The causal effect of employee ownership on firm performance : Evidence from a natural experiment

Although strategy literature has focused on the relationship between forms of ownership and firm performance, knowledge about the effect of employee ownership on firm performance is still incomplete. In this study, the authors investigate whether employee ownership is related to performance. Using a two-group sample of 5,577 firm-years with employee ownership and 5,677 firm-years without employee ownership located in 31 countries of the European Union, the authors executed a pre-post design approach, investigating performance before and after the 2008 subprime crisis as an exogenous variation. The results show that firms with employee ownership experienced higher performance. Controlling for contemporaneous endogeneity further supports these findings.