Do firms with broad employee ownership manage their external stakeholders more responsibly?

Abstract

Is there a link between how a firm manages its internal and external stakeholders? More specifically, are firms that give employees broader ownership and more say in running the enterprise more likely to manage their external stakeholders responsibly? This study seeks to answer these questions by elaborating on the concepts of employee ownership and responsible stakeholder management (RSM), and exploring their theoretical relationship. It tests these relationships using a sample of 347 private, mostly small-to-medium size firms, which have sought B Corporation certification or only assessment by the nonprofit B Lab. By investigating a homogeneous sample, this study is able to limit the variation in certain key determinants of RSM, such as business context, and private ownership, and to focus on the variation of employee ownership and its relationship with RSM. The results partially support the hypothesis that broad employee ownership is positively associated with external RSM, in particular with a focus o...