From the Throne to the Kingdom: Employee Empowerment in Owner-Managed Firms

Abstract

I develop a model explaining procedural aspects of employee empowerment in owner-managed companies. Based on 22 interviews with representatives from six owner-managed firms active in the Swiss main- and ancillary construction industry, I find that firm complexity and resource necessity act as a regulator for growth ambitions forcing these firms to empower their employees. I find that employee empowerment in owner-managed firms can be executed through mechanisms of participative leadership, professionalization of collaboration and ownership dispersion. Furthermore, my study sheds light on effects of employee empowerment such as benefits tied to reduced owner-manager dependence or downsides linked to increased agency costs. My model thus presents integrative theorizing of the drivers, mechanisms, and effects of employee empowerment in owner-manager firms.