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Lookup NU author(s): Dr Pushkar Jha
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Current economic crisis has highlighted the importance of an organization's ability to withstand economic shocks. This has rekindled interest in organization resilience on the one hand, and the relationship between alternative governance forms such as employee owned businesses (EOBs) on the other. We explore this relationship using performance data on 204 publicly traded non-employee owned businesses and 49 EOBs prior to the economic downturn (2004-2008), and during the economic downturn (20082009). This data is complemented with a survey of resilience related governance and organizational practices in 41 EOBs and 22 non-EOBs. Our results show that: (a) employee ownership that is combined with employee involvement in firm governance is associated with greater stability in business performance over a business cycle; (b) EOBs have longer investment payback horizon when compared to non-EOBs across a number of activities; (c) Top management in EOBs are more likely to seek employee input in strategic decision making; (d) EOBs are more likely to use employee involvement to achieve tighter coupling between feedback from operations and the setting of strategic direction for the firm. These results suggest that employee stock ownership programs alone are not sufficient to develop higher levels of organizational resilience. Managers must combine employee stock ownership with employee involvement in governance if they wish to build up resilience in advance of adverse economic conditions. (C) 2013 Elsevier Ltd. All rights reserved.
Author(s): Lampel J, Bhalla A, Jha PP
Publication type: Article
Publication status: Published
Journal: European Management Journal
Year: 2014
Volume: 32
Issue: 1
Pages: 66-72
Print publication date: 26/07/2013
ISSN (print): 0263-2373
ISSN (electronic): 1873-5681
Publisher: Pergamon
URL: http://dx.doi.org/10.1016/j.emj.2013.06.009
DOI: 10.1016/j.emj.2013.06.009
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