Employee Participation, Ownership, and Productivity: A Theoretical Framework

Abstract

A new conceptual framework to define and differentiate among diverse forms of employee ownership is developed. Two central rights associated with ownership, return and control rights, are identified. Their impact on individual motivation, individual performance, organizational structural variables and organizational performance is evaluated. We show how, over certain ranges of combinations of control and return rights, the relationship between alternative ownership arrangements and organizational performance may be nonlinear. The implications for the introduction of employee ownership and the evaluation of empirical work are considered.

The Internal and External Governance of Cooperatives: Membership and Consistency of Values

“…Opportunism can easily undermine the alignment of individual and collective objectives, endangering firm survival and growth. However, when opportunism is kept at bay by proper rules, members' rights to decisionmaking are expected to strengthen and to enable a more coherent expression of motivations, which, in turn, foster individual fulfilment, as well as organisational sustainability (Ostrom 2010;Ben-Ner and Jones 1995). The constraining feature of rules is not meant to impair individual potential, but to ensure that each individual's right to participate and share results is respected.…”

Corporate Governance and the Mondragón Cooperatives

“…Consequently, a significant division of labor involving functions of different degrees of specialization would give rise to significant salary differences within the firm. In the same vein, the special allocation of ownership rights (corporate control rights, residual income rights; Ben-Ner & Jones, 1995;Hansmann, 1996) of a cooperative to workers implies that when workers' preferences are heterogeneous, the decisionmaking process in which all workers participate turns out to be inefficient (Hansmann, 1988;1990;1996). This could be attributed to the fact that some workers, or coalitions of workers, will attempt to influence voting results (tactical vote), thereby bringing about high transaction costs (Benham & Keefer, 1991;Hansmann, 1988).…”

Uncertainty, task environment, and organization design: An empirical investigation

“…This type of uncertainty is not defined in Prendergast's model because agents are risk neutral. 8 It can however be compared to the notion of environmental uncertainty defined in Raith (2008), a noise in the measure of the agent's output in a context in which agents are risk neutral but are protected by 7 This is a point that originates with Grossman and Hart's (1986) theory, and has been emphasized by several authors (e.g., Tyson and Levine, 1990;Ben-Ner and Jones, 1995). 8 It is typically defined as an additive exogenous shock ε i ∼ N(0,σ 2 ε ) in the output equation where σ 2 ε represent external uncertainty (Rantakari, 2008 In sum, the task environment creates uncertainty for management and the desire to delegate some decision-making to employees and offer incentives.…”