From Robert Whitcomb’s “Digital Diary,’’ in GoLocal24.com
‘Time and time again a local and highly successful small or medium-size business is bought by a much bigger enterprise from far away and then the jobs at the new local subsidiary are slashed, as are some of its other resources, such as charitable giving, that had benefited the host community.
One way to keep more of such companies locally based is to introduce employee stock-ownership plans, which tend to keep companies headquartered where many of their original employees live. Thus it was good to hear that the Massachusetts Office of Business Development plans to revive the state Office for Employee Involvement and Ownership (EIO); the agency was closed in the Great Recession.
Massachusetts and even Rhode Island are famous as birthplaces of dynamic companies, some of which grow to be very big but many of which end up being bought up by enterprises from far away that have little concern for the original loyal employees who helped get the firms off the ground.
There are various ways to launch employee-stock ownership plans, including bank loans to finance the creation of the plans. The plans could then buy a percentage of (or all of) these closely held companies’ stock, which in many cases would be owned by the founding entrepreneurs who want to retire or otherwise move on.\
Employee stock ownership can also address, in a small way, income inequality by spreading out profits earned by successful companies. In any case, it keeps more wealth in places where companies are founded, and is more likely to keep their morale, and thus productivity, high.
Communities are usually far better served with companies whose managers and other employees feel a commitment to their communities than with ones whose far-off owners just see their subsidiaries as pieces on a chess board.