Understanding the influence of national culture on employee ownership mechanisms

Employee ownership is positively associated with firm performance. However, in addition to generally explored firm and industry related factors, this relationship may also be contingent on cultural factors. Specifically, culture may influence the strength of the relationship between employee ownership and firm performance, as well as the extent of adoption of employee ownership among firms in a country. In a sample of 1,486 firms representing 9,893 firm-years between 2006 and 2014, we find that employee ownership is positively associated with firm performance in cultures with high individualism, low power distance, or low uncertainty avoidance. These findings are noteworthy because, in drawing on instruments proposed for cultural dimensions, we controlled for endogeneity from firm-level adoption of employee ownership and from the influence of cultural dimensions on the employee ownership-firm performance relationship. We discuss theoretical and practical implications of our findings.