Study shows the ‘John Lewis economy’ is alive and well in Scotland

13 March 2014

Research published today has found that employee-owned firms in Scotland perform well in relation to conventionally structured businesses on employment, sales and productivity. 

The study, undertaken by a team from the University of St Andrews, the University of Stirling and Edinburgh Napier University,  examined the growth performance of Scotland’s employee-owned firms compared to non-employee owned firms. The study marks the first time employee-owned firms in Scotland have been examined in-depth by academic researchers. 

The UK and Scottish governments have strongly backed the view that employee-owned businesses are an effective mode of corporate governance to achieve business growth. Indeed, members of the UK government have been frequently extolling the virtues of the so-called ’John Lewis economy’.

Dr Ross Brown from the University of St Andrews, lead author of the paper, said: “The John Lewis economy is alive and well in Scotland. However, it appears that it is small dynamic SMEs who are most eagerly embracing the employee-ownership model in Scotland.” 

“Scots employees appear to be very successful capitalists and employee involvement seems a very good recipe for the success of these businesses.” 

Professor Ronald McQuaid, Professor of Work and Employment at the University of Stirling and co-author of the report, said: “These findings largely mirror other research undertaken elsewhere in the UK and abroad and further strengthen the evidence base concerning the growth performance of employee-owned firms.”

Professor McQuaid claimed the findings suggest that “support for fast growing employee-ownership firms is likely to lead to benefits throughout the Scottish business community.”

Professor Robert Raeside from Edinburgh Napier University, another of the study’s co-authors, said: “The performance of Scottish employee owned businesses is generally superior to their counterparts on a number of different variables.  In terms of their employment and sales growth employee owned firms do better than non-employee owned firms.” 

In recent years there has been considerable growth in the number of employee-owned firms in Scotland. There are now around 45 employee-owned firms headquartered in Scotland which together employ around 2,500 workers. The vast majority of these firms are small and medium-sized enterprises (SMEs). Recent examples of firms becoming employee-owned include AquaScot, Clansmen Dynamics, Voice Technologies and Woollard & Henry. 

The findings from the study were published this week by the respected Fraser of Allander Quarterly Economic Commentary. 

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