Employee ownership and firm performance: A variance decomposition analysis of European firms

Kyoung Yong Kim and Pankaj C. Patel

Journal of Business Research, 2017, vol. 70, issue C, 248-254

Abstract: Employee ownership is of increasing interest to researchers, policymakers, and firms. Findings on the influence of employee ownership on performance, however, remain mixed, possibly due to differences in institutional/cultural factors, period-effects, between-industry differences, and firm-specific heterogeneity. To further shed light on performance gains from employee ownership attributable to the relative effects of country, year, industry, and firm, we draw on a sample of 12,648 firm-years from 1797 European firms from 2006 to 2014. We find that while the relative variance explained by employee ownership is not statistically significant, its joint effects with country, year, industry, or firm explain 2.25%, 0.12%, 0.51%, and 4.16% of variance in ROA, respectively. Similar effects are observed for workforce productivity as an outcome. These findings suggest that contextual factors, especially in line with previous research, firm-related factors are important for the effective utilization of employee ownership. This study has implications for strategic human capital theory and practitioners.

Keywords: Employee ownership; Employee stock ownership plan; Variance decomposition; Firm performance (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (18)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbrese:v:70:y:2017:i:c:p:248-254

DOI: 10.1016/j.jbusres.2016.08.014

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