Transformations  in
Business & Economics

EMPLOYEE-OWNED FIRMS: A BUSINESS MODEL OF SOCIAL ECONOMY WITH POTENTIAL
Josefina Fernandez-Guadano

ABSTRACT.In Spain, the companies that are mainly owned by the employees form a part of the Social Economy and offer an alternative business model, which is found in a conventional capitalist economy. The objective of this study is to establish whether there are significant differences in the performance of Employee Owned Firms (EOFs) and more conventionally structured businesses, non-Employee Owned Firms (non-EOFs), due to the inherent differences in the capital-ownership structure. The aim is to establish whether or not a corporate governance structure characterised by the employee participation for both the financial and the informational decision-making aspects can be advocated. The results show differences in favour of the conventional non-EOFs for various indicators measuring economic performance and confirm the different objectives of each business type; however, they provide evidence of significant differences in favour of the EOFs in terms of the efficient use of the capital and labour factors of production, according to the theoretical literature.

KEYWORDS: capital ownership structure, social economy, labour managed firms, economic performance, small and medium enterprises, services, Spain.

JEL classification: J540, L200, D210.