This article compares sales per employee for a panel of over 300 US firms which are majority employee-owned through employee stock ownership plans with a panel of closely matched, traditionally owned firms. Responses from a survey of firm work practices are used to estimate worker participation effects. Comparing matched firms, sales per employee are substantially and significantly higher for the employee-owned group of firms. This ‘employee-owned advantage’ is significantly greater among smaller firms, and (holding firm size constant) improves as the average employee’s ownership stake in firm stock goes up. Holding both firm size and employee stake constant, the employee-owned advantage is substantially (though not significantly) greater in the large group of firms which are 100 percent owned by their ESOP trusts. Holding firm size constant, increased production—worker influence on three facets of firm innovation also improves the advantage.
Ben-Ner A., Burns WA, Dow G., et al. (2000) Employee ownership: An empirical exploration . In: Blair MM, Kochan TA (eds) The New Relationship: Human Capital in the American Corporation. Washington, DC: Brookings Institution Press, 194-240.
2.
Blasi JR, Kruse D. ( 2006) The political economy of employee ownership in the United States: From economic democracy to industrial democracy? International Review of Sociology16(1): 127-147.
3.
Blasi J., Conte M., and Kruse D. ( 1996) Employee stock ownership and corporate performance among public companies. Industrial and Labor Relations Review50(1): 60-79.
4.
Conte M., Svejnar J. ( 1988) Productivity effects of worker participation in management, profit-sharing, worker ownership of assets and unionization in US firms. International Journal of Industrial Organization6(1): 139-151.
5.
Conte M., Svejnar J. ( 1990) The performance effects of employee ownership plans. In: Blinder AS (ed.) Paying for Productivity: A Look at the Evidence. Washington, DC: The Brookings Institution, 143-172.
6.
Doucouliagos C. ( 1995) Worker participation and productivity in labor-managed and participatory capitalist firms: A meta-analysis. Industrial and Labor Relations Review49(1): 58-77.
7.
Employee Benefit Research Institute (1988) Employee Stock Ownership Plans can Enhance Corporate Performance, but most ESOPs have not been Structured to Realize their Full Potential in this Area . Issue Brief No. 74, January. Available at: www.ebri.org/publications/ib/index.cfm?fa=ibDispandcontent_id=3715
8.
Freeman RB, Rogers J. ( 1999) What Workers Want. Ithaca, NY: Cornell University Press.
9.
Freeman R., Blasi J., Kruse D., et al. (2010) Creating a bigger pie? The effects of employee ownership, profit sharing, and stock options on workplace performance. In: Kruse D, Freeman R, and Blasi J (eds) Shared Capitalism at Work: Employee Ownership, Profit and Gain Sharing, and Broad-based Stock Options. Chicago, IL: University of Chicago Press.
10.
Freeman RB, Kleiner MM, and Ostroff C. ( 2000) The Anatomy of Employee Involvement and its Effects on Firms and Workers. National Bureau of Economic Research Working Paper 8050, Cambridge. Available at: www.nber.org/papers/w8050
11.
Government Accounting Office (GAO) (1987) Employee stock ownership plans: Little evidence of effects on corporate performance . Report to the Chairman, Committee on Finance, US Senate, October, GAO/PEMD-88-1.
12.
Ichniowski C., Shaw K., and Prennushi G. ( 1997) The effects of human resource management practices on productivity: A study of steel finishing lines. American Economic Review87(3): 291-313.
13.
Kardas P., Scharf A., and Keogh J. ( 1998) Wealth and income consequences of ESOPs and employee ownership: A comparative study from Washington State. Journal of Employee Ownership Law and Finance10(4). (Also published separately by National Center for Employee Ownership, Oakland, CA, December 1998.)
14.
Keller G., Warrack B. ( 2003) Statistics for Management and Economics, 6th Edition. Pacific Grove, CA: Thomson-Brooks/Cole.
15.
Kramer B. ( 2008) Employee ownership and participation effects on firm outcomes . Unpublished doctoral dissertation, Graduate Center of the City University of New York. Available through ProQuest at: disexpress.umi.com/dxweb#search.
16.
Kruse D. ( 2002) Research Evidence on Prevalence and Effects of Employee Ownership. Testimony before the Subcommittee on Employer-Employee Relations, Committee on Education and the Workforce, US House of Representatives , 13 February. Available at: www.nceo.org/library/kruse_testimony.html
17.
Kruse DL, Blasi JR ( 1997) Employee ownership, employee attitudes, and firm performance: A review of the evidence. In: Lewin D , Mitchell DJB, and Zaidi MA (eds) The Human Resource Management Handbook, Part 1. Greenwich, CT: JAI Press.
18.
Kruse D., Freeman R., Blasi J., et al. (2003) Motivating Employee-Owners in ESOP Firms: Human Resource Policies and Company Performance. NBER Working Paper 10177. Available at: www.nber.org/papers/w10177
19.
Kumbhakar SC, Dunbar AE ( 1993) The elusive ESOP-productivity link: Evidence from US firm-level data. Journal of Public Economics52(2): 273-283.
20.
Levine DI, Tyson LD ( 1990) Participation, productivity, and the firm’s environment . In: Blinder AS (ed.) Paying for Productivity: A Look at the Evidence. Washington, DC: The Brookings Institution, 183-243.
21.
National Center for Employee Ownership (NCEO) ( 2009) A Statistical Profile of Employee Ownership. Available at: www.nceo.org/library/eo_stat.html
22.
Parker M., Slaughter J. ( 1988) Choosing Sides: Unions and the Team Concept. Boston, MA: South End Press.
23.
Rosen C. ( 2007) Guide to doing Academic Research on Employee Ownership . Available at: www.nceo.org/library/research.html
24.
Scharf A., Mackin C. ( 2000) Census of Massachusetts Companies with Employee Stock Ownership Plans (ESOPs). Boston, MA: Commonwealth Corporation.
25.
Smith SC ( 1985) Political behavior as an economic externality: Econometric evidence on the relationship between ownership and decision making participation in US firms and participation in community affairs. In: Jones DC, Svejnar J (eds) (1985) Advances in the Economic Analysis of Participatory and Labor-Managed Firms, Vol. 1. Greenwich, CT: JAI Press, 123-136.
26.
Weitzman ML, Kruse DL ( 1990) Profit sharing and productivity. In: Blinder AS (ed.) Paying for Productivity: A Look at the Evidence. Washington, DC: The Brookings Institution, 95-140.
27.
Winther G. ( 1999) Theory O: Is the case closed?Economic and Industrial Democracy20(2): 269-293.
28.
Winther G., Marens R. ( 1997) Participatory democracy may go a long way: Comparative growth performance of employee ownership firms in New York and Washington States. Economic and Industrial Democracy18(3): 393-422.
