There seems to be a slight increase in productivity from large percentage ESOPs at not-so-numerous employee firms (NSNE firms). Smaller ESOPs increase productivity more at NSNE firms. A hypothesis worth testing would be whether unequally allocated non-voting preferred stock options improve this. Overall worker compensation increases from an ESOP
For numerous employee firms, a larger ESOP seems to help mitigate the free rider effect associated with larger firms, but it isn’t conclusive because evidence is from a limited and unique sample. The free rider effect can potentially be overcome through peer pressure and co-monitoring. There are some cases where the benefits of these productivity gains of worker ownership don’t trickle up to voting shareholders
When worker coops fail, it is from institutional design flaws not inherent to cooperatives such as
- excessive direct democracy
- insufficient emphasis on representative democracy and delegation
- lack of independent board members
My understanding is that companies run by their founders are the most productive. Once that’s handed off, motives change.
I’d like to see the research you’ve found though.
I’ll also have to read more about economic democracy, because I’m not familiar with it.
1/4
Broad-Based Employee Stock Ownership: Motives and Outcomes
https://onlinelibrary.wiley.com/doi/10.1111/jofi.12150
There seems to be a slight increase in productivity from large percentage ESOPs at not-so-numerous employee firms (NSNE firms). Smaller ESOPs increase productivity more at NSNE firms. A hypothesis worth testing would be whether unequally allocated non-voting preferred stock options improve this. Overall worker compensation increases from an ESOP
2/4
For numerous employee firms, a larger ESOP seems to help mitigate the free rider effect associated with larger firms, but it isn’t conclusive because evidence is from a limited and unique sample. The free rider effect can potentially be overcome through peer pressure and co-monitoring. There are some cases where the benefits of these productivity gains of worker ownership don’t trickle up to voting shareholders
4/4
- non-democratic practices like non-member employees and unrepresented worker constituencies
https://journals.sagepub.com/doi/10.1177/0143831X19899474
David Ellerman is the best advocate for the economic democracy position.
Here’s a short introduction to his arguments and inalienable rights theory more broadly to those coming from a classical liberal background: https://www.ellerman.org/wp-content/uploads/2018/12/Classical-Liberal-JurisprudenceJune2018.pdf
3/4
A hypothesis worth testing is whether unions as a sort of legitimate opposition help avoid free riding on management accountability.
Having a voice in your group: Increasing productivity through group participation
https://osf.io/preprints/psyarxiv/vm4hu
When worker coops fail, it is from institutional design flaws not inherent to cooperatives such as
- excessive direct democracy
- insufficient emphasis on representative democracy and delegation
- lack of independent board members