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Book part
Publication date: 24 March 2021

Jonathan Preminger

Following critiques of shareholder capitalism and calls for reform of the corporation, employee-owned firms have attracted public and government attention in the UK and elsewhere…

Abstract

Following critiques of shareholder capitalism and calls for reform of the corporation, employee-owned firms have attracted public and government attention in the UK and elsewhere, based on the view that these alternative organizations serve a broader public purpose. However, despite attempts to broaden the measures for evaluating organizations and take seriously the social effects of business decisions, we lack a holistic framework for evaluating this public purpose that addresses aspirations like participation, democracy, equality, solidarity, and strong community relations alongside financial resilience and profitability. This study proposes that a solution can be found in Selznick’s concept of “moral community.” Selznick argued that community, conceived as a response to the perceived unravelling of the social fabric, plays a vital role in countering the excesses of capitalism. Using this as a yardstick to evaluate employee ownership (EO) in the UK, the author argues that the EO organizational field is indeed an embodiment of a moral community. It successfully infuses a broad range of social values into economic pursuits, nurtures an inclusive sense of the “common good,” and mitigates the alienation resulting from an increasingly marketized society. At the same time, the EO moral community does not reject capitalism as such, aspiring to connect with and reform existing political, financial, and legal structures as opposed to positioning its own institutions as an alternative to them. There are, therefore, limits to the challenge that the EO community levels against the current socioeconomic order.

Details

Organizational Imaginaries: Tempering Capitalism and Tending to Communities through Cooperatives and Collectivist Democracy
Type: Book
ISBN: 978-1-83867-989-7

Keywords

Book part
Publication date: 2 September 2016

Bernard Paranque and Hugh Willmott

From a perspective of ‘critical performativity’, John Lewis is of special interest since it is celebrated as a successful organization and heralded as an alternative to more…

Abstract

Purpose

From a perspective of ‘critical performativity’, John Lewis is of special interest since it is celebrated as a successful organization and heralded as an alternative to more typical forms of capitalist enterprise.

Methodology/approach

Our analysis uses secondary empirical material (e.g. JLP documents in the public domain, histories of John Lewis and recent empirical research). Our assumption is that engagement and interrogation of existing empirical work can be at least as illuminating and challenging as undertaking new studies. In addition to generating fresh insights, stimulating reflection and fostering debate, our analysis is intended to contribute to an appreciation of how structures of ownership and governance are significant in enabling and constraining practices of organizing and managing.

Findings

The structures of ownership and governance at John Lewis, a major UK employee-owned retailer, have been commended by those who wish to recuperate capitalism and by those who seek to transform it.

Research limitations/implications

JLP can be read as a ‘subversive intervention’ insofar as it denies absentee investors access to, and control of, its assets. Currently, however, even the critical performative potential of the Partnership model is impeded by its paternalist structures. Exclusion of Partners’ participation in the market for corporate control is reflected in, and compounded by, a weak form of ‘democratic’ governance, where managers are accountable to Partners but not controlled by them.

Practical implications

Our contention is that JLP’s ownership and governance structures offer a practical demonstration, albeit flawed, of how an alternative form of organization is sufficiently ‘efficient’ and durable to be able to ‘compete’ against joint-stock companies.

Originality/value

By examining the cooperative elements of the John Lewis structures of ownership and governance, we illuminate a number of issues faced in realizing the principles ascribed to employee-owned cooperatives – notably, with regard to ‘democratic member control’, ‘member economic participation’ and ‘autonomy and independence’.

Details

Finance Reconsidered: New Perspectives for a Responsible and Sustainable Finance
Type: Book
ISBN: 978-1-78560-980-0

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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

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Article
Publication date: 1 April 1984

Graham K. Kenny

As any organisation chart illustrates, two essential features of organisations are formal authority and division of labour. “Formal authority” specifies those individuals and…

Abstract

As any organisation chart illustrates, two essential features of organisations are formal authority and division of labour. “Formal authority” specifies those individuals and positions which have institutionalised power over others, while “division of labour” specifies those individuals and positions who are responsible for certain tasks in an organisation. In these respects organisations are a reflection of their environmental contexts of which class is a major feature (Clegg and Dunkerley, 1980). Broadly speaking what emerges in organisations are two classes of participants. One such class is represented by those who own the means of production (or capital) while the other such class is represented by those who own labour. This difference in capital ownership leads to disparities in the rights, powers and privileges—prerogatives—of the two classes (Clegg and Dunkerley, 1980). In practice, however, the capitalists are represented in organisations by “the management” who act as their agents. Thus the active participants in organisations become “management” and “labour” (Strauss and Rosenstein, 1970). Management with its power base grounded in its role as the owner's agent becomes the “elite” in the organisation.

Details

International Journal of Manpower, vol. 5 no. 4
Type: Research Article
ISSN: 0143-7720

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

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Article
Publication date: 24 May 2022

Richard M. Van Doel and George Howell

The purpose of this paper is to examine the type of governance dominant within employee-owned companies established as an Employee Stock Ownership Plan (ESOPs) and to ascertain if…

Abstract

Purpose

The purpose of this paper is to examine the type of governance dominant within employee-owned companies established as an Employee Stock Ownership Plan (ESOPs) and to ascertain if governance follows the agency or stewardship theory of governance.

Design/methodology/approach

A sequential mixed method (Quantitative/Qualitative) research design was used with a convenience sample of employee-owned companies who were members of The ESOP Association (TEA). The Stewardship Climate Scale (SCS) was used as the quantitative instrument and structured interviews were used as the qualitative instrument.

Findings

A majority (96%) of ESOPs participating in the study self-identified as stewardship governance, only 6 of the 154 companies (4%) self-identified as having agency governance.

Research limitations/implications

There is a potential of self-report bias based on the use of convenience sampling which should be minimized based on the large number of participants. The study was not able to examine the relationship between stewardship and productivity.

Originality/value

This is the first large scale research study examining governance within employee-owned companies.

Details

Journal of Participation and Employee Ownership, vol. 5 no. 1
Type: Research Article
ISSN: 2514-7641

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Book part
Publication date: 6 July 2004

Panu Kalmi

One of the surprising developments in the privatization processes of post-socialist economies was the high incidence of employee ownership. However, the available evidence…

Abstract

One of the surprising developments in the privatization processes of post-socialist economies was the high incidence of employee ownership. However, the available evidence suggests that the number of employee-owned firms is declining quite rapidly. This paper approaches the decline by using data on individuals in Estonian employee-owned firms. The key idea is that employee ownership can be sustainable only if it is extended also to new, incoming employees.We analyze the determinants of ownership in employee-owned firms and find out that new employees are excluded from ownership. While this finding is consistent with the literature on “degeneration” of employee-owned firms, it is not consistent with earlier empirical research. We argue that in developed economies, there are many countervailing forces that prevent the decline, but these are not in operation in Estonia. The peculiarity of Estonian findings is explained by different motives of entry of employee ownership vs. advanced market economies. However, the findings from this study may carry over to other transition economies as well.

Details

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

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

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Article
Publication date: 1 June 1987

Graham K. Kenny

Does participation equal power? The management prerogatives of employee‐owners are unequally distributed.

Abstract

Does participation equal power? The management prerogatives of employee‐owners are unequally distributed.

Details

Management Decision, vol. 25 no. 6
Type: Research Article
ISSN: 0025-1747

Article
Publication date: 24 August 2023

Saioa Arando-Lasagabaster and Beñat Herce-Lezeta

This article analyses how the MONDRAGON Group has overcome the barriers that the literature identifies in the creation of employee owned companies (Mygind and Poulsen, 2021), and…

Abstract

Purpose

This article analyses how the MONDRAGON Group has overcome the barriers that the literature identifies in the creation of employee owned companies (Mygind and Poulsen, 2021), and how it has managed to grow over the last few decades.

Design/methodology/approach

To this end, based on an analysis of the legislative framework and the internal documentation of the MONDRAGON Group and its cooperatives, the case of what is often considered the most successful and highly developed network of co-operative firms is studied.

Findings

The study leads us to conclude that MONDRAGON has had sufficient capacity to overcome the barriers faced by worker-owned companies and has known how to adapt to the economic and social demands of each moment, despite the fact that at certain times it has had to act flexibly in its principles.

Research limitations/implications

The work is limited to the analysis of the Group's internal documentation. It would be interesting to complement this vision with the perceptions of MONDRAGON's partners.

Practical implications

The MONDRAGON Group's study can show other cooperative experiences what the keys to success are.

Originality/value

MONDRAGON has been analysed from different perspectives, but how it has overcome the specific barriers presented by employee-owned companies has not been specifically studied. This perspective makes it possible to identify some of the group's success factors.

Details

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

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