Want to Foster Innovation? Try Shared Capitalism

A lot of talk has always been going on how to foster the innovation in technology employees and companies. I’d like to take a fresh look at the issue and offer a new way to release the power of innovation in your people and company.

Research shows that introducing Shared Capitalism into your company is a powerful to maximize innovation.

Shared Capitalism means expanding the circle of beneficiaries of corporate and economic growth, and the key tool to achieve this is partial or full employee ownership, directly or indirectly, of companies.

For example, this means that in startups, shares are being allocated to as many employees as possible, beyond the two or three founders.

Research: employee ownership drives innovation

The fact that employee ownership tends to foster innovation has already been proven in 2012. The UK government has released a report titled “The Employee Ownership Advantage“, based on two datasets. One is a survey of 41 employee-owned businesses, and the second is published financial data of 49 employee-owned businesses 204 non-employee owned businesses in the UK.

Based on the survey, the researchers’ conclusion was clear-cut: “our data shows that employee-owned businesses are more likely to support pioneering of innovations compared to non employee-owned businesses.”

Shared Capitalism and employee ownership foster innovation in many ways, but let me focus on three important ones. In order to innovate, the employee has to feel engaged, to feel safe enough to take risks and to expect a personal financial gain. Shared Capitalism is an effective means to ensure each one of these drivers.

Employee ownership, employee engagement and innovation

First, employee ownership creates employee engagement, which naturally drives employees to innovate. This was proven in the book Company of Owners by Blaski, Kruse and Bernstein (2003). The researchers surveyed the 100 largest internet corporations, and found out that the combination of Shared Capitalism and participative culture drove both employee engagement and innovation.

Job security, job satisfaction and innovation

Second, in order to innovate, employees have to feel secure enough to take risks, and this critical psychological infrastructure is laid by employee ownership. According to the British Employee Ownership Impact Report, “there is clear evidence to demonstrate that job security, job satisfaction, and productivity are significantly higher in employee owned businesses compared to traditional companies.”

Third, employee ownership is the most direct way to ensure personal financial benefits for the innovative employee. Naturally, when employees know that they will gain from their ideas, they will tend to innovate.

On top of all that, the mere fact that the company introduces an innovative format such as Shared Capitalism sends a clear signal to the whole organization that the management walks its talk in regard to innovation.

In summary, in the vast discussion on drivers of innovation, Shared Capitalism is an overlooked but ideal tool to nurture innovation.

PrivatEquity.biz’s Team

Read more about Shared Capitalism:

Why Shared Capitalism Can Transform Economies


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