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Book part
Publication date: 5 January 2006

Corey Rosen

This paper looks at the research to date on the future of broadly granted stock options (options granted to at least half the full-time employees of a company). In the…

Abstract

This paper looks at the research to date on the future of broadly granted stock options (options granted to at least half the full-time employees of a company). In the U.S., granting options broadly became popular in the late 1990s, but has lost some of its appeal in the wake of stock market declines, accounting changes, and increased shareholder concerns about dilution. The data indicate a significant minority of companies will change their plans, but a substantial majority will keep them. The data also indicate changes in accounting rules will not affect stock prices and that broadly granted options are better for corporate performance than narrowly granted options.

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Participation in the Age of Globalization and Information
Type: Book
ISBN: 978-0-76231-278-8

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Article
Publication date: 7 August 2018

Joseph Blasi, Douglas Kruse and Richard B. Freeman

The purpose of this paper is to review the historical background for broad-based ownership in the USA, the development of forms of employee ownership and profit sharing in…

Abstract

Purpose

The purpose of this paper is to review the historical background for broad-based ownership in the USA, the development of forms of employee ownership and profit sharing in the USA, the research literature on employee ownership and profit sharing and related employee participation, the development of policy and options for new policies.

Design/methodology/approach

It is a literature review.

Findings

There are four reasons to be interested in employee stock ownership and profit sharing today: first, employee share ownership and profit sharing can increase worker pay and wealth and broaden the overall distribution of income and wealth, a key ingredient for a successful democracy. To be a tool for reducing inequality, employee stock ownership and profit sharing must be spread more widely and meaningfully than it is today. Second, employee share ownership and profit sharing provide incentives for more effort, cooperation, information sharing and innovation that can improve workplace performance and company productivity. Third, employee share ownership and profit sharing can save jobs by enhancing firm survival and employment stability, with wider economic benefits that come from decreasing unemployment. Fourth, employee share ownership and profit sharing can create more harmonious workplaces with greater corporate transparency and increased worker involvement in their work lives through access to information and participation in workplace decisions.

Research limitations/implications

Growth has been extraordinarily sluggish in the recovery from the Great Recession and has weakened in advanced countries over a longer period, leading some analysts to believe that the authors have entered a new economic era of small to modest growth. This may turn out to be true, which will increase the importance of growth-enhancing policies. The evidence that firms with employee stock ownership and/or profit-sharing perform better than others suggests that policies that extend ownership would boost the country’s lagging growth rate. The evidence that employee share ownership firms preserve jobs and survive recessions better than others suggests that policies that extend ownership could help stabilize the economy when the next recession comes down the pike.

Practical implications

Because there may be informational or institutional barriers about the benefits of ownership and sharing and the ways firms can introduce such programs that government can help overcome. Government has often played a role in promoting performance-enhancing work practices to enhance overall economy-wide outcomes from higher productivity and innovation, such as the long history of agricultural extension services (since 1887) to spread information on best practices in farming, and employer education on safety practices conducted by the Occupational Safety and Health Administration.

Social implications

Because of the “externalities” – effects that extend beyond the firm and its members – that greater ownership/profit sharing can bring us. If employee ownership and profit sharing lead to fewer layoffs and firm closures, this can reduce recession-created drops in consumer purchasing power and aggregate demand; government expenditures on unemployment compensation and other forms of support; decreased tax base for supporting schools and infrastructure; and potentially harmful social and personal effects, such as marital breakups and alcohol abuse. Apart from unemployment, more broadly shared prosperity and lower inequality may also have wider benefits for macroeconomic growth, stability and societal outcomes, as described by a number of social scientists. To the extent the ownership and profit sharing is a public good, a nudge in policy to consider the idea makes sense.

Originality/value

Because it is hard to find policy options that are as bipartisan as the shares policy. In The Citizens’ Share, and in other articles and venues, the authors lay out the areas in which there is evidence or logic for in-depth development of, and experimentation with, several broad policy directions, with the details to be worked out by members of Congress based on their deliberations.

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Journal of Participation and Employee Ownership, vol. 1 no. 1
Type: Research Article
ISSN: 2514-7641

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Book part
Publication date: 11 April 2009

Benjamin B. Dunford, Deidra J. Schleicher and Liang Zhu

This study used dominance analysis to examine the relative importance of psychological versus pecuniary approaches to the development of employee ownership attitudes and…

Abstract

This study used dominance analysis to examine the relative importance of psychological versus pecuniary approaches to the development of employee ownership attitudes and behaviors. In a sample of 409 non-unionized employees from a commercial real estate firm, we found that perceptions of information and control (i.e., psychological ownership) had a much stronger impact on ownership-related outcomes than did voluntary investment in company stock (i.e., pecuniary ownership), as hypothesized. These findings are consistent with the predictions of the employee ownership literature, suggesting that ownership culture initiatives should be directed at increasing employees’ perceptions of information and control.

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Advances in Industrial & Labor Relations
Type: Book
ISBN: 978-1-84855-397-2

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Article
Publication date: 1 August 1997

Barbara R. Bartkus

The creation of an employee ownership plan is viewed as the catalyst enabling a sociotechnical change process. Identifies several key factors as mediating links between…

Abstract

The creation of an employee ownership plan is viewed as the catalyst enabling a sociotechnical change process. Identifies several key factors as mediating links between employee ownership plans and organizational effectiveness: the initiator’s purpose of the employee ownership plan; perceptions of ownership; level of participative decision‐making systems; and organizational culture. These elements are affected by the introduction of employee ownership arrangements and can be specific areas in which organizational development consultants can focus effort to facilitate change generated by the initiation of an employee stock plan.

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Journal of Organizational Change Management, vol. 10 no. 4
Type: Research Article
ISSN: 0953-4814

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Book part
Publication date: 15 December 2015

Dan Weltmann, Joseph R. Blasi and Douglas L. Kruse

Past research has found employee ownership to be linked to better attitudes and behaviors. We investigate three possible mechanisms: (a) a selection effect – employees who…

Abstract

Past research has found employee ownership to be linked to better attitudes and behaviors. We investigate three possible mechanisms: (a) a selection effect – employees who buy stock in their own company may have better attitudes to begin with; (b) a status effect – employees who have any amount of employee ownership may have better attitudes; and (c) a size of stake effect – employee attitudes and behaviors may be influenced by the size of their employee ownership stake. We used a rich database of over 40,000 employee surveys from one large multinational company and 13 other companies. We find some support for all three mechanisms. Selection effects are indicated by several positive relationships between attitudes and stock that is bought by the employees rather than being granted by the employer. Status and size of stake effects are indicated by several positive relationships between attitudes and stock that is granted by the employer, particularly when the employee ownership is accompanied by high-performance work policies. While dividing employee ownership into bought or granted stock sheds light on the selection issue, the data are cross-sectional so selection and causality cannot be firmly established. There is need for further research on selection versus causality in examining the effects of employee ownership. The results indicate that companies may improve employee attitudes and behaviors of people by granting them stock and by having opportunities for employees to purchase stock. Even the results pointing to selection effects, however, can be important for companies, since offering stock ownership opportunities to employees may be an effective way to identify which employees are most committed to the firm and are likely to become good corporate citizens.

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Advances in the Economic Analysis of Participatory & Labor-Managed Firms
Type: Book
ISBN: 978-1-78560-379-2

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Article
Publication date: 1 March 1991

Gianna Durso

Employee ownership has a rich tradition throughout the world in the form of co‐operative enterprises, however, the concept has received a new boost in the form of employee

Abstract

Employee ownership has a rich tradition throughout the world in the form of co‐operative enterprises, however, the concept has received a new boost in the form of employee stock ownership plans (ESOPs). In order to understand why the stock model of ownership has received so much attention worldwide, one must examine the known and potential benefits of this model. As the United States provides the most widespread example of employee stock ownership, we shall begin our discussion there. The next section addresses in depth the corporate performance benefits of employee ownership and outlines additional benefits of interest throughout the world. The final section offers a brief look at employee ownership worldwide.

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Management Research News, vol. 14 no. 3
Type: Research Article
ISSN: 0140-9174

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Article
Publication date: 29 October 2020

TianLong Ma and Huiping Zhang

This study aims to disclose how the nature of corporate ownership, stock efficiency and wage level affect the optimal proportion of employee stock.

Abstract

Purpose

This study aims to disclose how the nature of corporate ownership, stock efficiency and wage level affect the optimal proportion of employee stock.

Design/methodology/approach

This paper studies three duopoly markets: two private enterprises, two state-owned enterprises (SOEs) and a private enterprise and an SOE. The competitions between the two parties are taken as a two-stage dynamic sequential game and studied through back-induction.

Findings

The results reveal that the enterprise ownership has a directly bearing on the optimal proportion of employee stock and determines whether to implement the employee stock ownership plan (ESOP) and the specific level of the plan. The optimal proportion of employee stock is positively correlated with its contribution to enterprise efficiency. There are many influencing factors on the effect of wage level on the optimal proportion of employee stock, namely, the ownership nature of ESOP implementer and efficiency difference of different nature stocks.

Social implications

The results of this study provide policy recommendations for companies preparing to implement ESOP.

Originality/value

The research findings provide policy implications for enterprises to prepare a suitable ESOP and the reform of national equities, especially the mixed-ownership reform in China.

Details

Journal of Organizational Change Management, vol. 33 no. 6
Type: Research Article
ISSN: 0953-4814

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Book part
Publication date: 6 June 2017

Erik Poutsma, Paul E. M. Ligthart and Ulke Veersma

Taking an international comparative approach, this chapter investigates the variance in the adoption of employee share ownership and stock option arrangements across…

Abstract

Taking an international comparative approach, this chapter investigates the variance in the adoption of employee share ownership and stock option arrangements across countries. In particular, we investigate the influence of multinational enterprises (MNEs), industrial relations factors, HRM strategies, and market economies on the adoption and spread of the arrangements across countries. We find that industrial relations factors do not explain the variance in adoption by companies in their respective countries. MNEs and HRM strategies are important drivers of adoption. Market economy does not moderate the influence of MNEs on adoption, suggesting that MNEs universally apply the arrangements across borders.

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Book part
Publication date: 1 May 2012

Andrew H. Chen and John W. Kensinger

Although employee stock ownership may result in increased cash flows due to enhanced organizational productivity or improved governance, this benefit is counterbalanced by…

Abstract

Although employee stock ownership may result in increased cash flows due to enhanced organizational productivity or improved governance, this benefit is counterbalanced by the increased risk premium due to a higher correlation between the returns to the firm and the returns to human capital in general. For corporations that employ people with commonplace skills, employee stock ownership results in increased systematic risk, so the optimal level of employee stock ownership is small. When skills are unique, however (so the returns have low correlation with the returns to human capital in general), the optimal level of employee stock ownership is high, with strong incentives for outsourcing – not just the routine easily repeatable tasks but also research, product development, and other highly specialized tasks requiring knowledge not present within the firm. These conclusions hold even without conflicts of interest between owners and employees, but are strengthened in the presence of such conflicts. Incentives for greater employee ownership are further strengthened by the higher costs of becoming or remaining a public corporation that have been imposed by the Sarbanes–Oxley Act of 2002. This analysis provides a framework for optimizing employee incentives from stock ownership.

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Research in Finance
Type: Book
ISBN: 978-1-78052-752-9

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Article
Publication date: 1 January 1983

R.G.B. Fyffe

This book is a policy proposal aimed at the democratic left. It is concerned with gradual but radical reform of the socio‐economic system. An integrated policy of…

Abstract

This book is a policy proposal aimed at the democratic left. It is concerned with gradual but radical reform of the socio‐economic system. An integrated policy of industrial and economic democracy, which centres around the establishment of a new sector of employee‐controlled enterprises, is presented. The proposal would retain the mix‐ed economy, but transform it into a much better “mixture”, with increased employee‐power in all sectors. While there is much of enduring value in our liberal western way of life, gross inequalities of wealth and power persist in our society.

Details

International Journal of Sociology and Social Policy, vol. 3 no. 1/2
Type: Research Article
ISSN: 0144-333X

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