In his more than 30 years of studying shared capitalism, Professor Takao Kato says there is a strong consensus among scholars that an employee-ownership model is most successful when employees have a true voice \u2014 not just a financial stake \u2014 in company decisions.<\/p>\n\n\n\n
Kato, W.S. Schupf Professor in Far Eastern studies and professor of economics, is building on those decades of research by studying the day-to-day work of a Colgate alumnus while helping to guide a new generation of researchers in exploring the effects of employee ownership. <\/p>\n\n\n\n
Kato\u2019s career took a turn in 1995, when he co-published an article in American Economic Review<\/em>, providing the first rigorous evidence of the positive productivity effects of employee ownership. Kato says that it was the first time people really started to pay attention to his research.<\/p>\n\n\n\n The findings were produced in collaboration with Hamilton College Professor of Economics Derek Jones, and they showed that, if a company introduced employee ownership, employee productivity increased by about 4\u20135%.<\/p>\n\n\n\n \u201cIt\u2019s a very simple idea,\u201d Kato says. \u201cIf your pay or wealth is tied to the company performance or the well-being of the company, you\u2019re going to work harder and smarter.\u201d Under a shared-capital system, employees start thinking about how they can improve productivity.<\/p>\n\n\n\n \u201cI\u2019ve been doing this for three decades now, and all the evidence I have acquired so far points to positive or neutral effects, but not negative effects,\u201d he says. <\/p>\n\n\n\n Jason Wang \u201923, one of Kato\u2019s students, says he first became interested in shared capitalism after he took Kato\u2019s class The Japanese Economy. Several Kato classes later, Wang is now researching the intersection of economic justice and shared capitalism. Most recently, he has been analyzing unique longitudinal data to provide new evidence on the effect of shared capitalism on wealth for workers with and without disabilities. This effort informed both a labor seminar paper and his honors thesis.<\/p>\n\n\n\n Wang\u2019s findings show that, when shared capitalists become disabled, \u201cthey do not lose as much wealth as non\u2013shared capitalists, pointing to shared capitalism as an effective mechanism to help workers with disabilities,\u201d he says.<\/p>\n\n\n\n Wang notes his self-interest in the study of shared capitalism. \u201cEventually, I\u2019ll be a worker and I want to work in an environment where I can accumulate wealth and where I can be treated fairly,\u201d he says. \u201cI think that\u2019s what I really get from shared capitalism. It\u2019s a program that can benefit all employees.\u201d<\/p>\n\n\n\n Daniel Goldstein \u201989 lives shared capitalism as president and CEO of Folience, a holding company with more than 500 employees, based in Cedar Rapids, Iowa. He initially reached out to Kato after seeing the professor\u2019s name in the program of the 2020 Kelso workshop at Rutgers, and Kato recently visited Goldstein in Cedar Rapids to further their academic-practitioner collaboration.<\/p>\n\n\n\n Folience was originally established in 1884 and began transitioning to employee ownership in 1986, resulting in 100% employee ownership by 2012. Goldstein joined the company in 2016 and was instrumental in diversifying its business portfolio and transforming its employee ownership culture, embodied in the company\u2019s employee stock ownership plan (ESOP). In 2022, Folience was named the National Employee-Owned Company of the Year by the ESOP Association in recognition of the company\u2019s continued commitment to employee ownership. <\/p>\n\n\n\n ESOPs are governed by some of the same laws and regulations as 401(k) plans. But ESOPs offer additional advantages to businesses, owners, employees, and communities \u2014 including increased employee engagement, because employee-owners share the rewards and risks of Also, most ESOPs don\u2019t require an out-of-pocket contribution from employees, and they help to narrow the wealth inequality gap, with ESOP company employees tending to both earn higher wages and greater savings than those in non-ESOP companies \u2014 findings supported by decades of Kato\u2019s research.<\/p>\n\n\n\n When it comes to generational transition of ownership in companies, a business will often be handed down to heirs, sold to a private equity company, or end up closing, according to Goldstein. But, through his work on the ESOP Association Board of Directors, he hopes to advocate for shared capitalism and encourage retirement-ready business owners to consider a different option.<\/p>\n\n\n\n \u201cThis is absolutely capitalism. It\u2019s not a handout, but a much better path,\u201d Goldstein says.<\/p>\n\n\n\n Goldstein also notes that broken companies aren\u2019t fixed by employee ownership, and the leadership and employees all have to be educated and engaged for it to be successful.<\/p>\n\n\n\n \u201cGetting your employees to focus on building their retirement is a challenge. It requires a lot of education,\u201d he says. <\/p>\n\n\n\n Kato agrees and says there is a strong consensus among scholars that an employee-ownership model is most successful when combined with other supporting programs.<\/p>\n\n\n\n \u201cIt\u2019s vital that employees have an effective mechanism to share their ideas and also that a company makes sure to adequately educate and train employees,\u201d Kato says.<\/p>\n\n\n\n Goldstein continues to be a strong advocate for shared capitalism and ESOPs, testifying before Congress in 2020 about small-business benefits and challenges as part of his ongoing advocacy work. Kato says, as a researcher, his approach is completely neutral, based on statistical analysis: \u201cIf the evidence tells me this doesn\u2019t work, then I would say so.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":" Research into employee ownership connects a professor, student, and alumnus<\/p>\n","protected":false},"author":1263,"featured_media":12980,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_hide_featured_image":false,"_jetpack_featured_image_duplicate_dismissed":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[8],"tags":[1722,1723,277,1724,267],"coauthors":[1721],"class_list":["post-12976","post","type-post","status-publish","format-standard","has-post-thumbnail","category-discover","tag-capitalism","tag-economic","tag-economics","tag-hamilton-college","tag-research"],"jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/palXSH-3ni","amp_enabled":true,"jetpack_featured_media_url":"https:\/\/news.colgate.edu\/magazine\/wp-content\/uploads\/sites\/6\/2023\/08\/defdef_shared-capitalism7Resize.jpg","_links":{"self":[{"href":"https:\/\/news.colgate.edu\/magazine\/wp-json\/wp\/v2\/posts\/12976","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/news.colgate.edu\/magazine\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/news.colgate.edu\/magazine\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/news.colgate.edu\/magazine\/wp-json\/wp\/v2\/users\/1263"}],"replies":[{"embeddable":true,"href":"https:\/\/news.colgate.edu\/magazine\/wp-json\/wp\/v2\/comments?post=12976"}],"version-history":[{"count":4,"href":"https:\/\/news.colgate.edu\/magazine\/wp-json\/wp\/v2\/posts\/12976\/revisions"}],"predecessor-version":[{"id":13044,"href":"https:\/\/news.colgate.edu\/magazine\/wp-json\/wp\/v2\/posts\/12976\/revisions\/13044"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/news.colgate.edu\/magazine\/wp-json\/wp\/v2\/media\/12980"}],"wp:attachment":[{"href":"https:\/\/news.colgate.edu\/magazine\/wp-json\/wp\/v2\/media?parent=12976"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/news.colgate.edu\/magazine\/wp-json\/wp\/v2\/categories?post=12976"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/news.colgate.edu\/magazine\/wp-json\/wp\/v2\/tags?post=12976"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/news.colgate.edu\/magazine\/wp-json\/wp\/v2\/coauthors?post=12976"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}A New Generation of Research<\/strong><\/h2>\n\n\n\n
Putting Shared Capitalism Into Practice<\/strong><\/h2>\n\n\n\n
\nstock performance.<\/p>\n\n\n\nSharing the Exploration<\/strong><\/h2>\n\n\n\n