Dissertations, Theses, and Capstone Projects

Date of Degree


Document Type


Degree Name





Harvey Gram

Committee Members

David Laibman

Joseph Blasi

Douglas L. Kruse

Subject Categories



Hundreds of firms in the U.S. are majority-owned by their employees through Employee Stock Ownership Plans (ESOPs). This study measures whether employee ownership makes a difference in firm outcomes, looking also at effects of worker participation in management-type decisions. Theorists have suggested that the rarity of employee ownership is prima facie evidence that such firms could not be as efficient as traditional firms. But institutional and financing constraints may be a more realistic explanation for their rarity, and it is important for policy purposes to investigate efficiency objectively.

The author compares sales per employee for a panel of over 300 majority-employee- owned (EO) firms in the United States with a panel of closely matched, traditionally-owned (KO) firms. Responses from a survey of firm work practices are used to estimate worker participation effects.

Sales per employee is substantially and significantly higher for the employee-owned group of firms. This “employee-owned advantage” is significantly greater among smaller firms, and (holding firm size constant) improves as the dollar value of the average employee’s ownership stake in firm stock goes up. Holding both firm size and employee stake constant, the employee-owned advantage is substantially (though not significantly) greater in the large group of firms which are 100% owned by their ESOP Trusts. Holding firm size constant, increased production-worker influence on three facets of firm innovation also improves the advantage.

Resistance to broadening employee ownership may come in part from academic arguments that such a structure must reduce firm (and thus social) efficiency. This study belies those arguments. Broader employee ownership and employee participation in firm management, which have intrinsic social benefits, improve firm outcomes as well.


Digital reproduction from the UMI microform.

Included in

Economics Commons