A critical analysis of different forms of employee ownership

From the 1970’s, there has been almost a half-century of development of employee-owned firms. There has been a wide variety of legal/capital structures that have been tried but too little analysis of which legal forms work or don’t work over the longer term, e.g. the transition from one generation of employee-owners to the next generation of employee owners. This paper provides a critical analysis of the major forms. These include the forms based on common ownership (Yugoslav self-managed firms and the UK EOTs), the older plywood cooperatives in the US Northwest along with the Spanish Sociedades Laborales, and the American Employee Stock Ownership Plans (US ESOPs). Finally, we advocate a variation on the US ESOP model, called the ‘European ESOP’, that seems to avoid some pitfalls and combines the best aspects of the past forms of employee ownership.