Employee versus conventionally‐owned and controlled firms: an experimental analysis

Abstract

Full employee ownership, under which employees enjoy dominant ownership and control rights, is an innovation which alters the relationship between employees and the organization in which they work. Although it has been hypothesized to have a number of positive implications, it has suffered from poor diffusion and survival rates overall, and selection biases have limited the generalizability of field research. We have therefore attempted to develop experimental methods to test hypotheses about the effects of employee ownership on selected economic, social, and psychological outcomes. In our experiments, subjects in employee-owned firms exhibited higher productivity, perceived greater fairness in the pay they received and the method used to pay them, reported higher levels of involvement in their tasks, had more positive evaluations of their supervisors, and showed a greater propensity to interact with and provide assistance to their co-workers than did those in employee-owned firms. Four areas where further research is needed are identified; these will refine our understanding of employee ownership and the conditions under which it will operate as hypothesized. © 1998 John Wiley & Sons, Ltd.