Employee Ownership: A Conceptual Model of Process and Effects

A model is developed that explicates one process through which employee ownership operates, leading to a set of social-psychological and behavioral effects. Where the formal ownership system is operationalized in such a way that it leads to psychological ownership, a bonding or integration of the employee-owner with the organization occurs. It is through these processes that employee ownership exercises an influence on group and individual outcomes. A set of antecedent and moderating variables to the operation of the formal ownership system is identified. While the primary focus of the research is on the employee stock ownership plan (ESOP), many parts of the model presented are applicable to a variety of employee ownership situations. Specifically, the formal ownership system characterized by a meaningful equity, information, and influence component should produce psychological ownership regardless of its type. In most employee ownership systems, power for the day-to-day operations of the system becomes lodged, formally or informally, with a dominant coalition.