Work in progress
Co-authored with Avner Ben-Ner
Technological change has driven increased automation in all stages of the value chain, from logistics to design, material processing, assembly, quality control, delivery, customer service, and everything in between. Different forms of automation may differentially affect the demand for workers at various skill levels. Some forms of automation substitute for work done typically by low-skilled workers but require complementary work of high-skill workers, whereas other forms may reduce the demand for high-skill workers. What do ESOP firms, where employees can own part or all of the firm, choose regarding different types of automation?
By granting ownership to workers, ESOP allows the potential to gain a slice of future profits and aligns the interests of both parties (employee owners and other shareholders). Employees are also provided a representation of their voice through an ESOP trustee and committee. Thus, the adoption of technologies by such firms may be different from that of other firms. Those that advance worker well-being, such as financial returns, employment stability, workplace safety, and job satisfaction may be more likely to be chosen. Using difference-in-differences and discrete-time hazard models, the paper compares the adoption of industrial robots and artificial intelligence in ESOP and conventional firms in U.S. manufacturing (the second largest sector with ESOP firms) matched by size, public/private status, industry, and commuting zones. The analysis is at the firm and establishment levels.
Results indicate that establishments in employee-owned firms exhibit a significantly greater propensity to deploy industrial robots and artificial intelligence than similar plants in conventional firms. Employee owners embrace automation because of the gains from financial returns, as shown by the positive relationship between plan assets per participant and technology adoption propensity. Ownership affords them a voice and power to protect their interest in sustaining employment and capturing productivity returns. The presence of institutional channels for worker voice and profit-sharing enshrined in ESOP legal rules and regulations appears pivotal in realizing mutual gains from manufacturing modernization.
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Co-authored with Avner Ben-Ner and Ainhoa Urtasun
Given a particular product to produce, firms have several alternative production technologies from which to choose. This paper examines the effect of production technologies, directly and indirectly through complexity and task interdependence, on outcomes essential to the organization of work. Our study uses online job vacancy postings in the U.S. manufacturing sector during 2017-2021 to analyze technical occupations (i.e., engineers, technicians, and operators) in plants that implement one of six primary technologies: subtraction, forming, molding, additive manufacturing, chemical, and assembly. Controlling for different forms of automation, location, and other factors, we find that the differences in the division of labor, specialization, and span of control among technologies are driven by differences in complexity. Additive manufacturing, chemical, and assembly are technologically more complex than forming, molding, and subtraction, and, as a result, they need more jobs to be designed, more tasks and skills to be bundled into a job, and fewer employees to be overseen by a manager. Moreover, each technology exhibits a distinct pattern of two forms of task interdependence—reciprocal and sequential, and therefore the effects on the three outcomes are more nuanced.
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Co-authored with Dadang R. Sunandar
Most theories and empirical studies of employee ownership explain the relationship with performance as an outcome, and employee well-being positioned as a mediator (Goldstein, 1978; Klein, 1987; Aitken and Wood, 1989; Pierce et al., 1991; Connelly et al., 2010). Those that treat employee well-being as a focal construct focus on a particular form of ownership, well-being measure, industry, or country, or view it from diverging theoretical lenses. Surprisingly, no studies have synthesized them into a coherent story despite employee-owners being the focal actor and around 25 million employees being covered in any form of employee ownership program (e.g., ESOP or worker cooperative) in the U.S. alone. In this study, we aim to integrate theories and empirical findings from multiple fields on the effect of employee ownership on broad measures of subjective and objective well-being, from satisfaction, compensation, work-life balance, mental and physical health, job security, career opportunity, workplace safety, to turnover.
Work in the preliminary phase (ideation, data collection, and preliminary findings)
Are Employee-Owned Firms Luddites? Effects of Ownership on Adoption of Robots and Employment after Adoption
Co-authored with Avner Ben-Ner and Ainhoa Urtasun
This paper evaluates whether firms with Employee Stock Ownership Plans (ESOP) – employee-owned firms – exhibit “Luddite” opposition toward manufacturing automation adoption compared to conventional firms. Leveraging data about robot adoption between 2010-2022 for 34,000 U.S. manufacturing plants and over 8 million job postings, we use logistic regression to estimate the likelihood of adoption and difference-in-differences analysis to assess the effect of adoption on subsequent hiring of workers in various occupations among adopting and non-adopting plants.
Results indicate that plants in employee-owned firms exhibit a significantly greater propensity to deploy industrial robots than plants in conventional firms. This contradicts the intuitive expectation that employee-owned firms will resist automation more vigorously to protect jobs. Moreover, we find that unionized conventional plants are less likely to adopt robots as compared to their non-unionized counterpart, in line with the Luddite tradition and the extremely limited empirical evidence on this matter (Noble 1986). In contrast, unions did not seem to have any effect on plants in employee-owned firms; instead, the propensity to adopt robots was even stronger when ESOPs were introduced through union-management collective bargaining agreements.
Empirical evidence suggests that plants that adopt robots increase the hiring of new workers in all occupations as compared to non-adopters, shift their workforce composition away from other occupations (e.g., HR, sales, and finance) towards technical occupations, and gain market share (Adrianto et al. 2024b). In this study, we find that plants in conventional and employee-owned firms increase external hiring following the adoption of robots, but the effect for the latter is more limited after size differences are removed. Moreover, the compositional shift is only observed within conventional firms. Since employee-owned firms advance worker well-being (i.e., satisfaction and safety) more than conventional firms (Adrianto et al. 2024a), they will share the benefits of technological upgrades with their workers more than conventional firms. Hence, our findings indicate that employee-owned firms have more stable employment. They protect jobs by limiting new external hires in favor of incumbent workers, and therefore there will be no union or worker opposition against automation.
In sum, contrary to “Luddite” expectations, employee-owners embrace automation because ownership affords them a voice and power to protect their interest in sustaining employment and capturing productivity returns. The presence of institutional channels for worker voice and profit-sharing enshrined in ESOP legal rules and regulations appears pivotal in realizing mutual gains from manufacturing modernization.
Are employee-owned firms more ethical? Employee ownership and environmental, social, and governance impacts
In ESOP firms, employee-owners have a longer-term perspective than external shareholders since they can realize the returns from stock ownership only when they leave the company. This poses two consequences. First, they may choose organizational policies that ensure operational sustainability. Second, they may prioritize their (selfish) well-being instead of that of external parties (i.e., external shareholders, customers, and society). In this study, I test the two predictions. I compare public employee-owned firms with public conventional firms with respect to their ratings on the long-term commitment to socially responsible investments and ESG investment standards, and the levels of emissions and environmental violations.
Does automation make the workplace more equitable? Examining the effects of emerging technologies on gender and race
Automation reduces physical strain in labor-intensive jobs, thus broadening the opportunities for jobs that were predominantly occupied by men into those that women and people with disabilities can enter. For instance, robots and automated systems substitute manual and physically demanding tasks, alleviating barriers related to physical strength. Automation also enhances process transparency and standardization, facilitating more objective performance evaluations and reducing potential biases against minority groups. In this study, I investigate the effect of change in technology intensity in the same local labor market and industry on the likelihood that women and people with disabilities enter occupations with high automation.
Artificial intelligence and skill complementarity and substitution: Evidence from job postings
Co-authored with Avner Ben-Ner
In this paper, I investigate the evolution of AI capabilities and how they complement and substitute human skills over time. I study AI and other complementary technologies (e.g., robotics, specialized software, and specialized machinery) as a system, leveraging the wealth of information on skill requirements from online job postings and other sources.
The effect of the anti-abuse rules for S corporations on the development of ESOP in the US
The year 2001 marked the beginning of a series of regulations that dealt with abuses of the ERISA Law related to ESOP tax benefits. In 2001, Congress enacted legislation to address both actual and anticipated situations that could lead to an inappropriate deferral or avoidance of tax in certain S corporation ESOP structures. New criteria were added to limit the tax benefits of ESOPs maintained by S corporations to those in which the ESOP is designed to provide a meaningful benefit to a broad base of rank-and-file employees. March 14, 2001, marked the date after which all S corporation ESOPs must comply with the new rules. This study explores the effect on corporate behaviors in response to the more limiting ESOP regulations.
Risk tolerance: Do employee-owned firms hire workers that fit with the ownership culture?
Previous studies show that employee-owned firms have distinct human resource practices that distinguish them from conventional firms (e.g., group-based incentives and higher autonomy). One highly cited such practice is the compensation package in employee-owned firms in the form of ownership shares, which tends to be riskier than base salary. As such, ESOP firms may want to hire employees who fit the “risky” ownership culture and think and act like owners, and only those who have a high tolerance for risk will be willing to join these firms. I investigate whether employees in employee-owned firms are more risk-tolerant than those in other firms with no such plan.
