Employee ownership and firm performance: a meta‐analysis

Abstract

Employee ownership has been an area of significant practitioner and academic interest for the past four decades. Yet, empirical results on the relationship between employee ownership and firm performance remain mixed. To aggregate findings and provide potential direction for future theoretical development, we conducted a meta‐analysis of 102 samples representing 56,984 firms. Employee ownership has a small, but positive and statistically significant relation to firm performance ( truer¯ = 0.04). The effect is generally positive for studies with different sampling designs (samples assessing change in performance pre‐employee–post‐employee ownership adoption or samples on firms with employee ownership), different performance operationalisation (efficiency or growth) and firm type (publicly held or privately held). Suggesting benefits of employee ownership in a variety of contexts, we found no differences in effects on performance in publicly held versus privately held firms, stock or stock option‐based ownership plans or differences in effects across different firm sizes (i.e. number of employees). We do find that the effect of employee ownership on performance has increased in studies over time and that studies with samples from outside the USA report stronger effects than those within. We also find little to no evidence of publication bias.

Moderating effect of pay dispersion on the relationship between employee share ownership and labor productivity

“…Even though there is much debate about the precise mechanisms through which these schemes impact on performance, there is strong theoretical support and empirical evidence to suggest that ESO schemes are associated with higher labor productivity (Freeman, Blasi & Kruse, 2010; Kim & Ouimet, 2014; Park & Song, 1995) and performance in organizations (Bryson & Freeman ; Blasi, Freeman, Mackin, & Kruse, 2010; Fernie & Metcalf, ; Kruse et al, 2010b; Long, ; McNabb & Whitfield, ; O’ Boyle et al, 2016; Pendleton, ; Sengupta, ; Sengupta et al, ). In a meta‐analysis of 27 studies, Kruse and Blasi (1995, p. 26, in O'Boyle et al, ) concluded that studies on employee ownership and firm productivity or profitability frequently “indicate better or unchanged performance.” A more recent meta‐analysis of 102 studies representing 56,984 firms from around the world found that employee ownership had a small but a positive and statistically significant relationship with firm performance (O'Boyle et al, ). The sample was dominated by U.S.‐based studies and pointed to the role of context in shaping the strength of ESO performance relationship.…”

Do Employee‐Owned Firms Produce More Positive Employee Behavioural Outcomes? If Not Why Not? A British‐Spanish Comparative Analysis

“…Moreover, studies also find that these firms have higher productivity on average (O'Boyle et al 2016). But other studies find neutral effects or even find lower levels of satisfaction and higher levels of absenteeism (Arando et al 2011;Blasi et al 2008;Keef 1998;Kruse 1984;Rhodes and Steers 1981).…”

New social cooperation model in service oriented economy: the case of employee financial participation in the Baltic states

“…Preference for some schemes depends on country-level factors. Some schemes are more related to possibility improved labour productivity and performance (Blasi et al, 2010a;O'Boyle et al, 2016;Bryson & Freeman, 2010). Among various schemes, share ownership has the clearest positive association with productivity, but its impact is the largest when firms combine it with other forms of participation (Bryson & Freeman, 2010;Poutsma & Braam, 2012).…”

“…Ongoing control in decisionmaking and entrepreneurial co-determination are strong arguments for taking one of employee financial participation schemes. They could be reinforced by other economic arguments, such as enhancement of motivation and productivity (O'Boyle, 2016;Lowitzsch, 2009a).…”