Employee ownership gives staff a stake, and a say, in their work. Firms are more productive and more resilient as a result. Employees have higher job satisfaction.

It is no surprise, then, that policymakers from both left and right are clamouring to promote the ‘John Lewis economy’. But which policy levers, if any, are effective?

This report analyses the development of three notable clusters of employee-owned firms in Europe and the US. It argues for a new policy approach – one that harnesses the power of norms and personal networks – to unleash a new wave of local ownership.

A local approach to employee ownership

The report argues that there are three reasons to shift towards a local approach to the promotion of employee ownership.

1. Evidence shows that employee ownership tends to cluster in certain regions and cities, usually as a result of some combination of local culture, knowledge networks and ‘anchor’ institutions. Understanding the development of the employee-owned sectors means understanding these local dynamics.
2. National, ‘top-down’ attempts to develop economic clusters – of high-tech firms or entrepreneurial enterprises, for example – have a poor record of success. The evidence for what works in terms of promoting clusters is still developing, so encouraging a multiplicity of policy experiments designed and run locally in different areas, with plenty of experimentation and evaluation, is likely to be the most fruitful approach.
3. Many of the economic and social benefits of employee ownership will be felt at a local level. Concerted action from individuals, associations and institutions can promote further growth of employee-owned firms, especially in those areas where some cultural and/or institutional supports already exist, and where policy will therefore be working with the grain of the local economic environment.