Buying into Capitalism? Employee Ownership in a Disconnected Era
| DOI | http://doi.org/10.1111/bjir.12309 |
| Author | Valerie Egdell,Ross Brown,Matthew Dutton,Jesus Canduela,Robert Raeside,Ronald McQuaid |
| Published date | 01 March 2019 |
| Date | 01 March 2019 |
British Journal of Industrial Relations doi: 10.1111/bjir.12309
57:1 March 2019 0007–1080 pp. 62–85
Buying into Capitalism? Employee
Ownership in a Disconnected Era
Ross Brown, Ronald McQuaid, Robert Raeside,
Matthew Dutton, Valerie Egdell and Jesus Canduela
Abstract
This article considers whether employee ownership mitigates the negative
workplace outcomes identified by the Disconnected Capitalism Thesis (DCT).
Drawing on a programme of in-depth interviews with workers and managers in
employee-owned businesses (EOBs), the article reveals how they are partially
insulated from the vicissitudes endemic within contemporary capitalism. In
contrast to the workplace outcomes envisaged within the DCT, these firms
are characterized by strong workforce participation, high levels of employment
security, active employee engagement and strong levels of employee creativity.
Not only are these features beneficial for productivity and firm performance,
they generatea form of ‘connected’ capitalism, partially osetting wider negative
systemic forces at play in the economy.
1. Introduction
The problem with capitalism is there aren’t enough capitalists’ (Quote from the
Employee Ownership film ‘Wethe Owners’)
The global financial crisis starting in 2007 instigated a ‘fundamental
rethink’ (Stiglitz 2015) about the socioeconomic relationships in many
advanced economies, leading to increased interest in alternatives to investor-
owned firms (Blasi et al. 2014). Of particular interest to researchers and policy
makers in this regard is employee ownership (Blasi et al. 2016; Pendleton and
Poutsma 2012; Poutsma et al. 2012). According to some, this ‘atypical’ mode
of corporate governanceis a means of mitigating the inherent inequalities and
Ross Brown is at the School of Management, University of St Andrews. Ronald McQuaid is
at School of Management, University of Stirling. Robert Raeside, Matthew Dutton and Valerie
Egdell are atthe Employment Research Institute, Edinburgh NapierUniversity, Edinburgh. Jesus
Canduela is at Edinburgh Business School, Heriot-Watt University.
C
2018 John Wiley & Sons Ltd.
Buying into Capitalism? 63
instabilities endemic within contemporary capitalism (Blasi et al. 2014; Kruse
et al. 2010; Kurtulus and Kruse, 2017).1
However, some scholars question the likelihood and sustainability of
this kind of ‘equitable’ outcome within the workplace (Thompson 2003),2
especially given the deleterious eects globalization and financialization are
having across workplaces, most notably chronic job insecurity and employee
detachment (McCann 2014; Thompson 2013). The so-called disconnected
capitalism thesis (henceforth DCT) conceptualizes the systemic forces within
global capitalism which are argued to be fundamentally recasting labour-
management relations (Dobbins and Dundon 2017; Thompson 2003).
Linking these macro-level changes to upheavals at the micro-level of the
firm, Thompson (2003) claims there is a ‘massive tension’ between the types
of stability needed to foster high performance in the workplace and the
‘insecurity inherent in current forms of corporate governance’ (p. 365) and
that employees are ‘askedto unconditionally invest more of themselves’ while
‘employer promises are purely conditional’ (pp. 364–5).
While the DCT is ‘theoretically attentive to how workplace processes are
linked to macro-structures’ (Hauptmeier and Vidal 2014: 22), little attempt
has been made to assess its potential implications for workers or workplace
relations. This article examines whether employee-owned businesses (EOBs)
are ableto withstand the destabilizing forces conveyedwithin the DCT. Strictly
speaking, as projected within the DCT, EOBs and their employees would seem
just as likely to befall the same negative consequences aicting traditional
capitalist organizations. However, this goes against the vast body of literature
on employee ownership accumulated over the last three decades indicating
that these firms perform dierently to more conventionally structured firms
on a number of metrics such as firm survival, job security, levels of employee
participation, human capital development and wage levels (Baghdadi et al.
2013; Kramer 2010; O’Boyle et al. 2016; Pendleton and Robinson 2011;
Richter and Schrader 2017); even during recessionary periods (Kurtulus and
Kruse 2017; Lampel et al. 2014).
Importantly, however, a key omission within this literature is an in-
depth examination of the workplace factors underpinning this organizational
resilience despite the dysfunctional aspects of contemporary capitalism. This
article seeks to fill this gap. Therefore, the article makes a novel theoretically
informed contribution to the employee ownership literature by examining
the nature of workplace conditions and management-labour relations within
employee-owned firms during an era of intense economic and labour market
turbulence following the financial crisis. The article’s overriding research
question is: can employee ownership insulate firms from the dysfunctional
elements of contemporary capitalism depicted by the DCT?
The article reports the findings of an in-depth empirical study of
firms transitioning into employee ownership in Scottish firms during the
post financial crisis period.3Scotland provides an interesting empirical
backdrop to this research as successive Scottish and UK governments
have extolled ‘the virtues of the John Lewis economy’ (Wilkinson et al.
C
2018 John Wiley& Sons Ltd.
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