Why do firms adopt employee ownership? An industry perspective

PurposeThis paper offers a new perspective on the potential motivation for the adoption of employee ownership based on market power. Employee ownership may be linked to market power, either through contributing to firm growth that leads to market power or through industry leaders adopting employee o...

Full description

Saved in:
Bibliographic Details
Published inJournal of participation and employee ownership (Online) Vol. 7; no. 1; pp. 66 - 91
Main Authors Townsend, Phela, Kruse, Douglas, Blasi, Joseph
Format Journal Article
LanguageEnglish
Published Bingley Emerald Group Publishing Limited 14.06.2024
Subjects
Online AccessGet full text

Cover

Loading…
Abstract PurposeThis paper offers a new perspective on the potential motivation for the adoption of employee ownership based on market power. Employee ownership may be linked to market power, either through contributing to firm growth that leads to market power or through industry leaders adopting employee ownership as part of rent sharing or a broader consolidation of market position. Both employee stock ownership plan (ESOP) coverage and product market concentration (PMC) have been increasing in the past two decades, providing a good opportunity to see if and how these are related.Design/methodology/approachThe authors predict ESOP adoption and termination using multilevel regressions based on 2002–2012 firm- and industry-level data from the Census Bureau, Compustat and Form 5500 pension datasets.FindingsThe authors find that the top four firms in concentrated industries are more likely to adopt Employee Stock Ownership Plans (ESOPs), while having an ESOP does not predict entering the top four, apart from firm-level predictors. Tests indicate the first result does not reflect simple rent sharing with employees but instead appears to reflect an effort by firms to consolidate market power through the attraction and retention (or “locking in”) of industry talent. Other positive predictors of ESOPs include company size, being in a high-wage industry and having a defined benefit (DB) pension.Research limitations/implicationsTo better distinguish among hypotheses, it would be helpful to have firm-level data on managerial attitudes, strategies, networks and monopsony measures. Therefore, future research using such data would be highly useful and encouraged.Practical implicationsThe paper includes implications for the potential usefulness of ESOPs in attracting and retaining talent and for the design of nuanced policy to encourage more broadly based sharing of economic rewards.Originality/valueWhile prior research focuses on firm-level predictors of employee ownership, this study uses market concentration and other industry-level variables to predict the use of ESOPs. This study makes a unique contribution, broadening the current thinking on firm motives and environmental conditions predictive of firm ESOP adoption.
AbstractList PurposeThis paper offers a new perspective on the potential motivation for the adoption of employee ownership based on market power. Employee ownership may be linked to market power, either through contributing to firm growth that leads to market power or through industry leaders adopting employee ownership as part of rent sharing or a broader consolidation of market position. Both employee stock ownership plan (ESOP) coverage and product market concentration (PMC) have been increasing in the past two decades, providing a good opportunity to see if and how these are related.Design/methodology/approachThe authors predict ESOP adoption and termination using multilevel regressions based on 2002–2012 firm- and industry-level data from the Census Bureau, Compustat and Form 5500 pension datasets.FindingsThe authors find that the top four firms in concentrated industries are more likely to adopt Employee Stock Ownership Plans (ESOPs), while having an ESOP does not predict entering the top four, apart from firm-level predictors. Tests indicate the first result does not reflect simple rent sharing with employees but instead appears to reflect an effort by firms to consolidate market power through the attraction and retention (or “locking in”) of industry talent. Other positive predictors of ESOPs include company size, being in a high-wage industry and having a defined benefit (DB) pension.Research limitations/implicationsTo better distinguish among hypotheses, it would be helpful to have firm-level data on managerial attitudes, strategies, networks and monopsony measures. Therefore, future research using such data would be highly useful and encouraged.Practical implicationsThe paper includes implications for the potential usefulness of ESOPs in attracting and retaining talent and for the design of nuanced policy to encourage more broadly based sharing of economic rewards.Originality/valueWhile prior research focuses on firm-level predictors of employee ownership, this study uses market concentration and other industry-level variables to predict the use of ESOPs. This study makes a unique contribution, broadening the current thinking on firm motives and environmental conditions predictive of firm ESOP adoption.
Author Blasi, Joseph
Kruse, Douglas
Townsend, Phela
Author_xml – sequence: 1
  givenname: Phela
  surname: Townsend
  fullname: Townsend, Phela
– sequence: 2
  givenname: Douglas
  surname: Kruse
  fullname: Kruse, Douglas
– sequence: 3
  givenname: Joseph
  surname: Blasi
  fullname: Blasi, Joseph
BookMark eNo9jV1LwzAYhYNMcM79AO8CXkffvGnS9EYZY34xmBeK3o02ecs6tqY2rdJ_b0Hx6hweDs85Z5M61MTYpYRrKcHePL-sNgKUQEAUAKBO2BS1TERq9MfkvyfyjM1j3I8LzBAtwpTdvu8G7gMvq_YYee5D03E6NocwEPHwXVMbd1Vzxxc1r2rfx64deDPChlxXfdEFOy3zQ6T5X87Y2_3qdfko1puHp-ViLRwq2wnnoCgdmNIkKSqkxBrnk8Joi2QKRaAUGpklWqO0HnKf2cymBnOtyFkj1Yxd_XqbNnz2FLvtPvRtPV5uFZjUosbUqh8nIUya
ContentType Journal Article
Copyright Emerald Publishing Limited.
Copyright_xml – notice: Emerald Publishing Limited.
DOI 10.1108/JPEO-03-2022-0003
DatabaseTitleList
DeliveryMethod fulltext_linktorsrc
Discipline Economics
EISSN 2514-765X
EndPage 91
GeographicLocations United States--US
GeographicLocations_xml – name: United States--US
GroupedDBID 7WY
9F-
AAGBP
AAKOT
AAMCF
AAUDR
AAXBI
ABIJV
ABSDC
ABYQI
ACGFS
ACHMN
ACTSA
ADOMW
ADQHX
AFLPE
AGTVX
AJEBP
ALMA_UNASSIGNED_HOLDINGS
AODMV
ASMFL
AUCOK
BENPR
EBS
GEI
GMX
GQ.
H13
KLENG
PQBIZ
TDD
Y9Z
ZYZAG
ID FETCH-LOGICAL-c238t-cc0bfc06f647232e486cd4b6582e6b3e0332619455218d0ad9898762a53ec8613
IEDL.DBID ZYZAG
ISSN 2514-7641
IngestDate Wed Dec 11 10:42:05 EST 2024
IsPeerReviewed true
IsScholarly true
Issue 1
Language English
LinkModel DirectLink
MergedId FETCHMERGED-LOGICAL-c238t-cc0bfc06f647232e486cd4b6582e6b3e0332619455218d0ad9898762a53ec8613
PQID 3067825278
PQPubID 4882999
PageCount 26
ParticipantIDs proquest_journals_3067825278
PublicationCentury 2000
PublicationDate 20240614
PublicationDateYYYYMMDD 2024-06-14
PublicationDate_xml – month: 06
  year: 2024
  text: 20240614
  day: 14
PublicationDecade 2020
PublicationPlace Bingley
PublicationPlace_xml – name: Bingley
PublicationTitle Journal of participation and employee ownership (Online)
PublicationYear 2024
Publisher Emerald Group Publishing Limited
Publisher_xml – sequence: 0
  name: Emerald Group Publishing Limited
SSID ssj0002922820
Score 2.310158
Snippet PurposeThis paper offers a new perspective on the potential motivation for the adoption of employee ownership based on market power. Employee ownership may be...
SourceID proquest
SourceType Aggregation Database
StartPage 66
SubjectTerms Cooperation
Corporate profits
Employee ownership
Employee stock ownership plans
ESOP
Incentives
Information sharing
Productivity
Profit margins
Profitability
Trends
Unionization
Wages & salaries
Wealth distribution
Workers
Title Why do firms adopt employee ownership? An industry perspective
URI https://www.proquest.com/docview/3067825278
Volume 7
hasFullText 1
inHoldings 1
isFullTextHit
isPrint
link http://utb.summon.serialssolutions.com/2.0.0/link/0/eLvHCXMwrV1LT8JAEN4gHPTi2_hAswevC9t2W8pFQwxISBQPEpEL2WcgSmloOeCvd4e2mKjx5Lmbpt3Mznzf7DczCF1T6GGnmCTaCSlhhlLCOTWE-9QEjjBGG0joPzwG3QHrDf1hCfWLWpi1rDJLx6z99DRKgKTWQbhtvfCm4QBMr-k9tfsgB3JBkQ7gvg4p6_oknb1voYrF2tSaeWX0Omrdb9IubtO1JAMyLzawM9IImJPfdf76xh8eeh12OnsoLj44U5u81ZapqMmPb70c__GP9tFuDlFxK7OpA1TS0SHaLiqYkyN08zJZYTXHZrqYJZireZxinU8OxpbVZ9LoW9yK8DSbDLLC8VdR5zEadNrPd12Sz2Eg0gb0lEhJhZE0MNBq3nM1CwOpmLDYxdWB8DT1POBhzLdQIFSUK5hJaZ0s9z0tQ4sXTlA5mkf6FGGf6qAphJJGh8w1DpR82aVGUMa5ovQMVYv9HueHKRkDq7FE1m2E538_vkA7ducYKLkcVkXldLHUlxYzpOIqt4NPNg69XA
link.rule.ids 314,780,784,21709,27924,27925
linkProvider Emerald
openUrl ctx_ver=Z39.88-2004&ctx_enc=info%3Aofi%2Fenc%3AUTF-8&rfr_id=info%3Asid%2Fsummon.serialssolutions.com&rft_val_fmt=info%3Aofi%2Ffmt%3Akev%3Amtx%3Ajournal&rft.genre=article&rft.atitle=Why+do+firms+adopt+employee+ownership%3F+An+industry+perspective&rft.jtitle=Journal+of+participation+and+employee+ownership+%28Online%29&rft.au=Townsend%2C+Phela&rft.au=Kruse%2C+Douglas&rft.au=Blasi%2C+Joseph&rft.date=2024-06-14&rft.pub=Emerald+Group+Publishing+Limited&rft.issn=2514-7641&rft.eissn=2514-765X&rft.volume=7&rft.issue=1&rft.spage=66&rft.epage=91&rft_id=info:doi/10.1108%2FJPEO-03-2022-0003&rft.externalDBID=HAS_PDF_LINK
thumbnail_l http://covers-cdn.summon.serialssolutions.com/index.aspx?isbn=/lc.gif&issn=2514-7641&client=summon
thumbnail_m http://covers-cdn.summon.serialssolutions.com/index.aspx?isbn=/mc.gif&issn=2514-7641&client=summon
thumbnail_s http://covers-cdn.summon.serialssolutions.com/index.aspx?isbn=/sc.gif&issn=2514-7641&client=summon