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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

Book part
Publication date: 15 December 2015

Lars Lindkvist

In this paper, my claim is that employee ownership of industrial companies enables economic survival, democracy, and joint responsibility. My main focus is a case study of Ljuders…

Abstract

In this paper, my claim is that employee ownership of industrial companies enables economic survival, democracy, and joint responsibility. My main focus is a case study of Ljuders Nickelsilfverfabrik and its change to employee ownership. In 1980, 36 of the 42 employees became owners. My research question is how have the economy and democracy in an employee-owned industrial company changed over the years? My main research method includes a 35-year in-depth longitudinal case study of Ljuders Nickelsilfverfabrik since its employee takeover. The empirical material includes documents, interviews, participant observations, and informal talks over the entire study period. My theory is based on the study by Connell Fanning and McCarthy (1983, 1986), who have compiled the critical literature on employee-owned companies and have asked why so few employee-owned companies exist in Western economies. They formulate six non-viability hypotheses for employee ownership, against which I present my empirical study and conclude that employee ownership is possible. From my case study in combination with the literature about organizational changes, I formulate a recipe for a successful employee takeover and collective entrepreneurship. The experience of Ljuders Nickelsilfverfabrik shows that a more complete business idea can subsequently unfold with the help of different people’s knowledge and experiences. Degeneration from democratic to more traditional ownership and control can be avoided by placing new people in leadership positions. The management must create legitimacy for a different organizational form for internal and external stakeholders.

Details

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

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

Book part
Publication date: 6 July 2004

Rhokeun Park, Douglas Kruse and James Sesil

Research on employee ownership has focused on questions of productivity, profitability, and employee attitudes and behavior, while there has been little attention to the most…

Abstract

Research on employee ownership has focused on questions of productivity, profitability, and employee attitudes and behavior, while there has been little attention to the most basic measure of performance: survival of the company. This study uses data on all U.S. public companies as of 1988, following them through 2001 to examine how employee ownership is related to survival. Estimation using Weibull survival models shows that companies with employee ownership stakes of 5% or more were only 76% as likely as firms without employee ownership to disappear in this period, compared both to all other public companies and to a closely matched sample without employee ownership. While employee ownership is associated with higher productivity, the greater survival rate of these companies is not explained by higher productivity, financial strength, or compensation flexibility. Rather, the higher survival is linked to their greater employment stability, suggesting that employee ownership companies may provide greater employment security as part of an effort to build a more cooperative culture, which can increase employee commitment, training, and willingness to make adjustments when economic difficulties occur. These results indicate that employee ownership may have an important role to play in increasing job and income security, and decreasing levels of unemployment. Given the fundamental importance of these issues for economic well being, further research on the role of employee ownership would be especially valuable.

Details

Employee Participation, Firm Performance and Survival
Type: Book
ISBN: 978-0-76231-114-9

Open Access
Article
Publication date: 15 August 2023

Andrew Pendleton, Andrew Robinson and Graeme Nuttall

The paper traces the development of employee ownership in the UK since the 1980s. It proposes that employee ownership is a function of macro-level contexts and micro-level…

1168

Abstract

Purpose

The paper traces the development of employee ownership in the UK since the 1980s. It proposes that employee ownership is a function of macro-level contexts and micro-level decisions, with the latter framed and guided by the former. The macro context comprises the regulatory framework and the provision of incentives to adopt employee ownership. The paper shows how the evolution of these has led to a steep increase in employee ownership in the last eight years.

Design/methodology/approach

The paper draws on several sources of empirical data to chart the development of employee ownership in the UK since the 1980s and to identify the current features of employee ownership. Two firm-level surveys conducted in 2015 and 2020/21 are supplemented by qualitative case study data collected in the early 1990s. An annual census of all employee-owned firms facilitates a comprehensive overview of the current state of UK employee ownership.

Findings

It is found that there has been a steep increase in the number of UK employee-owned firms since 2014 after several decades of uneven growth. This is attributed to the introduction of new incentives and to refinements of the regulatory framework. Over the period, there has been a shift from hybrid employee ownership, combining direct and indirect forms, to indirect ownership associated with the employee ownership trust model.

Originality/value

The paper provides an original history of employee ownership in the UK using rich and unique data, along with the most comprehensive picture of current employee ownership to date.

Details

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

Keywords

Book part
Publication date: 8 May 2018

Daphne Berry and David Fitz-Gerald

This case explores the context in which decisions related to the composition of the board of directors are made at a company with a strong, participatory culture and strong values…

Abstract

This case explores the context in which decisions related to the composition of the board of directors are made at a company with a strong, participatory culture and strong values of accountability, responsibility, and community.

This case study seeks an in-depth understanding of a 100% ESOP company’s (Carris Reels, Inc.) values, culture, and processes related to broad-based employee participation in decision-making and governance of the company. Data were collected from formal and informal interviews and discussions with Carris Reels’ employees, observation, and company archival data, including newsletters, meeting minutes, and announcements.

Goals may be sufficiently different at highly participatory, majority employee-owned ESOP companies such that regulatory guidelines for board structure for public or privately held companies that are not employee-owned should be evaluated in the context of that company’s stakeholders.

A trend toward external members for boards of directors should be given careful consideration in the case of majority ESOP companies whose employee-owned and governed status is central to the company’s vision.

This case study provides an in-depth look at a company’s board of directors’ composition-related decision-making in the context of broad-based participatory processes and the desire to maintain a profitable and fully employee-owned and governed enterprise.

Details

Employee Ownership and Employee Involvement at Work: Case Studies
Type: Book
ISBN: 978-1-78714-520-7

Keywords

Article
Publication date: 10 November 2021

Joseph Blasi, Douglas Kruse and Dan Weltmann

The purpose of this study is to understand how majority employee-owned firms responded to the pandemic compared to firms that were not majority employee-owned. The Employee

Abstract

Purpose

The purpose of this study is to understand how majority employee-owned firms responded to the pandemic compared to firms that were not majority employee-owned. The Employee Ownership Foundation partnered with Rutgers University and the SSRS survey firm to survey ESOP and non-ESOP firms about their responses to the COVID-19 pandemic. A key purpose of the survey was to estimate firm-level changes in employment from mid-January to August (current employment figures were adjusted to August 5 using BLS industry employment trends). The survey also looked at other forms of adjustment and responses to the pandemic as reviewed below. The focus in this study is on the differences between firms that are majority owned by ESOPs and those that are not.

Design/methodology/approach

The survey included 247 executives from ESOP Association member companies and 500 executives from an SSRS business panel constructed to be representative of US companies with 50 or more employees. The survey started on August 5 and ended on September 23, 2020.

Findings

(1) Majority ESOP firms had employment declines from January to August that were on average only one-fourth as large as for other firms. The difference is maintained when controlling for industry membership. (2) Majority ESOP firms were more likely to be declared “essential,” but the lower employment cutbacks among majority ESOP firms remain among essential and non-essential businesses. As essential businesses, majority ESOP firms were more likely receive Paycheck Protection Program or other government pandemic assistance, but both assistance recipients and non-recipients had lower employment cutbacks among majority ESOP firms. (3) The extent of employment cutbacks was higher for non-managers than for managers, but the manager/non-manager gap was higher among other firms than among majority ESOP firms.

Research limitations/implications

This study supports empirical findings done previously.

Practical implications

This study suggests to non-EO firms what they can do.

Social implications

This study suggests strengths of EO firms.

Originality/value

A very original and one-of-a-kind dataset.

Details

Journal of Participation and Employee Ownership, vol. 4 no. 2
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

Book part
Publication date: 8 May 2018

Marc D. Street, Vera L. Street, Thomas J. Calo and Frank Shipper

The purpose of this research was to investigate how Mid South Building Supply, a 100% employee-owned company, survived the Great Recession. Research has found that employee-owned

Abstract

The purpose of this research was to investigate how Mid South Building Supply, a 100% employee-owned company, survived the Great Recession. Research has found that employee-owned companies are more likely to survive recessions than other companies. Why this happens was unclear. Thus, this research was conducted to learn why this might happen.

The case study approach was chosen to uncover the causes because this approach has played a significant role in uncovering organizational phenomena. Moreover, the industry was chosen because of the vulnerability of firms in it to recessionary forces.

Mid South uses practices that enhance both financial and psychological ownership. Prior research has suggested that both are important.

Case study research is limited because only a single frim is investigated. Thus, additional studies need to be performed to confirm the results.

Although this is a single case study, the practical implication is that enterprises that want to improve their probability of surviving should apply the findings of this study.

Firms that provide employment stability to employees are more likely to survive. In turn, research would suggest that this is associated with greater family and community stability.

Whereas prior studies have used across-industry data to find that employee-owned firms are more likely to survive recessions than others, what such firms do differently was unclear. A literature review failed to reveal a prior study that looked at the internal practices that may cause this to happen.

Details

Employee Ownership and Employee Involvement at Work: Case Studies
Type: Book
ISBN: 978-1-78714-520-7

Keywords

Article
Publication date: 1 September 2000

Thomas Li‐Ping Tang, Jwa K. Kim and Debra Ann O’Donald

Examines the Japanese management philosophy in organizations, and develops a 15‐item, four‐factor (family orientation and loyalty, open communication, team approach, and manager…

4437

Abstract

Examines the Japanese management philosophy in organizations, and develops a 15‐item, four‐factor (family orientation and loyalty, open communication, team approach, and manager knowledge) Japanese organizational culture scale (JOCS). Investigates the differences in JOCS and other work‐related variables between 156 non‐unionized employees of one Japanese‐owned automobile plant and 144 unionized employees of one US‐owned automobile plant in the USA. There were no differences in income and education. Employees in the Japanese‐owned plant had higher scores for family orientation and loyalty, open communication, team approach, manager knowledge, organizational commitment, organization‐based self‐esteem, organizational instrumentality, intrinsic satisfaction, and extrinsic satisfaction than those in the US‐owned plant. Results are discussed in light of organizational culture and enhancing quality and productivity in the global competitive market.

Details

Journal of Managerial Psychology, vol. 15 no. 6
Type: Research Article
ISSN: 0268-3946

Keywords

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