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Employee Ownership Of Firms

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  • Henry B. Hansmann

    () (School of Law)

Abstract

Once widely considered just a theoretical curiosity or an ideological aspiration, employee ownership of enterprise has attracted considerable interest in recent years as a practical matter of organization. In the West, this interest derives in considerable part from the decline of unionism and the resulting search for other means of assuring efficiency and equity in labor contracting, while in the East, interest in employee ownership has been stimulated by the rapid market-oriented ownership structures that stop short of a direct leap into full finance capitalism. This essay explores the relative efficiency advantages and disadvantages of employee ownership with respect to other forms of ownership--in particular, investor ownership--and seeks to explain why employee ownership has become widespread in some industries, such as the service professions, while it remains rare in many others. The general conclusion offered is that employee ownership appears relatively efficient in a broad range of circumstances so long as control of the firm can be placed in the hands of a class of employees who have highly homogeneous interests. Where, however, this condition cannot be met--as is commonly the case--other forms of ownership typically have the advantage.

Suggested Citation

  • Henry B. Hansmann, 1998. "Employee Ownership Of Firms," Yale School of Management Working Papers ysm96, Yale School of Management.
  • Handle: RePEc:ysm:somwrk:ysm96
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    Cited by:

    1. Seungchul Lee & Robert Rosenman, 2013. "Reimbursement and Investment: Prospective Payment and For-Profit Hospitals’ Market Share," Journal of Industry, Competition and Trade, Springer, vol. 13(4), pages 503-518, December.
    2. J.E. van den Berg, 2003. "The Dutch Works Council from an Institutional Economics Point of View: An Efficient Solution to the Governance Structure Problem?," Working Papers 03-06, Utrecht School of Economics.
    3. repec:kap:hcarem:v:20:y:2017:i:2:d:10.1007_s10729-015-9348-9 is not listed on IDEAS

    More about this item

    JEL classification:

    • J54 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Producer Cooperatives; Labor Managed Firms
    • J53 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Labor-Management Relations; Industrial Jurisprudence

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