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

Author

Listed:
  • Norman Frohlich

    (The Faculty of Management, The University of Manitoba, Winnipeg, Canada)

  • John Godard

    (The Faculty of Management, The University of Manitoba, Winnipeg, Canada)

  • Joe A. Oppenheimer

    (Department of Government and Politics and Center for Collective Choice, University of Maryland, College Park, MD 20742, USA)

  • Frederick A. Starke

    (The Faculty of Management, The University of Manitoba, Winnipeg, Canada)

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.

Suggested Citation

  • Norman Frohlich & John Godard & Joe A. Oppenheimer & Frederick A. Starke, 1998. "Employee versus conventionally-owned and controlled firms: an experimental analysis," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 19(4-5), pages 311-326.
    • Handle: RePEc:wly:mgtdec:v:19:y:1998:i:4-5:p:311-326
    DOI: 10.1002/(SICI)1099-1468(199806/08)19:4/5<311::AID-MDE893>3.0.CO;2-I
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    Citations

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    Cited by:

    1. Leonid Krasnozhon, 2011. "Property rights and farm efficiency: evidence from Ukraine," Economic Change and Restructuring, Springer, vol. 44(4), pages 279-295, November.
    2. Shaun P. Hargreaves Heap & Kei Tsutsui & Daniel J. Zizzo, 2020. "Vote and voice: an experiment on the effects of inclusive governance rules," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 54(1), pages 111-139, January.
    3. Stefan Grosse & Louis Putterman & Bettina Rockenbach, 2007. "Monitoring In Teams: A Model and Experiment on the Central Monitor Hypothesis," Working Papers 2007-4, Brown University, Department of Economics.
    4. Gabriel Burdín, 2016. "Equality Under Threat by the Talented: Evidence from Worker‐Managed Firms," Economic Journal, Royal Economic Society, vol. 126(594), pages 1372-1403, August.
    5. Douglas L. Kruse & Joseph R. Blasi & Richard B. Freeman, 2012. "Does Linking Worker Pay to Firm Performance Help the Best Firms Do Even Better?," NBER Working Papers 17745, National Bureau of Economic Research, Inc.
    6. Artz, Georgeanne M. & Kim, Younjun, 2011. "Business ownership by workers: are worker cooperatives a viable option?," ISU General Staff Papers 201111090800001098, Iowa State University, Department of Economics.
    7. Marina Albanese & Cecilia Navarra & Ermanno Tortia, 2017. "Equilibrium unemployment as a worker insurance device: Worker insurance and wage setting in worker owned enterprises," DEM Working Papers 2017/09, Department of Economics and Management.
    8. Charness, Gary & Kuhn, Peter, 2011. "Lab Labor: What Can Labor Economists Learn from the Lab?," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 4, chapter 3, pages 229-330, Elsevier.
    9. Zied Guedri & Xavier Hollandts, 2008. "Beyond Dichotomy: The Curvilinear Impact of Employee Ownership on Firm Performance," Corporate Governance: An International Review, Wiley Blackwell, vol. 16(5), pages 460-474, September.
    10. Marina Albanese & Cecilia Navarra & Ermanno Tortia, 2019. "Equilibrium unemployment as a worker insurance device: wage setting in worker owned enterprises," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 36(3), pages 653-671, October.
    11. Carpenter, Jeffrey & Bowles, Samuel & Gintis, Herbert & Hwang, Sung-Ha, 2009. "Strong reciprocity and team production: Theory and evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 71(2), pages 221-232, August.
    12. Richard B. Freeman & Joseph R. Blasi & Douglas L. Kruse, 2010. "Introduction to "Shared Capitalism at Work: Employee Ownership, Profit and Gain Sharing, and Broad-based Stock Options"," NBER Chapters, in: Shared Capitalism at Work: Employee Ownership, Profit and Gain Sharing, and Broad-based Stock Options, pages 1-37, National Bureau of Economic Research, Inc.
    13. Joseph Blasi & Richard Freeman & Douglas Kruse, 2016. "Do Broad-based Employee Ownership, Profit Sharing and Stock Options Help the Best Firms Do Even Better?," British Journal of Industrial Relations, London School of Economics, vol. 54(1), pages 55-82, March.
    14. Marina Albanese, 2020. "Social and Relational Variables in Worker Cooperatives: Implications for the Objective Function," Journal of Entrepreneurial and Organizational Diversity, European Research Institute on Cooperative and Social Enterprises, vol. 9(1), pages 26-44.

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