IDEAS home Printed from
   My bibliography  Save this paper

Employee Ownership Of Firms


  • Henry B. Hansmann

    () (School of Law)


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

    Download full text from publisher

    File URL:
    Download Restriction: no


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    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


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ysm:somwrk:ysm96. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.