TY - JOUR AU - Kruse,Douglas AU - Freeman,Richard AU - Blasi,Joseph AU - Buchele,Robert AU - Scharf,Adria TI - Motivating Employee-Owners in ESOP Firms: Human Resource Policies and Company Performance JF - National Bureau of Economic Research Working Paper Series VL - No. 10177 PY - 2003 Y2 - December 2003 UR - http://www.nber.org/papers/w10177 L1 - http://www.nber.org/papers/w10177.pdf N1 - Author contact info: Douglas L. Kruse School of Management and Labor Relations Rutgers University 94 Rockafeller Road Piscataway, NJ 08854 Tel: 732/445-5991 Fax: 732/445-2830 E-Mail: kruse@smlr.rutgers.edu Richard B. Freeman NBER 1050 Massachusetts Avenue Cambridge, MA 02138 Tel: 617/868-3900 Fax: 617/868-2742 E-Mail: freeman@nber.org Joseph R. Blasi Rutgers University School of Management and Labor Relations 200 B Levin Building Rockefeller Road New Brunswick, NJ 08903 Tel: 732/445-5444 Fax: 732/445-2830 E-Mail: blasi@smlr.rutgers.edu Robert Buchele Department of Economics Smith College 10 Prospect St., #103 Northampton, MA 01063 E-Mail: rbuchele@email.smith.edu Adria Scharf Ownership Associates 122 Mt. Auburn Street Cambridge, MA 02138 E-Mail: scharf@rpec.org M2 - featured in NBER digest on 2004-05-01 AB - What enables some employee ownership firms to overcome the free rider problem and motivate employees to improve performance? This study analyzes the role of human resource policies in the performance of employee ownership companies, using employee survey data from 14 companies and a national sample of employee-owners. Between-firm comparisons of 11 ESOP firms show that an index of human resource policies, nominally controlled by management, is positively related to employee reports of co-worker performance and other good workplace outcomes (including perceptions of fairness, good supervision, and worker input and influence). Within-firm comparisons in three ESOP firms, and exploratory results from a national survey, show that employee-owners who participate in employee involvement committees are more likely to exert peer pressure on shirking co-workers. We conclude that an understanding of how and when employee ownership works successfully requires a three-pronged analysis of: 1) the incentives that ownership gives; 2) the participative mechanisms available to workers to act on those incentives; and 3) the corporate culture that battles against tendencies to free ride. ER -