Download Companies whose employees own a significant stake have a

Companies whose employees own a significant stake
have a combined annual turnover of over £30 billion,
around 3% of GDP.4 The Employee Ownership
Association has ambitions for this figure to grow
to 10% of GDP by 2020.
There are sound reasons for policy to support
the development of the employee-owned sector,
especially in terms of creating a more balanced, fairer,
and more stable economy. Employee-owned firms
have the potential to deliver a wide range of economic
and social benefits, from greater employee engagement
and satisfaction to higher levels of job creation
and innovation. Overall, the evidence suggests that
employee-owned (EO) firms are more than a match,
economically speaking, for non-EO competitors, and
superior in terms of financial stability, job quality and
employee engagement. Employee-owned firms are at
least as good as non-EO firms at delivering economic
value, and are better producers of ‘social value’.5 In the
context of the search for ‘good growth’ and ‘responsible
capitalism’, especially in the wake of the financial crisis,
the strengths of employee ownership are becoming
ever more apparent.
One of the difficulties with research in this field
is teasing out cause and effect. Employee-owned
companies differ from others on a range of other
variables, most obviously in terms of leadership,
corporate culture, and employee commitment. It may
be these factors that are behind the higher performance
of employee-owned firms. The best studies therefore
attempt to compare the performance of employeeowned enterprises with non-employee-owned ones,
as similar as possible in terms of size, market, maturity
and so on.6
Before proceeding, it is important to be clear about
the definition of employee ownership, which can vary
by context. For our purposes, employee ownership is a
spectrum. To be ‘employee-owned’ a firm must be more
than 50% owned by employees, either directly via shares
or indirectly via an employee benefit trust, or some
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