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Motivating employee owners in ESOP firms: human resource policies and company performance

Kruse, Douglas and Blasi, Joseph and Buchele, Robert and Scharf, Adria and Rodgers, Loren and Mackin, Chris and Freeman, Richard B. (2004) Motivating employee owners in ESOP firms: human resource policies and company performance. CEPDP, 658. Centre for Economic Performance, London School of Economics and Political Science, London, UK. ISBN 0753017881

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Identification Number: 658

Abstract

What enables some employee ownership firms to overcome the free rider problem and motivate employees to improve performance? This study analyzes the role of human resource policies in the performance of employee ownership companies, using employee survey data from 14 companies and a national sample of employee-owners. Between-firm comparisons of 11 ESOP firms show that an index of human resource policies, nominally controlled by management, is positively related to employee reports of co-worker performance and other good workplace outcomes (including perceptions of fairness, good supervision, and worker input and influence). Within-firm comparisons in three ESOP firms, and exploratory results from a national survey, show that employee-owners who participate in employee involvement committees are more likely to exert peer pressure on shirking coworkers. We conclude that an understanding of how and when employee ownership works successfully requires a three-pronged analysis of: 1) the incentives that ownership gives; 2) the participative mechanisms available to workers to act on those incentives; and 3) the corporate culture which battles against tendencies to free ride.

Item Type: Monograph (Discussion Paper)
Official URL: http://cep.lse.ac.uk
Additional Information: © 2004 the authors
Subjects: H Social Sciences > HD Industries. Land use. Labor
JEL classification: M - Business Administration and Business Economics; Marketing; Accounting > M4 - Accounting and Auditing > M40 - General
M - Business Administration and Business Economics; Marketing; Accounting > M5 - Personnel Economics
O - Economic Development, Technological Change, and Growth > O1 - Economic Development > O15 - Human Resources; Human Development; Income Distribution; Migration
Sets: Collections > Economists Online
Research centres and groups > Centre for Economic Performance (CEP)
Date Deposited: 24 Jul 2008 14:17
Last Modified: 07 Feb 2012 17:16
URI: http://eprints.lse.ac.uk/id/eprint/19930

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