Employee Ownership and Preferences for Organisational Control
Degree GrantorUniversity of Canterbury
Degree NameMaster of Science
Employee ownership describes the situation where employees own an equity stake in an employing organisation. Psychologists have found that employee ownership positively relates to several attitudes that contribute to organisational effectiveness, including: Organisational Commitment, Job Satisfaction, Organisational Justice, and Psychological Ownership. Contrarily, economists point out that employee owned firms exhibit reduced value maximisation compared to investor owned firms, and suggest that employee influence in decision making produces suboptimal outcomes. This thesis investigated whether the psychological effects related to employee ownership are affected by the level of employee control over the organisation. Experiment 1 investigated if individuals display differing preferences for three factors related to formal and psychological ownership: equity, control, and information, and it was found that greater levels of each factor were preferred. Experiment 2 investigated which of two types of control, operational control or governance control, were preferred for different employee ownership conditions. Higher levels of control were preferred in all cases with governance control preferred overall. Experiment 3 investigated if the preference for governance or operational control changed as the at-risk component of employee remuneration changed. As at-risk remuneration increased, greater levels of control were preferred, and perceptions of organisational justice decreased. Overall it appeared that full organisational control produces the best outcomes in terms of organisational commitment, satisfaction, organisational justice, and psychological ownership, although acceptable outcomes are still possible with decreased levels of control.
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