Where employee ownership works best

Researchers have primarily looked within organisations to identify factors for the effectiveness of broad-based employee share ownership (ESO). To date, the community-level determinants of success for ESO firms have been overlooked. This paper examines the relationship between community-level generalised exchange and the prevalence of ESO firms and their survival in California between 2009 and 2019. We contribute to the literature on ESO in the following ways: first, we argue that broad-based employee-owned firms operate on the basis of generalised exchange; second, we find that ESO firms are more common in places that exhibit more generalised exchange; and finally, we find that ESO firms that operate in communities with high generalised exchange enjoy better survival rates.