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Abstract

Details

Journal of Participation and Employee Ownership, vol. 6 no. 3
Type: Research Article
ISSN: 2514-7641

Article
Publication date: 26 September 2023

Niels Mygind

The purpose of this paper is to compare three models of employee ownership and to identify pros and cons in relation to how the models can overcome the barriers. Which choices are…

Abstract

Purpose

The purpose of this paper is to compare three models of employee ownership and to identify pros and cons in relation to how the models can overcome the barriers. Which choices are important when defining the overall rules around the models and the specific possibilities for variations and combinations and what are the pros and cons for these choices?

Design/methodology/approach

The comparison is based on the three main models of employee ownership identified from the country descriptions in this special issue.

Findings

The models do not exclude each other. The models can all be promoted in a specific country, leaving the choice of specific model to the stakeholders involved in the establishment of the employee-owned company. The article also shows the possibility of combining different models and in this way to adjust to specific preferences and conditions – e.g. whether employees and other stakeholders want collective or individual ownership and whether it concerns a start-up or a succession company.

Originality/value

This paper identified the key differences and similarities of different models for employee ownership including pros and cons of worker cooperative vs the Employee Ownership Trust (EOT) and the Employee Stock Ownership Plan (ESOP) models.

Details

Journal of Participation and Employee Ownership, vol. 6 no. 3
Type: Research Article
ISSN: 2514-7641

Keywords

Article
Publication date: 17 November 2021

Niels Mygind and Thomas Poulsen

The purpose of this paper is to give an updated overview of the research on employee ownership. What does the scientific literature reveal about advantages and disadvantages? What…

Abstract

Purpose

The purpose of this paper is to give an updated overview of the research on employee ownership. What does the scientific literature reveal about advantages and disadvantages? What can be learned from different models used in Italy, France, Mondragon (Spain), UK and US with many employee-owned firms in contrast to Denmark.

Design/methodology/approach

A structured review of the literature on employee. The paper identifies different mechanisms leading to effects on productivity, job stability, distribution, investment etc., and reviews the empirical evidence. The main barriers and drivers are identified and different models for employee ownership in Italy, France, Mondragon (Spain), UK and US are reviewed to identify potential models for a country like Denmark with few employee-owned firms.

Findings

The article gives an overview over the theoretical predictions and the main empirical evidence of the effects of employee ownership. The pros are greater employee identification with the firm and increased productivity reinforced by increased participation. Employee-owned firms have more equal distribution of wages and more stable employment, and they have greater mutual control between employees and fewer middle managers. The motivation effects may be smaller for large firms and lack of capital may lead to lower levels of investments and capital per employee.

Originality/value

Comprehensive and updated literature review on the effects and successful formats of employee ownership to identify models for implementation in countries with few employee-owned firms.

Details

Journal of Participation and Employee Ownership, vol. 4 no. 2
Type: Research Article
ISSN: 2514-7641

Keywords

Article
Publication date: 17 October 2023

Niels Mygind

The purpose of this paper is to give an updated overview over the development of employee-ownership in Italy, France, Spain including Mondragon, the UK and the US with relatively…

Abstract

Purpose

The purpose of this paper is to give an updated overview over the development of employee-ownership in Italy, France, Spain including Mondragon, the UK and the US with relatively many employee-owned firms. How have the barriers for employee-ownership been overcome in these countries?

Design/methodology/approach

The overview is based on updated descriptions of the development of employee-ownership included in this special issue. The analysis follows the structure of overcoming five barriers: the organization problem; the problem of entry and exit of employee-owners; the startup and takeover problem; the capital- and the risk problem.

Findings

Italy, France and Spain have overcome the barriers by specific legislation for worker cooperatives, this includes rules for entry and exit of employee members. Cooperative support organizations play an important role for monitoring and managing the startup problem and for access to capital. The Mondragon model includes individual ownership elements and a group structure of cooperatives. The EOT and ESOP models are well suited for employee takeovers, financing are eased by tax advantages and they are all-employee schemes. While the EOT has no individual risks, the ESOP model has the possibility for capital gains for employees but also the risk of losing these gains.

Originality/value

Comprehensive and updated overview of the development in employee-ownership in the five countries to identify successful formats of employee-ownership for implementation in countries with few employee-owned firms.

Details

Journal of Participation and Employee Ownership, vol. 6 no. 3
Type: Research Article
ISSN: 2514-7641

Keywords

Article
Publication date: 7 June 2021

Niels Mygind

Drivers and barriers for employee ownership vary between countries because of differences in Politics, Institutions and the Economy (PIE). By analyzing this variation, the purpose…

Abstract

Purpose

Drivers and barriers for employee ownership vary between countries because of differences in Politics, Institutions and the Economy (PIE). By analyzing this variation, the purpose of this study is to answer why employee ownership has developed fast in the United States and not in Denmark.

Design/methodology/approach

The drivers and barriers for employee ownership are identified from the scientific literature, and the main societal dynamics are identified through the PIE model covering the dynamics between politics, institutional change and the economy. Politics focuses on different social groups influencing the development of institutions driving or hindering employee ownership in the economy.

Findings

United States has followed a self-enforcing circle with broad political support of “shared capitalism,” including the employee stock ownership plan (ESOP) type of employee ownership. In Denmark, the labor movement rejected worker cooperatives as a main strategy and focused on building up the welfare state. Center-right parties favored employee stocks, but the institutional framework never overcame the barriers for employee ownership.

Originality/value

This is the first study to perform an analysis of politics, institutional change and economic development to explain drivers and barriers for employee ownership and to make a comparison between the development of employee ownership in the United States and Denmark.

Details

Journal of Participation and Employee Ownership, vol. 4 no. 1
Type: Research Article
ISSN: 2514-7641

Keywords

Article
Publication date: 17 July 2017

Niels Mygind and Benjamin Faigen

Little systematic work has been completed on the incidence of employee ownership in a Chinese context. Similar to the situation in Eastern Europe, this type of ownership was quite…

Abstract

Purpose

Little systematic work has been completed on the incidence of employee ownership in a Chinese context. Similar to the situation in Eastern Europe, this type of ownership was quite widespread in China, particularly during the 1990s. Based on the existing literature and available statistical data, the purpose of this paper is to identify drivers of, and barriers to, the development of employee ownership in China.

Design/methodology/approach

The scattered evidence from the literature and official statistical sources are collected and structured in a systematic analysis where the drivers and barriers for employee ownership in the transition process from plan to market are identified at three levels: society, the company and the individual.

Findings

Employee ownership developed as a transitory stage between state and private ownership; employees acquired ownership stakes as part of the privatisation of small- and medium-sized state-owned enterprises as well as collectively owned enterprises. However, in most cases the dynamics of ownership resulted in dominant ownership by managers. This trend became more noticeable at later stages of the privatisation process.

Research limitations/implications

The paper shows how policies and institutional settings at the society level are determining for the development of employee ownership.

Originality/value

The contribution of the paper is to give a general and systematic analysis of the development of employee ownership in China both based on a comprehensive literature review and by utilising existing statistical sources.

Details

International Journal of Emerging Markets, vol. 12 no. 3
Type: Research Article
ISSN: 1746-8809

Keywords

Article
Publication date: 30 September 2019

Derek C. Jones, Niels Mygind and Patrick Sen

The purpose of this paper is to investigate whether performance is enhanced if firms use employee involvement (EI) in decision-making and financial participation (FP) in an…

Abstract

Purpose

The purpose of this paper is to investigate whether performance is enhanced if firms use employee involvement (EI) in decision-making and financial participation (FP) in an emerging market economy.

Design/methodology/approach

The authors use representative data for Estonian firms. The authors estimate diverse forms of production functions. Some are restricted to individual forms of EI (including membership on boards by nonmanagerial employees) or individual forms of FP (such as employee ownership and profit sharing). To investigate the complementarity hypothesis findings, the authors construct systems of EI and FP and estimate diverse specifications.

Findings

For individual forms of EI, cross-sectional estimates indicate that alone, typically such mechanisms have little impact. However, panel estimates do provide support for some forms of FP such as employee ownership and profit sharing increasing business performance. Tests of the complementarity hypothesis provide only weak evidence in support of the synergies between EI and FP.

Research limitations/implications

Together with the results from related studies, the findings support the more general finding that FP practices have positive effects on productivity; the limited impact of EI alone and weak evidence for complementarities suggest an important role for the institutional context in accounting for the effectiveness of the mechanisms underlying EI and thus to the differences in the impact of EI and FP across institutional contexts; reinforce findings from other studies of emerging market economies of inertia in EI and FP practices during early transition.

Originality/value

This is the first study for a former transition economy/emerging market economy that uses detailed information on EI and FP to investigate individual and complementary effects.

Details

Journal of Participation and Employee Ownership, vol. 2 no. 2
Type: Research Article
ISSN: 2514-7641

Keywords

Abstract

Details

Journal of Participation and Employee Ownership, vol. 6 no. 2
Type: Research Article
ISSN: 2514-7641

Article
Publication date: 16 May 2008

Raul Eamets, Niels Mygind and Natalia Spitsa

The purpose of this paper is to provide an overview of the development of employee financial participation in Estonia from patterns of employee ownership which was promoted during…

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Abstract

Purpose

The purpose of this paper is to provide an overview of the development of employee financial participation in Estonia from patterns of employee ownership which was promoted during the privatization of enterprises in the transition period, to the emergence of different forms of employee participation, including employee share ownership and profit sharing schemes. The analysis of the changing institutional setting and legislation in Estonia in the context of EU accession serves as a basis for examining the actual diversification of forms of employee financial participation, and provides some suggestions of likely further development.

Design/methodology/approach

The study combines results from earlier research, analysis of Estonian legislation from the late 1980s to the present time, interviews with social partners, data collected through enterprise surveys during the transition period and case studies, examining recent examples of financial participation.

Findings

There is no historical tradition of employee financial participation in Estonia. By far the most important development was in relation to early privatization, with the employee takeover of many small enterprises. However, majority ownership by employees in these firms has changed quite rapidly, so that now the dominant ownership pattern is of ownership by managers and outside owners. This phenomenon was observed both in quantitative studies and in case studies. There are very few cases of profit sharing. The need to transform acquis communautaire into national law in connection with the EU accession has recently led to debates about employee participation in decision making. Although the government and other influential political players do not promote financial participation, the discussion on the implementation of EU directives shows that the issue will be addressed and even new legislation could be adopted if an EU act on financial participation of employees were approved.

Research limitations/implications

In contrast with employee share ownership, the incidence of which was quite recently assessed in a survey study of January 2005 for 722 enterprises, profit sharing has not been the subject of regular and/or recent studies. Thus, one should be cautious when estimating the extent of the spread of diverse forms of financial participation in Estonian companies.

Practical implications

Description of the current status of employee financial participation can be important for policy makers for further development of the labour market in Estonia. Development of legislation following the trend in the EU, together with changes in the taxation system, could promote different forms of financial participation by employees, and could lead to strengthening employee motivation and productivity, especially in knowledge‐based companies.

Originality/value

The paper is a comprehensive description of the development and current status of employee financial participation in Estonia. The paper provides suggestions for further research.

Details

Baltic Journal of Management, vol. 3 no. 2
Type: Research Article
ISSN: 1746-5265

Keywords

Book part
Publication date: 6 December 2011

Derek C. Jones and Niels Mygind

In this chapter, we provide the first empirical study of the effects of differing types of majority ownership, including employee ownership, on executive compensation. By…

Abstract

In this chapter, we provide the first empirical study of the effects of differing types of majority ownership, including employee ownership, on executive compensation. By investigating the case of Estonia, we also extend the range of geographical coverage of studies of the determinants of executive compensations to the case of Estonia.

Although previous research finds that the type of ownership affects CEO pay, our new panel data, and the exceptional configurations of ownership that prevailed in Estonia during early transition, enable us to construct unusual measures of majority ownership.

Findings indicate that an economically significant determinant of CEO pay is ownership both in state versus privatized firms and in different types of private firms. In firms with majority ownership by employees, pay is about 15% less than in state-owned firms, other things equal. CEO pay is also positively related to size and seldom related to performance although size elasticities are much smaller than those estimated in other studies, mainly for advanced western countries.

Findings provide more general support than previously for the varying importance of principal–agency relationships across firm types and the views that privatization and employee ownership have imposed strong discipline on the level of CEO compensation.

Details

Advances in the Economic Analysis of Participatory and Labor-Managed Firms
Type: Book
ISBN: 978-0-85724-760-5

Keywords

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