Does Employee Ownership Increase Innovation?

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New England Journal of Entrepreneurship, ISSN: 1550-333X, Vol: 13, Issue: 2, Page: 5

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Garrett, Robert
innovation; employee ownership; corporate entrepreneurship; employee stock ownership; research and development; Entrepreneurial and Small Business Operations; Human Resources Management
article description
One way that firms attempt to innovate is through investment in R&D activity. However, there is much heterogeneity in innovations among firms making comparable R&D investments. This article explores employee ownership’s moderating effect on the relationship between R&D intensity and innovative output. The basis for the moderation is that ownership increases motivation and commitment to the innovation agenda of the company, and retains employees’ entrepreneurial efforts for internal opportunities. Using hierarchical regression, the data support the hypothesis that employee stock ownership positively moderates the relationship between R&D intensity and innovative output. Implications for future research and practice are addressed.