Do Employee‐Owned Firms Produce More Positive Employee Behavioural Outcomes? If Not Why Not? A British‐Spanish Comparative Analysis

Abstract

Whether 'employee ownership '

Can employee ownership and human resource management policies clash in worker cooperatives? Lessons from a defunct cooperative

“…In subsequent decades, this would lead to a culture of remuneration based on egalitarianism and little connection between pay and performance. Similar opposition of worker owners to pay for performance systems has been found in other big Mondragon cooperatives, such as Eroski (Basterretxea & Storey, ).…”

“…While our study focuses on the case of Fagor Electrodomésticos, some of the clashes between employee ownership and HR policies documented here have also been documented in other large Mondragon cooperatives, such as Eroski (Basterretxea & Storey, ). Similarly, some of the forces that fostered nepotism in recruitment policies of this cooperative (free riding problems, financing problems, horizon problems) are common to other worker cooperatives.…”

“…Thanks to those flexibility measures, researchers conclude that the Mondragon cooperatives have been able to overcome different economic crises, enjoying a lower failure rate than their competitors. As highlighted by Basterretxea and Storey (2018), researchers have largely ignored the possible negative effects of wage cuts and other labor flexibility measures of worker cooperatives on employeeowners' attitudes and their behavior.…”

“…Indeed, employee owners in this type of company have historically opposed many HRM practices, such as individual performance evaluations, pay-for-performance systems, or plans to increase salary differentials to attract and retain senior managers and technicians (Basterretxea & Storey, 2018;Kasmir, 1996;Whyte & Whyte, 1988).…”

“…The scholarly literature about fully employee‐owned organizations, such as of Mondragon's cooperatives, demonstrates that a set of HRM policies and practices may be strongly conditioned by employee ownership. Indeed, employee owners in this type of company have historically opposed many HRM practices, such as individual performance evaluations, pay‐for‐performance systems, or plans to increase salary differentials to attract and retain senior managers and technicians (Basterretxea & Storey, ; Kasmir, ; Whyte & Whyte, ). Moreover, certain HRM policies and practices that are taken for granted in the tradition of fully employee‐owned firms such as cooperatives can run counter to the recommendations of the HRM literature and even clash with them.…”