Beyond the Corporation

Erdal ran his family's paper business in Scotland, converted it to employee ownership, and then took a doctorate studying the effects of employee ownership on the communities where the firms operate. This book combines both.

The research is the distinctive part. Erdal studied three towns in northern Italy with different levels of employee ownership: Imola, where cooperatives account for a large share of employment, Sassuolo, where they account for almost none, and Faenza, in between. He compared health, education, crime, social participation and other outcomes across the three, controlling for what he could, and found better outcomes on most measures where employee ownership was more prevalent. He argues the mechanism runs through reduced income inequality, greater control over one's own work, and stronger local commitment by firms whose owners live in the community.

The practical material covers his own conversion of Tullis Russell to employee ownership, the mechanisms available including employee benefit trusts and share schemes, the valuation and financing problems in converting a company, and cases including Mondragon in Spain, Baxi in Britain, and the John Lewis Partnership.

His general argument is that employee ownership improves productivity as well as social outcomes, and that the obstacles are not economic but arise from the difficulty of the transition and from the absence of institutions supporting it.

The Italian study is a comparison of three towns and cannot establish causation, since the towns differ in ways beyond ownership structure. Erdal is an advocate who converted his own company, and the book argues a position. The practical material on conversion mechanics is useful and comes from experience.