The nature and scope of support organizations for employee ownership in the USA: an assessment

What the paper says

Purpose This paper contributes to a neglected research area – the nature, role and effects of organizations that support employee ownership. The central issues investigated are: (1) whether there are preferred support organizations (SOs) for employee owned firms (EOFs); (2) if so, whether preferred set-ups differ for different kinds of EOFs – for example, for firms with ESOPs compared to worker/producer cooperatives (PCs)? Design/methodology/approach Competing conceptual frameworks are outlined. A typology for SOs serving US EOFs is developed with two central elements, functions and capacity and then applied to diverse SOs including EOFs and SOs that serve firms outside the mainstream. Findings US EOFs are faced by SOs with limited institutional capacity. The absence of a SO for US EOFs with deep capacity and expansive functions stands in sharp contrast with arrangements facing other notable US organizations outside the mainstream as well as PCs elsewhere. Arguably there is a mismatch between the needs of broad-based EOFS and the SOs serving them. The limited institutional capacity of current support organizations for EOFs may contribute to the recent slowdown in growth of the overall EOF sector. Research limitations/implications Enhanced knowledge of what SOs do in practice requires more structured interviews with key players from SOs as well as surveys of SOs. By surveying a random sample of existing EOFs, better data on what firms see as the strengths and gaps in available services provided by private and government bodies would be generated. Practical implications There may be some duplication in services for SOs serving EOFs; consideration might be given to encouraging consolidation of those functions within a single or fewer bodies achieving some economies of scale. A concierge SO would reduce transaction costs for individual EOFs and facilitate one-stop-shopping by individual EOFs. This point might carry over to conventional firms contemplating a conversion to EOF. Social implications EOFs have numerous social advantages over conventional firms including better outcomes for workers, higher productivity and more job stability. Changes in the institutional design of bodies serving EOFs may help stimulate the growth of EOFs and generate positive social implications. Originality/value Research surrounding organization that support employee ownership is scarce. This is one of the first studies to investigate that area for SOs serving EOFs in the USA.