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This chapter examines the evolution of US corporate governance and its implications for labour. It first analyses the development of the present US model of corporate governance over the last 40 years or so. It then considers the costs and benefits of the US system. To propel further changes in the US system, policy recommendations are advanced that would simultaneously reform corporate governance practices while creating a more favourable climate for employee representation.

This chapter surveys the key determinants of economic performance in transitional economies, focusing on organizations and policies that have influence structures of ownership, control, and the motivation of economic agents. It examines the nature and economic impacts of ownership and control and discusses privatization and the productivity effects of different property forms, especially employee ownership. It concludes by discussing new forms of compensation such as performance-related incentives.

This chapter examines the holding patterns of company stock in defined contribution (DC) plans, why employers and employees tolerate high levels of company stock holdings, and the impact of concentrated holdings on retirement incomes. It is argued that retirement systems with concentrated stock positions will always have some participants lose their DC plan savings to firm bankruptcy. Company stock in retirement portfolios leads to greater extremes in accumulated wealth due to its higher volatility, and a lower median wealth compared to a system of diverse investments.

This chapter looks at corporate networks and privatization in Poland and Hungary to determine which type of capitalism is developing in Eastern Europe. In particular, the chapter examines whether the emerging structures more closely resemble the model of German corporatism or that of Anglo-Saxon market liberalism. First, the economic elites adopted a new ideology to legitimize the emerging unequal distribution of ownership and control in post-socialist societies. The chapter argues that the work of Hayek and Polanyi has structured a controversy between the proselytes of a liberal market order and those who have criticized the excesses of ‘wild east’ capitalism. Second, the privatization process created a new social structure characterized by an unequal distribution of ownership and control of the former state-owned enterprises. The different privatization methods are analyzed to show how they influenced the distribution of economic power and the process of class formation. Third, most East European countries have enacted a new corporate law that defines the governance structure of the privatized firms. This chapter examines the extent to which these laws restrict property rights and whether employee ownership may be a substitute for codetermination.

This chapter addresses several questions surrounding employee stock ownership as a wealth-sharing tool. It discusses how much on average do employee owners own in “shared capitalist” firms (those with broad-based employee ownership, profit sharing, gain sharing, and/ or stock options). It explores how company stock distributed among employee-owners, which ownership structures distribute wealth most equitably, and how the distribution of employee stock ownership wealth compares to the distribution of wealth among US households. Further, the extent of employer stock substitute for other forms of compensation (higher pay and benefits) and for other forms of wealth is discussed. It also describes the effect of universal employee ownership of employer stock on the overall distribution of stock ownership and pension wealth in the United States. Results indicated that broad-based employee ownership may be raising wealth for many workers without unduly increasing worker risk.

Employee stock ownership plans (ESOPs) are a special form of defined contribution (DC) plan available to corporate sponsors in which the investments are not employee directed. There are essentially two types of ESOPs: ESOPs that borrow money to buy stock in the sponsoring employer, and ESOPs that do not borrow money. This chapter begins by describing ESOPs, then discusses the advantages and disadvantages of using company stock in a DC plan. It shows that the costs associated with using company stock are greater than many people realize — for plan participants and shareholders.

This chapter presents an introduction to shared capitalism of the U.S. economy. Shared capitalism refers to a diverse set of compensation practices through which worker pay or wealth depends on the performance of the firm or work group. In the United States, one major form for employee ownership is the Employee Stock Ownership Plan (ESOP), which federal legislation established to allow companies to contribute money to a trust to buy worker shares or to borrow money to fund worker ownership and then repay in installments from company revenues. Individual employee stock ownership refers to situations in which workers buy shares in the firm and vote those shares privately. Profit sharing pays workers specified shares of profits when the firm makes money. The payments can be cash bonuses on a yearly or more frequent basis or can take the form of placing the workers' share of profits in a retirement plan.

Although there is general consensus that share ownership increased in Britain from the late nineteenth century onwards, less attention has been paid to the extent to which this increase reflected a change in the social class of shareholders. In the early twentieth century, there was a frequent claim that increased ownership resulted from the democratization of share purchase. The chapter investigates the evidence for this, examining the growth in savings banks’ deposits, the wide take-up of War Savings during the First World War, and the promotion of employee share ownership. These influences, and contemporary comments, provide a context for the study of the social class of shareholders in a number of UK companies. The chapter concludes that democratization did not take place, and that share ownership rather reflected the growth in popularity of more diversified investment portfolios during the period under review.

This chapter analyzes the relationship of shared capitalism programs to a range of employee outcomes: participation in decisions, supervision, training, company treatment of employees, pay, job security, and job satisfaction by using the General Social Survey (GSS) and NBER data sets. Profit sharing is stated to be most consistently linked to the positive outcomes, although gain-sharing, stock options, and employee ownership also affect some outcomes positively. In many cases the positive effect was tied to simply being covered by a policy, but there were also many cases in which the effect was tied to the size of the financial stake involved. Those who are covered by the combination of high-performance policies with shared capitalism are most likely to report high participation in decisions, satisfaction with participation, and overall job satisfaction. The combination of close supervision with shared capitalism, however, has negative effects on almost every outcome.

For more than two decades, the United Kingdom has tried to encourage shared capitalist practices by offering tax advantages to firms that link pay to profits, provide company shares to workers, encourage workers to save through stock options, or develop approved share-option plans. Behind the desire to increase shared compensation in the United Kingdom is the widespread belief that shared capitalist arrangements will create a better work culture with improved productivity and commitment by employees. Existing studies on profit sharing, employee ownership, and employee participation lend general support to this proposition, but these studies also show considerable variability in the effects of practices on firm performance. This chapter examines how a shared mode of compensation has affected firm performance in the United Kingdom. It uses a 1999 survey of the shared compensation strategies used by a sample of UK listed companies between 1995 and 1998; the 1998 Workplace Employment Relations Survey (WERS) of some 2,000 UK establishments or workplaces; and the 1990–1998 longitudinal WERS panel survey of nearly 900 workplaces.

Incentives may involve relating employees’ pay to their individual performance, as with piece rates or most sales commissions; or relating pay to the performance of their working group or team; and/or to the performance of the whole firm. Schemes that connect remuneration to firm-level performance commonly involve employees participating in property rights, as ‘residual claimants’ to the firm’s profits. These forms of incentive schemes, which include profit-sharing and employee share ownership, are often referred to as employees’ financial participation.

This chapter discusses the impact of subjective risk on workers' attitudes, preferences, and behaviors under shared capitalism and whether employee ownership and other forms of worker equity participation be consistent with proper diversification and shared capitalism. The three components of a worker's economic insecurity score are the size of each worker's fixed annual pay, how many multiples each worker's total wealth (minus debt) is relative to that worker's fixed annual pay, and the extent to which each worker perceives they are competitively paid in the firm where they work. It has been demonstrated that as economic insecurity of workers rises, it is associated with worse worker attitudes toward shared capitalism, preferences for variable pay, and behavioral outcomes under shared capitalist arrangements. The level of economic insecurity also influences how well they actually respond to shared capitalist arrangements such as employee ownership in their workplace.

This chapter analyzes the relationship of various forms of shared capitalist compensation to six workplace outcomes—turnover, absenteeism, perceived effort of co-workers, loyalty to the firm, willingness to work hard, and frequency of worker suggestions to improve productivity from the perspective of shared capitalism. It also examines employee responses to questions about their response to shared capitalist incentives and analysis using the General Social Survey (GSS) and NBER data sets. It states that shared capitalism affects workplace performance and substantiated by the fact that the results from the NBER sample are broadly similar to the results from the nationally-representative GSS. Shared capitalism is linked to lower turnover and greater loyalty and willingness to work hard, particularly when combined with high-performance policies, low levels of supervision, and fixed pay at or above market levels. Workplaces where workers average more shared capitalist compensation report greater employee effort along several dimensions.

This chapter examines how access to shared capitalism, returns from shared capitalism programs, and organizational power and authority within companies with shared capitalism are stratified by gender, race, ethnicity, and disability. The value of assets acquired through shared capitalism is usually directly related to pay; it is not possible to assume that implementing shared capitalism creates instant equity and fairness. The reality is that the implementation and operation of these plans occurs within broader structures of stratification, and this reality may have negative consequences for the effectiveness of these plans if employees perceive their implementation and operation as unfair. Beyond the traditional mechanisms of stratification, the ways in which certain types of shared capitalism are designed and operated can create further disparities in access and financial value for different groups.

This chapter explores the development of co-operatives, collectives, and employee owned enterprises that provide architectural services in Britain, and the growth of such architectural practices, particularly in periods of economic recession since the 1980s. In the aftermath of the 2008 financial crisis, new architectural co-operatives developed as architects sought to share resources and combat high levels of unemployment and underemployment in the profession. Architects surveyed noted the better work-life balance and flexibility of co-operative practices, and cited the importance of collaboration, transparency, and a sense of shared purpose among the advantages. The author offers insights from his own experience of creating and working in a co-operative architectural practice.

In the economic literature, worker co-operatives are viewed as small, specialised and undercapitalised organisations that only thrive in unusual conditions and could not possibly constitute a serious alternative to conventional firms. This chapter challenges this conventional wisdom, drawing on a range of international economic studies comparing worker co-operatives and conventional firms. The evidence reviewed suggests that worker co-operatives match ‘mainstream’ firms for durability, and can be found in most industrial sectors. The chapter rejects the notion that worker co-operatives are systemically undercapitalised, and asserts that many are more productive than their mainstream equivalents, largely because of their capacity to motivate workers through their control of the enterprise. It suggests that worker co-operation is a viable alternative to private ownership for small and medium sized enterprises (SMEs), and that in some regions of Italy and Spain, the model is integrated into the economic mainstream.

This chapter presents a proposal to promote firms run by their employees and extensive employee involvement in the governance of conventional firms. Democratic firms build up capital for future generations, keep more profit in the firm, and have more powerful incentives to keep the firm in operation in the medium and long term than investor-owned firms. They involve younger generations in decisions. Although labour-managed firms may not necessarily be environment-friendly without appropriate regulation, their negative impact is likely to be lighter than that of conventional firms. Democratic firms may also indirectly benefit future generations by limiting unchecked firm growth and the loss of skills and jobs that can have dramatic compounded effects on communities far into the future. Labour-managed firms are efficient, but incentives for individual entrepreneurship may have to be retained in a labour-managed economy. Multi-stakeholder governance is proposed in sectors that are not appropriate for private ownership.

The joint pursuit of commercial and societal objectives will likely require non-traditional (non-hierarchical) ways of organizing. This chapter discusses the prospects for one promising alternative: “organizational democracy.” This is a flatter form characterized by distributed decision rights, a deliberative culture, and employee ownership. Other alternatives to hierarchy have emphasized individualistic values of autonomy and empowerment. In contrast, organizational democracy emphasizes the collective. Relevant work in political philosophy underlines analogous dimensions including representation, deliberation, and a collective point of view. The last point makes it different from work on solidarity and class or group interest. In multi-objective organizational democracy there are trade-offs and these are negotiated. Representation and deliberation come to the foreground. Unlike in traditional organizations, however, negotiations are not regarded as transaction costs to be minimized; rather they are brought to the foreground and cultivated. The chapter illustrates these ideas and discusses challenges and avenues for future research.

At a time when regulators are seeking new responses to the dilemmas of world-spanning digital platforms, forms of community ownership such as cooperatives and trusts offer attractive benefits for workers and other users. Yet if economic democracy is to provide a counterweight to investor ownership in the online economy, it will require an appropriate policy framework. This chapter argues that such a framework can come from radically generalizing and expanding on pre-digital successes in local and industry-specific policies from various countries and contexts—including policies for incorporation, financing, and coordination. Policy should use community ownership not just to solve specific problems but also as a universal means of organizing innovation. It should also seek to repair past injustices to communities marginalized through underinvestment. Community ownership could thereby become at least as available to the online economy as investor ownership has been.