Employee Ownership: Pros and Cons - A Review

Niels Mygind*, Thomas Poulsen

*Corresponding author for this work

Research output: Contribution to journalReviewpeer-review

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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.
Original languageEnglish
JournalJournal of Participation and Employee Ownership
Volume4
Issue number2
Pages (from-to)136-173
Number of pages38
ISSN2514-7641
DOIs
Publication statusPublished - 17 Nov 2021

Keywords

  • Employee participation
  • Employee ownership
  • Institutional context for employee ownership
  • Italy
  • France
  • Mondragon
  • Spain
  • UK
  • USA
  • Productivity effects

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