Book Review: In the Company of Owners by Joseph Blasi, Douglas Kruse, and Aaron Bernstein

This important new book (published by Basic Books; list price $27.95) makes a persuasive case that ownership needs to be shared more broadly. According to the authors, "CEOs and a thin layer of other executives and mangers in corporate America own a collective total of about 1.2 billion options today," or about 10% of all outstanding corporate shares, worth $80 billion if exercised. Yet the authors conclude that there is no evidence that this embarrassment of riches for these top executives has paid off for shareholders, their companies, or their employees.

Blasi, Kruse, and Bernstein believe there is a better way, what they call "partnership capitalism," a system in which ownership is disbursed broadly and in significant amounts to all employees through options, ESOPs, or other mechanisms. That equity sharing needs to be joined by sharing decision making about how work is performed. This is not just an ideological argument. The authors looked at every significant study of broad ownership models and found that, summing up all the studies of the last two decades, broad ownership boosts productivity 4%, shareholder return 2%, and profits 14% over what would otherwise have been expected. This is despite the much-feared dilution that ownership sharing creates; shareholders, they say, would be wise to share.

The authors are well positioned to write this book. Joseph Blasi is the dean of academic researchers in employee ownership in the U.S., having been actively involved in the field since the 1970s. Doug Kruse, his colleague at Rutgers is considered one of the leading, if not the leading, researcher on incentive compensation systems of all kinds. Aaron Bernstein is a long-time writer for Business Week on labor issues.

The book presents one of the most comprehensive and compelling arguments to date about why sharing ownership and workplace decision-making are important and productive ideas for the American economy. It deserves a wide readership.