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This paper aims to identify the key lessons to learn from the US employee stock ownership plan (ESOP)-model. The lessons are, broad-based employee ownership is difficult to attain and sustain if employees have to use their own money to purchase shares. The paper works better when the shares are held in trust rather than being held individually. Broad-based employee ownership improves corporate performance and employee financial security. Employees care more about how employee ownership affects the stability of their jobs and retirement than having governance rights. If laws require democratic governance there will not be widespread employee ownership. Tax incentives are critical to induce companies and their owners to share ownership.

This paper is based on results from National Center for Employee Ownership research, a review of other research in the field, and the author’s own 45 years of experience in this field.

About one-quarter of the private sector workforce in the USA participates in some kind of employee ownership plan. There are 6,700 ESOPs in the USA with 14 million participants. The ESOPs hold over $1.4 trillion in assets. About 6,000 of these plans are in non-listed companies and the companies employ about two million people. Public companies ESOPs generally own under 10% of company stock; private company ESOPs usually own at least 30% of the stock and a majority of the plans own 100% of the stock. Most of these companies have between 20 and 500 employees.

The article gives a practitioner's overview over the main reasons behind the success of the ESOP model in the USA.

This study aims to investigate how a French multinational enterprise (MNE) is developing employee stock ownership (ESO) in its subsidiaries in Peru and Mexico, both Latin American countries with deep social and economic inequalities.

This is a qualitative case study which conducted interviews with representatives of the French MNE and its subsidiaries in Peru and Mexico.

The employee stock purchase plans offered by the company to its employees support the achievement of the sustainable development goals (SDGs) 1, 8 and 10 in these countries.

The authors argue that MNEs could become flagships in the SDG achievement in emerging economies.

By contributing to better workplace outcomes and enhanced corporate performance, ESO is in line with SDG 8. ESO also fulfills SDGs 1 and 10 by allowing employees to build up savings and wealth, whose lack is the main source of inequality and poverty. Reciprocity and binary economics theories explain these relationships.

This viewpoint will present some statistical information about employee ownership in the US and interpret and analyze this information in order to address the barriers question using material from qualitative interviews that the authors have conducted over the last ten years with practitioners in the field. There have been few actual empirical studies that sort out the different barriers to employee ownership. The authors have chosen to focus on employee stock ownership plan (ESOP) in the US because this is the principal example from which people could learn from, and the high prevalence of ESOPs plays an important role in the US. This overview will present interpretations of these interviews with conceptual arguments that cannot always be supported with either overwhelming empirical studies or arguments that conclusively eliminate one or other explanation. This is an initial attempt to bring some comprehensive treatment and data to this incipient discussion. This is based on an interpretive analysis of qualitative interviews without quantification or social survey methods used for measurement. The advantage of this approach is that it lays out a completely different level of analysis of the barriers to employee ownership in the US that is “closer to the ground” and more based in the views of front-line practitioners who are actually implementing it.

Analysis and interpretation of qualitative interviews.

The list of barriers that has been identified is not exhaustive. The preliminary conclusions are that (not necessarily in this order) limitations of investment banking models, poor supportive infrastructure, complexity and cost and regulatory issues, the lack of support by political parties and social movements, the sale of companies due to financial considerations and legal complexities and lack of clarity and resistance by Federal agencies are major barriers in the US. Various sectors of Wall Street has been amenable to employee ownership with the proper government and private sector support. What is needed now is a series of quantitative surveys and qualitative interviews of retiring business owners in closely held companies and of CEOs and CFOs in stock market companies in order to gauge the barriers that they believe are blocking their own action in the employee share ownership area. The Rutgers Institute for the Study of Employee Ownership and Profit Sharing is working on such a research agenda at this time. In addition, with the future size of the US employee ownership sector at stake, a more intensive one-year interview project would make sense in order to present these different explanations to key actors and practitioners and ask them to provide evidence to prove or disprove the relevance of the different barriers.

Empirical research which can resolve which barriers are more important than others is presented, when possible; however, studies that provide metrics to compare different barriers are not available and need to be carried out.

Other countries considering employee ownership policies can learn from the US experience. US policymakers and legislators can learn from an original, recent discussion of barriers.

If employee ownership sectors are to be developed, a careful discussion of barriers is most relevant.

Original document by the authors based on original interviews.

This paper aims to provide evidence-based managerial advice for identifying, developing and managing a broad-based innovation system for organizations to reap optimal performance outcomes.

The general review is based upon large-scale peer-reviewed academic studies of innovation practices in organizations and their performance outcomes and synthesized here through two illustrative case studies. The first case deals with Brightsquid Secure Communications as they expanded their product-focused innovation practices to include broad-based organizational improvements, while the second case focuses on Trimet Building Products and their use of broad-based innovation to turn around declining revenue.

Using the SME context, this study outlines an innovation management model that highlights the importance of leadership attention on organization-wide innovation and the interdependence of investments across functions.[AQ2] To enhance their performance, SMEs must implement broad learning programs across the organization that provides formal and informal cross-training and takes a cross-functional approach to innovation and problem-solving.

Reviewing and integrating the literature on different innovation types and outcomes, this study proposes a novel broad-based innovation model that guides firms that overemphasize improvements within a single function. Further, drawing on the learning literature, this paper recommends an organizational learning and collaboration model to achieve organization-wide innovation for optimal outcomes.

This paper offers a new perspective on the potential motivation for the adoption of employee ownership based on market power. Employee ownership may be linked to market power, either through contributing to firm growth that leads to market power or through industry leaders adopting employee ownership as part of rent sharing or a broader consolidation of market position. Both employee stock ownership plan (ESOP) coverage and product market concentration (PMC) have been increasing in the past two decades, providing a good opportunity to see if and how these are related.

The authors predict ESOP adoption and termination using multilevel regressions based on 2002–2012 firm- and industry-level data from the Census Bureau, Compustat and Form 5500 pension datasets.

The authors find that the top four firms in concentrated industries are more likely to adopt Employee Stock Ownership Plans (ESOPs), while having an ESOP does not predict entering the top four, apart from firm-level predictors. Tests indicate the first result does not reflect simple rent sharing with employees but instead appears to reflect an effort by firms to consolidate market power through the attraction and retention (or “locking in”) of industry talent. Other positive predictors of ESOPs include company size, being in a high-wage industry and having a defined benefit (DB) pension.

To better distinguish among hypotheses, it would be helpful to have firm-level data on managerial attitudes, strategies, networks and monopsony measures. Therefore, future research using such data would be highly useful and encouraged.

The paper includes implications for the potential usefulness of ESOPs in attracting and retaining talent and for the design of nuanced policy to encourage more broadly based sharing of economic rewards.

While prior research focuses on firm-level predictors of employee ownership, this study uses market concentration and other industry-level variables to predict the use of ESOPs. This study makes a unique contribution, broadening the current thinking on firm motives and environmental conditions predictive of firm ESOP adoption.

Drawing on bargaining power and the inequality aversion perspective, this study aims to probe employees’ influence on addressing income inequality between top executives and nonexecutive employees. Meanwhile, it examines the moderating role of employee-related factors and plan attributes.

This study uses a staggered difference-in-differences design with a propensity scoring match approach and verification of the parallel trend assumption to test the hypotheses.

The results support the hypothesis that employee stock ownership plans (ESOPs) significantly reduce within-firm income inequality. The negative effect is amplified by both the presence of trade unions and the unemployment rate at the regional level, as well as the duration of the lock-in period and the scale of participants within the stock ownership plan.

This study has implications for income inequality research and ESOP design and provides theoretical support for policymakers and corporate governance.

This study contributes to the literature on income inequality by examining the implementation of ESOPs from the employee perspective. Furthermore, it extends the current literature by investigating the strengthening effects of regional factors and ESOP attributes on the relationship between ESOPs and income inequality. The conclusions provide new empirical evidence to promote the effective implementation of ESOPs by combining internal and external factors.

Employee Stock Options [ESOs] have been used widely as a component of employees' compensation. To maximise the incentive effect of these options it is very important to understand the exercise decision of the employees. This is an important financial decision that is dependent on both rational and psychological factors. This paper aims to study the mediating role of Herding Bias on Personality Traits and the employees' decision to exercise ESOs.

The data were collected through a self-structured questionnaire from 210 employees of Banks and NBFCs [Non-Banking Financial Companies] who have received and exercised the ESOs. SPSS MACRO version 25 was used to understand the mediational effect of Herding Bias on Personality Traits and Employees' decision to exercise their ESOs.

The results showed that Personality Traits affect the employees' decision to exercise their ESOs. The study also shows a partial negative mediating effect of Herding Bias on Personality Traits and employees' decision to exercise ESOs.

Limited study has been conducted on how the employees make their decision to exercise ESOs. Although extant studies have touched upon the importance of including behavioural biases in ascertaining the exercise decision of the employees, the predictors of the behavioural biases have not been studied under this context. To the best of the author's knowledge, this study is the first in itself to study the inter-linkage between Personality Traits, Herding Bias and employees' decision to exercise ESOs.

This study investigates how a competitor orientation (knowledge of and acting on competitors' strengths and weaknesses) facilitates coopetition activities (collaboration with competitors), within networks of competing micro-sized, independent, family restaurants, owned by entrepreneurs from ethnic minority backgrounds.

An instrumental case study features data collected from interviews with 30 owners (as key informants) of micro-sized, independent, family-owned restaurants, in two urban clusters within the Midlands (UK). Specifically, the context involves restaurants offering South Asian cuisine and where the owner originated from the Indian sub-continent (Bangladesh, India or Pakistan). Secondary data were collected wherever possible. These two clusters (not named for ethics reasons) are highly populated by members of these respective ethnic communities; also, they contain a relatively large number of restaurants offering South Asian cuisine.

A competitor orientation facilitated strong coopetition-oriented partnerships comprised of extended family and intra-community members that helped enhance individual firms' performance, maintained family employment and sustained their cluster. It also helped owners develop subtle counter strategies where weak ties existed, such as via inter-community networks. For example, strategies attracted customers that were not loyal to a particular restaurant, or indeed, sub-ethnic cuisine (within Bangladesh, India or Pakistan, like the Punjab region). Subtle as opposed to outright counter strategies minimised retaliation, since restaurant owners wanted to avoid price wars, or spreading misinformation where the reputation of a cluster may suffer alongside the likely survival of individual businesses within that regional cluster.

Mixed evidence exists in earlier studies regarding the competitive rivalry in certain sectors where ethnic minority ownership is prominent; not least, restaurants located in regional clusters. However, this investigation considers the notion – what if some of these earlier studies are wrong? More specifically, does certain prior research under-represent the extent that rival entrepreneurs of an ethnic minority origin collaborate rather than compete for mutually beneficial purposes? New evidence emerges regarding ways in which a competitor orientation can influence the performance-enhancing nature of coopetition activities among business owners originating from both intra and inter-ethnic communities.

The learning outcomes for this case study are as follows: learning outcome 1: evaluate the environmental context of Youth Employment Service (YES) and ascertain whether YES is a social enterprise. Students will provide an analysis of what is happening around the business, and why addressing youth unemployment is an urgent matter to address; learning outcome 2: apply basic financial principles to evaluate the basic profit and loss statement of YES. In a business management class, students need to recognise the importance of applying basic financial principles to ensure the financial sustainability of a business. Therefore, the objective is for students to evaluate the basic profit and loss statement in the case’s exhibit. The focus is not necessarily on the numbers, but rather on the insight that students will gain into the organisation’s strengths and development areas; and learning outcome 3: create recommendations by considering the exploitation of existing opportunities and the exploration of new opportunities to innovate. Students should understand the principles of organisational ambidexterity and provide suggestions on how they can be used by organisations to reshape their desirable future.

On 31 March 2022, Leanne Emery Hunter, the chief operating officer of the YES, was considering how YES could increase their impact. Hunter considered how to convince more corporations to sponsor their efforts in creating work experiences for South African youth. In addition to exploiting these efforts that they were already involved with, YES could explore new opportunities to increase their impact, such as focusing on the community hubs and the innovative products they were developing. Expanding YES’s community hubs to serve as support to the youth would require a capital investment in technology and specific skills within the next six months. Hunter, therefore, faced the dilemma of managing the tensions between focusing on YES’s existing offering, which had a social impact, while paying attention to secure their future by focusing on the financial sustainability and expansion of YES. Its ceremonial inauguration in March 2018 was ushered by President of South Africa Cyril Ramaphosa, followed by its registration in October 2018. YES was challenged to look for new ways of creating a proactive growth strategy. YES had a social mission to address youth unemployment, students will, however, need to ascertain whether YES is a social enterprise. The case shares financial results and students have an opportunity to calculate profit and loss and offer recommendations on the financial viability of YES while fulfilling their social mission of contributing to youth employment. Students must give recommendations to resolve the dilemma of Hunter in managing the tension between their existing social impact and the future financial sustainability of the business.

The case is suitable for post-graduate courses in business management in business administration programmes.

Teaching notes are available for educators only.

CSS 3: Entrepreneurship.