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

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journalpeer-review

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Original languageEnglish
Pages (from-to)248-254
Journal / PublicationJournal of Business Research
Online published17 Aug 2016
Publication statusPublished - Jan 2017


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.

Research Area(s)

  • Employee ownership, Employee stock ownership plan, Firm performance, Variance decomposition