Do Employee‐Owned Firms Produce More Positive Employee Behavioural Outcomes? If Not Why Not? A British‐Spanish Comparative Analysis
| Date | 01 June 2018 |
| Published date | 01 June 2018 |
| DOI | http://doi.org/10.1111/bjir.12247 |
British Journal of Industrial Relations doi: 10.1111/bjir.12247
56:2 June 2018 0007–1080 pp. 292–319
Do Employee-Owned Firms Produce
More Positive Employee Behavioural
Outcomes? If Not Why Not? A
British-Spanish Comparative Analysis
Imanol Basterretxea and John Storey
Abstract
Whether ‘employee ownership’ takes the form of worker cooperatives, co-
ownership or simply employee share ownership plans, there are normally high
expectations that a range of positive outcomes will result. Yet many empirically
based studies tend to find a much more complex picture. An influential segment
of that empirical literature has posited the need for a number of mutually
reinforcing workforce management components to be in place alongside co-
ownership. Drawing on detailed case research in two large and successful co-
owned retailers in Spain and Britain this paper examines the role of these
wider elements supporting employeeownership. Wefind that employee ownership
can be linked to higher productivity and lower employee turnover, while at the
same time being linked to higher absenteeism and mixed eects on attitudes.
Expectations held by managers and employees are higher; these expectations
are not always fully met. The role of managers was also found to be crucial.
1. Introduction
One of the many rationales advanced as justifying employee-owned
enterprises is the idea that workers in such enterprises will be more engaged
and more productive. The suggestion is that workers in such enterprises will
think and behave dierently: the essential nature of that dierence being that
they can be expected to act more like ‘owners’. This means, for example, that
they will be more customer (and market) focused as they see the customer
rather than the boss as the source of their economic futures; they would also
be expected to be willing to make sacrifices in hard times in order to sustain
Imanol Basterretxea is at Universidad del Pa´
ıs Vasco UPV/EHU. John Storey is at The Open
University
C
2017 John Wiley & Sons Ltd.
A British-Spanish Comparative Analysis 293
the enterprise. They would be expected to expend ‘discretionary eort’. In
managerial language, they might be expected to be more willing than an
employee in a conventional firm, to ‘go the extra mile’.
Many studies find that employee-owned firms derive favourable eects in
terms of satisfaction, motivation and behavioural measures such as lower
absenteeism and reduced labour turnover (Bakan et al. 2004; Brown et al.
1999; Kruse et al. 2004, 2010; Long 1980, 1982; McCarthy et al. 2010; Oliver
1984). Moreover, studies also find that these firms have higher productivity
on average(O’Boyle et al. 2016). But other studies find neutral eects or even
find lower levels of satisfactionand higher levels of absenteeism (Arando et al.
2011; Blasi et al. 2008; Keef 1998; Kruse 1984; Rhodes and Steers 1981).
Existing research reports generally fail to explain the reasons for such
dispersed and mixed results. Kruse and Blasi (1995: 25) considered that the
mixed results remained unexplained because ‘research has only scratched
the surface of the range of other human resource policies that might
produce positive complementarities with employee ownership’. The purpose
of this paper is to get beneath that surface. We draw upon the results of a
detailed comparative studyof behaviours in two large retailers with employee-
ownership characteristics in orderto trace the precise impacts of ‘membership’
of an employee owned enterprise. We did this by locating the study of such
behaviours in the context of wider economic factors and the wider array of
human resource management policies and practices.
One of these retailers, Eroski, is based in Spain and is part of the
Mondragon Cooperatives group, the other, the John Lewis Partnership, is
based in the UK and is by far the largest co-owned enterprise in that country.
We analyse the results from employee surveys conducted over multiple years
in both companies and we examine behavioural responses using measures
such as productivity, absenteeism and voluntary turnover. Our analysis
complements the existing literature by also reporting on the reasoning used
by managers to account for employee attitudes and behaviours. This adds an
extra dimension to the understanding of the employee ownership model as
does the attention we pay to the wider economic context over time.
The John LewisPartnership (JLP) has two major business units: John Lewis
department stores and Waitrose supermarkets. JLP employs nearly 90,000
‘partners’, mainly in its 48 John Lewis department stores and shops and
in the 350 Waitrose supermarkets and branches. In the 1930s, the founder,
John Spedan Lewis, took the highly unusual step of giving away a large
portion of his ownership of the business to his employees by placing his
shares in a trust using an ‘irrevocable settlement’ (Lewis 1954). The stock
as a whole rests with the Trust. Managers and workers talk routinely of this
arrangement as a co-owned business. The founder also created a checks-
and-balances governance system, set out in a Constitution. In the founder’s
own words, he was embarking on ‘an experiment in industrial democracy’
(Lewis 1948). Partner influence and voice is based on a series of elections to
representative bodies. Nearly all employees are Partners but in recent years
some outsourcing arrangements and innovative company to company joint
C
2017 John Wiley& Sons Ltd.
To continue reading
Request your trial