Does Employee Ownership Affect Attitudes and Behaviors? The Role of Selection, Status, and Size of Stake

Past research has found employee ownership to be linked to better attitudes and behaviors. We investigate three possible mechanisms: (a) a selection effect – employees who buy stock in their own company may have better attitudes to begin with; (b) a status effect – employees who have any amount of employee ownership may have better attitudes; and (c) a size of stake effect – employee attitudes and behaviors may be influenced by the size of their employee ownership stake. We used a rich database of over 40,000 employee surveys from one large multinational company and 13 other companies. We find some support for all three mechanisms. Selection effects are indicated by several positive relationships between attitudes and stock that is bought by the employees rather than being granted by the employer. Status and size of stake effects are indicated by several positive relationships between attitudes and stock that is granted by the employer, particularly when the employee ownership is accompanied by high-performance work policies. While dividing employee ownership into bought or granted stock sheds light on the selection issue, the data are cross-sectional so selection and causality cannot be firmly established. There is need for further research on selection versus causality in examining the effects of employee ownership. The results indicate that companies may improve employee attitudes and behaviors of people by granting them stock and by having opportunities for employees to purchase stock. Even the results pointing to selection effects, however, can be important for companies, since offering stock ownership opportunities to employees may be an effective way to identify which employees are most committed to the firm and are likely to become good corporate citizens.