A recent study conducted by Rutgers University Institute for the Study of Employee Ownership and Profit Sharing and commissioned by the Employee-Owned S Corporations of America (ESCA) found that multinational employee stock ownership plan (ESOP)–owned companies appear to gain competitive advantages in international markets from being employee-owned.
The study, “Ownership Beyond Borders: New Research on S ESOPs with International Workers,” interviewed executives at seven different S corporation ESOPs and other professionals in the ESOP space.
The interviews asked three broad questions of the participants:
- How do international employees benefit from working for U.S. ESOP companies,
- Do ESOP companies include international employees in equity ownership or ownership-like opportunities, and
- How do multinational companies themselves benefit from extending their ownership cultures globally?
Key findings from the study include1:
- International employees benefit from working for U.S. ESOP companies through increased financial security and enhanced engagement at work. In one instance described in the report, employee ownership was “lifesaving,” allowing workers to escape geopolitical turmoil by providing needed resources to help establish themselves in a new home.
- It appears that multinational ESOP companies obtain competitive advantages in international markets from being employee-owned. Respondents reported numerous benefits regarding employee productivity, recruitment and retention, corporate reputation, and customer loyalty.
- Due to legal and regulatory barriers, non-U.S. workers may be unable to participate in an ESOP directly. Instead, these ESOP-owned companies have utilized other structures to ensure that non-U.S. employees have opportunities to benefit financially from company success. These include benefits such as synthetic equity plans and profit-sharing arrangements.
- ESOP companies are strongly committed to building companywide cultures of ownership and excellence that go beyond borders and include non-U.S. workers. Many create and employ programs and initiatives to promote collaboration and cultivate an “ownership mindset” globally.
ESCA also published a full executive summary of the study results for reference. These findings reinforce that ESOP-owned companies provide a multitude of benefits for both U.S.-based and international employees. While ESOP companies with international employees may face unique challenges in building a culture of ownership that extends across borders, interviews with executives from more than a half dozen S corp ESOP companies with a worldwide presence indicate that doing so can be worthwhile.
To learn more about ESOPs, please contact our professionals at Forvis Mazars.
- 1 “Rutgers Study Shows the Effects of Employee Ownership Can Transcend Borders,” esca.us, 2024.