economies and economies in transition.

The originality of the paper is determined by drawing a logical link between the development of employee ownership and overall market reform in Russia, as well as by presenting a comparative analysis of the U.S. and Russian models of ESOP.

The purpose of this paper is to investigate the incidence of employee financial participation (EFP) schemes in Europe and examine the factors that influence the likelihood of (i) a company offering EFP schemes and (ii) employees taking up EFP schemes.

Using a combination of descriptive and econometric techniques, the paper provides information on the incidence of EFP schemes in the EU and profiles a typical company and a typical employee that, respectively, offers and takes up EFP schemes. The empirical investigation is based on two models employing probabilistic techniques. Data used for this analysis include the European Company Survey (ECS) conducted in 2009 and three rounds of the European Working Conditions Survey (EWCS) conducted in 2000, 2005, and 2009.

Results display a significant rise in EFP in the EU-27 in the last decade. In addition, results seem to suggest that the employees’ and companies’ characteristics, as well as sector and region of operation explain some of the variation in likelihoods of companies and employees, respectively, offering and taking up EFP schemes.

Due to data limitation, our analysis lacks a dynamic assessment of the relationship between parameters. Studies that exploit longitudinal data are suggested to follow this paper.

This paper contributes to the existing empirical literature by examining jointly the determinants of financial participation from both employers’ and employees’ perspective.

To describe the Pragathi Bandhu Groups (PBG) Model and portray the performance of PBG farmers encouraged by their financial and decision-making participation in micro financing and labor sharing, as well as to analyze the factors that influenced participation of small farmers in PBG.

The empirical study is confined to the small farmers and laborers of PBG functioning in the coastal districts of Karnataka State in India. The study is conducted in Belthangady and Bantwal Taluks of Dakshina Kannada (DK) Districts-Udupi taluk of Udupi District in the State of Karnataka. Primary data from 100 farmer members, selected at random in each of the Taluks, is collected through personal interview by administering semi-structured interview schedules and open discussion. In addition, the data on the functions and the performance of PBG in the State of Karnataka in India are also collected from the official records of Shri Kshetra Dharmasthala Rural Development Project (SKDRDP) and their field-level functionaries through informal discussions. Factor analysis is performed with principal component analysis followed by Varimax rotation to analyze the factors that influenced participation of small farmers in PBG.

Results show that the implementation of PBG Model, through the collective participation of small farmers in micro financing, free labor sharing, financial and decision-making activities underlying the functions of PBG Model, has helped them to achieve robust performance in terms of increased savings mobilization, loan utilization, and value of free labor sharing and acres of land brought under cultivation with the help of irrigation facilities created by them. The factor analysis has derived four factors that influenced the participation of farmers in PBG (agriculture development, financial participation, capacity building, and other benefits) which explain 63.701 of total factor variance.

The findings of this paper can benefit the small farmers and laborers in replicating the PBG Model and its initiatives that address shortages of labor and credit, as well as the high cost of labor, particularly in the unorganized sector in the agrarian economy.

The insights offered are likely to be beneficial to the distressed small farmers, development agencies, and agriculture policy makers to solve the agrarian crisis caused due to shortages of labor and farm credit.

To examine how different types of ownership, including investor-owned, employee-owned, and mixed models, affect the dynamics of participatory practices in the workplace, and the broader social effects of these differences.

Brings together literature from democratic theory and empirical research in workplace participation and employee ownership. The first step is to articulate the range of democratic practices from nondemocratic to strongly democratic. The essay then discusses the different forms that participation can take and the threshold for what can be considered democratic participation. It then considers different models of ownership and the impact of ownership type on participatory practices.

It is found that investor-owned firms cannot be considered strongly democratic and that worker cooperatives are more likely to be strongly democratic and cannot fall below the threshold of weak democracy. However, strong democracy is not necessarily a feature of worker cooperatives.

Little work has been done to consider the way the type of ownership affects the kind or degree of democratic practices that may be present in an enterprise.

This article describes the practical and theoretical implications relating to the labor managed firm (LMF), which has been formed from an insolvent company purchased by its workers. The research focuses on an international comparison and the cultural context of six LMFs – two each in the United States, Spain, and Italy where legislation supports worker buyouts from insolvency. Adopting a critical theoretical approach it draws on the scholarship of industrial relations and human resource management, grounded in a historical analysis to predict when a transformative or integrative LMF will be formed.

Taking a case study methodology to enable an in-depth understanding of the firms internal processes and relationships the use of semi-structured interviews of blue- and white-collar workers (with the use of a translator) and the administration of a structured questionnaire are used to gather and triangulate qualitative and quantitative data. The research limitations relate to the small number of respondents in each firm, which prevented more rigorous analysis, and calls for further research with larger numbers of respondents.

The results reveal that at macro level the theoretical model predicts that the LMF will have a propensity to emerge when there are market failures, when there is support from the state and the labor movement. The type of LMF was found to depend on the national context of industrial relations. At the micro level a core set of practices were found to work together to lead to high member commitment and positive behavioral outcomes.

The research has important social implications by informing public policy aimed at redressing the injustice to employees when a business fails and jobs and entitlements are lost.

The article advances an understanding of the theoretical nature of the LMF.

The purpose of this paper is to delve into three themes about democratic enterprises.

(1) The first theme is the question of capital structure where labor-managed firms (LMFs) are often pictured as having “horizon problem.” Yet this is only a minor technical problem which is solved by the system of internal capital accounts as in the Mondragon cooperatives.

(2) The second theme concerns the attempt to implement participative management and the related ideas of active learning in educational theory in the workplace. The point is that the democratic firm is the natural setting to implement these ideas, not the conventional firm where the staff have the legal role of “employees” rented by the company.

(3) The third theme is the old canard the cooperatives are incompatible with entrepreneurship. My rethinking of the issue was inspired by the analysis of the late Jane Jacobs who emphasized that the primary means of growing economic “biomass” is through economic offspring (e.g., spin-offs) – in analogy with the biological principle of plentitude. Yet the conventional form of ownership operates as a fetter on this process since the ownership and management wants to expand its empire and maintain “ownership” of any potential offspring. But that constraint against spin-offs is absent in democratic firms, and the Mondragon complex has indeed illustrated how to catalyze this process of growth through offspring.

A public policy to encourage all companies to grow by affiliated and perhaps democratic spin-offs would create more jobs (through filling extra niches) and more stability (through the agility of separate companies).

Political institutions and contemporary workplaces operate according to different rules. The seeming contradiction between these two spheres, one democratic and the other something else, presents an opportunity for productive speculation about the possibilities for reconciliation. The purpose of this paper is to provide a guide for future research investigation of this perennial topic.

The discussion of whether the workplace can catch up with the democratic achievements of political life requires an understanding of the status quo, the prevailing frames or metaphors that govern our understanding of organizational life. Four metaphors are put forward to describe the prevailing spectrum of thought. In addition to metaphors, analogies are introduced as an interpretive tool to help guide the imaginative transition between political and workplace domains.

Democratic political cultures are supported by structures and institutions which encourage the expression of individual and collective voice. Workplaces, comprised of the same citizens who participate in the governance of communities, do not, with some important exceptions, offer the same opportunities for democratic participation. If a general analogy between political and workplace sphere is found persuasive, it should be possible to import and adapt democratic traditions from the former to the latter.

Discussions of workplace democracy often suffer from a certain naiveté, a bias against structure and toward informal consensus. Insofar as democratic workplaces are by definition smaller scale than political communities, this bias is defensible. This paper concludes however by asserting certain minimal “acid test” challenges to those who would promote the goal of workplace democracy.

To explore the challenges of worker ownership in complex and distributed collaborative production systems.

Review of emerging developments in the organization of economic production and conceptual exploration of their implications for the ownership regime, and for worker ownership.

Worker ownership research and advocacy usually take for granted what is to be owned: a factory or firm, exchanging on open markets. But this form of production, analyzed in the markets-hierarchy literature, is increasingly in question as more value is generated through flexible cross-boundary collaborations. As a result, the nature of ownership rights are contested from both within and without the business community.

This paper explores some implications of these developments on employee ownership as a practical ideal: what are the main possibilities for the evolution of “ownership” rights in collaborative processes?

Worker owners need to consider their relation to, and distribution of rights among, other collaborative partners, including knowledge contributors and interdependent stakeholders.

Implies a need to move beyond markets-hierarchies frameworks, in which concern is focused on the governance of firms, to building a set of mechanisms for the organization and governance of production networks.

Poses a set of problems for the worker ownership field emerging from the changing nature of production and organization.