Psychological Ownership: Effects and Applications

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Introduction >
Definition >
Dimensions >
Organizational Applications: Management Practices to Foster PO >
Conclusion >
Works Cited >


Introduction

What you need to know

Psychological Ownership of a job or organization by an employee is a feeling of having a stake in it as a result of commitment and contribution. Managers who recognise the ways in which Psychological Ownership may have positive and negative effects can ensure that both employee and organization benefit from enabling employees to increase their effectiveness; this is a powerful tool. Here is what you need to know:

  • Psychological ownership is often derived from learning about an organization and investing time and effort in it.

  • Psychological Ownership is associated with positive outcomes for the organization, including increased motivation, company stewardship, and loyalty. Positive Psychological Ownership entails reciprocity between organization and employee.

  • However, it can also have negative effects, including territoriality and a reluctance to share knowledge. Leadership and management can affect these outcomes.

  • Psychological Ownership can be fostered in an organization by enabling employees to contribute to their work creatively, learning about it, and contributing to decisions.

  • Formal ownership of shares or profits may increase Psychological Ownership, but not necessarily.

Abstract

Psychological ownership (PO) can be an important tool for organizations to encourage productivity and certain desirable employee behaviours. In the organizational literature, PO is the sense of ownership over a “target”: not only physical objects, but a concept, a job, or the whole organization. It can express itself in positive ways, such as higher motivation; but it also has potentially negative effects, such as territoriality. This briefing looks closely at the literature to understand the various dimensions of PO, and how organizations can foster the positive aspects of it to help improve employees’ experiences in the workplace by fostering morale while contributing to productivity. By bringing together the most relevant research on the topic, this briefing also highlights areas that are still underdeveloped, such as collective PO, the role of culture, and the employee perspective.

Preamble

The study of psychological ownership (PO) analyses individuals’ behaviour when they feel that they possess an ownership stake. A sense of ownership – the feeling that this is my neighbourhood, for example – need not be tied to actual ownership rights or even the possibility of them. PO is about identification, control, responsibility, and the desire to belong.

PO is a phenomenon that was originally defined outside of the organization and management literature but has since been applied to the work environment, first and most notably by Pierce et al. (2001). It is associated with a range of positive behaviours including increased motivation, company stewardship, and loyalty; but it also has potentially negative effects, such as territoriality and failure to delegate responsibility. Overall, understanding PO can help promote the positive aspects that benefit both the individual and the organization while avoiding the negatives; and various studies have sought to identify management practices to this effect.

This review first looks at the management and organizational literature that defines what PO is – and what it is not. It explores the roots and routes of PO and key dimensions such as collective ownership and culture, as well as efforts to measure it. This note then turns to the practical side: organizational applications of PO and suggestions of how to foster it.

The Mutuality in Business project, a partnership between Said Business School and Mars Catalyst, is interested in the ways in which different forms of ownership affects relationships between employers and employees. This paper is one of a series examining different forms of ownership of firms and the jobs within those firms, whether formal, legal ownership, or a feeling of possession towards a job or a firm in which the employee is invested. We consider whether PO can be part of a mutual relationship between firm and employee, and, if so, how each may benefit from the relationship.

Introduction >
Definition >
Dimensions >
Organizational Applications: Management Practices to Foster PO >
Conclusion >
Works Cited >


Definition

Psychological ownership is the feeling of possession over a target – an object, concept, organization, or other person – that may or may not be supported by formal ownership. This ownership not only defines the object (“that is my team”), but also, more importantly, the owner (“my team is Oxford United; I am an Oxford United fan”). Individuals become invested in the target of ownership as an expression of who they are and that to which they belong (see Dittmar, 1992 and Pierce et al., 2001). The individual has a personal stake in the performance of the object, as its performance reflects upon his or her identity (Pierce et al., 2001). This leads to a feeling of possessiveness, a desire to retain ownership, which can be manifested positively or negatively, and a mental attachment to the target (Pierce et al., 2001).

Measurement

Based on this definition, attempts have been made to measure PO; however, this is a complex undertaking with limited comparability across different scales due to the inconsistency of variables used. Van Dyne and Pierce (2004) created a standard 7 item measure for PO using scales that indicate the level of possessiveness over the target. Over the past 10 years, 18 empirical studies have used versions of this measure, although some of them use varying criteria (Dawkins et al., 2015). Two other studies built on this measure using 12 items; Avey et al. (2009) used a 16 item scale; 5 other studies used an older measure by Pierce, Van Dyne and Cummings (1992); and 8 studies used entirely different measures of PO (Dawkins et al., 2015).

Moving forward, it will be important to improve comparability across these scales and, if possible, to harmonise them into one that can work in different cultural contexts. It is interesting to note that one reason for other authors developing their own scales is the difficulty of translating the Van Dyne and Pierce (2004) criteria into other languages and cultural settings. Furthermore, most of these studies are cross-sectional, and longitudinal studies will help researchers understand how it changes over time, in new job roles, and as tenure increases. They will also shed light on how organizational practices affect PO.

Introduction >
Definition >
Dimensions >
Organizational Applications: Management Practices to Foster PO >
Conclusion >
Works Cited >


Dimensions

Although organizational PO has been defined as a concept, its dimensions, drivers, and results are less immediately clear. Why does PO exist and how does it come about? What positive and negative outcomes are correlated with PO? And where does our current understanding of the concept fail us? These questions are useful from both a theoretical and practical point of view as the theory continues to develop and managers seek to benefit from the positives and avoid the negatives aspects of PO.

Why and How PO is developed

Pierce et al. (2001), in their seminal text on PO in organizations, identified three “roots” that contribute to an individual’s fundamental desire for ownership: efficacy, self-identity, and belonging; and three “routes” of how psychological ownership is formed: control, investment of self, and intimate knowledge of the target. While the authors recognise PO’s importance in satisfying “certain human motives, some of them genetic and others social in nature” (2001: 300) and agree that there is not a clear empirical path to PO, these have been widely accepted as the main reasons that it exists and have been used and expanded upon in more recent literature (Avey et al., 2009; Dawkins et al., 2015).

Efficacy is the ability to successfully produce a result, and is linked to the desire for control (Pierce et al., 2001). The satisfaction of changing an outcome through one’s own actions is found even in children (Furby, 1991 in Avey et al., 2009). The sense of efficacy can both foster a sense of ownership, and come from it: when an individual owns something, he or she is able to change or manipulate it (Pierce et al., 2001), further strengthening the feeling of ownership of a target where the person has invested effort. Thus, this innate desire to affect outcomes combines with the ability to influence a task, project, or organization to foster a feeling of ownership. Avey et al. refer to this root as “self-efficacy” by linking it explicitly to the individual psychology of efficacy, which they explain as: “I need to do this task, I can do it, and I therefore own the responsibility for achieving success” (2009: 177).

People identify themselves through the things over which they feel ownership. A racing car driver may define himself by the fact that he drives cars (Avey et al., 2009). Over time, this can lead to a sense of ownership over the cars even if he does not personally own them. This feeling of self- identity means that the car and his sense of self are tied up together, ensuring that he works hard to keep the cars in top form and makes recommendations to optimise them; but he may also be resistant to sharing responsibility over them with others and could become territorial. In addition to objects, this type of self-identity can be felt toward a purpose, job, team, or organization (Rousseau, 1998 in Avey et al., 2009).

The desire to belong is an essential part of being human, and one that can be met through ownership. If an individual feels a sense of belonging at an organization or in a job role, he or she is thus more likely to develop PO (Pierce et al., 2001). This can be a reinforcing cycle in which the feeling of ownership helps solidify the sense of having a home or place. If this human need to belong is met by the organization, it can intensify the employee’s relationship with the organization.

These roots are explanations of “why” PO occurs. Such human motivations and sensations can lead to the desire to own something; yet on their own, they are not sufficient to create PO. The routes, on the other hand, explain “how” PO occurs, and can offer interesting perspectives to managers who wish to promote it.

Linked to the desire for efficacy, achieving control over a concept, object or job can lead to a feeling of ownership because of the ability to change the direction or outcome of the activity (Pierce et al., 2001). Having autonomy, high levels of responsibility and the ability to influence strategy, a project, job design, etc. can help foster PO for this reason (Pierce et al., 2001). The target of PO is not therefore necessarily a concrete object or physical space, but can also be a concept, a role within the organization, or the organization itself.

Investing the self in the target through time, energy, and interest is a strong way to lead to PO. Pierce et al. (2001) draw from 17th century philosopher John Locke’s idea that people feel that they own their labour and the things that they produce or create. Even if an organization maintains legal ownership over intellectual property, for example, if an individual spends significant time on a product, team, job, etc., then PO is likely to develop (Pierce et al., 2001). Similarly, building an intimate knowledge of the target through long association or personal interest can create a situation in which the individual feels a “fusion” with it (Beaglehole, 1932 via Pierce et al., 2001). By knowing the target extremely well, whether it is a project or the entire organization, the individual may feel ownership and assume certain rights and responsibilities.

Finally, accountability is described as both a path to PO and a result of it. Avey et al. (2009) contend the former: that it is “the implicit or explicit expectation that one may be called upon to justify one’s actions to other (Lerner & Tetlock, 1999: 255 via Avey et al., 2009: 177). They believe that PO manifests when individuals feel that they can be held accountable for the target of ownership and that they have the right to keep others accountable for their actions around it (Avey et al., 2009: 177). In the organizational context, a manager who is responsible for the success of a project will feel personally accountable for the outcome, but will also expect and require the participation and accountability of colleagues. By feeling this type of personal and managerial responsibility for the task, a sense of ownership for the outcome of the project can easily develop.

Pierce et al. (2001), on the other hand, see this feeling of accountability and, as a result, responsibility as a result of PO rather than a driver of it. When an individual feels ownership, it not only enhances his or her sense of accountability and responsibility but also perceived rights: they refer to this dual sense of accountability as the “expected rights and presumed responsibilities” associated with ownership, both real and perceived (2001: 2000). This has implications for management and governance of organizations since employees who feel PO may in turn require a stronger role in decisions affecting the target; managers who seek to increase PO should be aware that it comes with reciprocal and mutual responsibilities. For example, employees who have invested themselves in an idea or project may both wish to continue to contribute, which could be addressed through increasing employee voice and involvement in the decision making process.

Distinctions from Related Concepts

Job satisfaction, a positive attitude at work, or extra-role behaviours could all be indicative of an employee who feels strong ownership ¬– or of someone who is very committed (Lee and Suh, 2015). It is indeed hard to disentangle PO from responsibility felt by an employee who is expected to produce a good outcome as part of his or her job. Yet there are many concepts that are related to PO but are still distinct from it. A systematic review by Olckers and du Plessis (2012) found a number of positive employee feelings and behaviours correlated with PO:

  •  Organizational commitment (Mayhew et al., 2007)

  • Positive attitudes toward the firm (Wagner et al., 2003)

  • Financial performance (Wagner et al., 2003)

  • Employee retention and tenure (Mayhew et al., 2007; Sieger et al., 2011)

  • Job satisfaction (Mayhew et al., 2007)

  • Organizational citizenship behaviours (Ozler et al., 2008)

  • Extra-role behaviours (VandeWalle et al., 1995)

Organizational commitment is the desire to remain affiliated with a group, motivated by security, beliefs, and values or the “need” to stay (Pierce and Jussila, 2012). While these motivations could lead to or be the result of PO, there are many other possible drivers behind this feeling. The reason can be normative, with an employee’s morals and values dictating that they ought to behave a certain way based on obligation to the employer and/or cultural socialisation (e.g. anticipated gratitude) (Etzioni, 1991; Wiener, 1982). It can also be behavioural, if the individual considers that the financial or emotional cost of leaving due to, for instance, loss of pension or social relations at work is too high (Allen and Meyer, 1990).

Tenure has been found to have a positive relation with PO where agents are motivated by feelings of responsibility or duty, but no correlation with PO deriving from accomplishments and achievements. This does not tally with the concept that PO derives from the agent’s role in creating or contributing to the target. The majority of the research suggests that longer periods spent investing learning, effort, and time into the target increase PO. However, it is possible that if PO leads to rapid accomplishment or achievement, the longer-term PO effect is reduced.

All of these concepts are common outcomes of PO, but they can also be indicative of highly motivated employees. For example, an employee may decide to work long hours and put in additional effort due to factors such as pay, job security, co-workers – not necessarily from a sense of PO (Locke, 1976; Weiss, 2002). As summarised by Pierce and Jussila:

...an employee can want to stay in the organization, can be committed to the organization, can identify with the organization, but still not have a sense of psychological ownership for the organization. An employee can feel proud of an organization or can share similar values ...can experience an enhanced sense of self as a result of performance without feeling that the organization is his/her psychological property. (2012: pp. 28 - 29).

For an employee, PO is not always necessary for satisfaction in his or her work, but where it does exist, may enhance it. For the organization, PO is not therefore essential for the satisfactory performance of the employee’s work; however, where a company is able to foster PO, it is possible to develop a relationship where both benefit from the increased sense of accountability and commitment.

Formal Ownership

The relationship between formal or legal ownership and PO is complex, not least because “ownership” as a psychological phenomenon is complex, with psychologists, anthropologists, and philosophers among those researching the connections between possessions and the sense of self (Pierce and Rodgers, 2004). While legal ownership is recognised or even conferred by others, PO derives from the individual’s perception of ownership from a feeling of responsibility or accountability, or personal investment of time or effort. As Dawkins et al. point out, the legal recognition of ownership of property is upheld by a public system, which sets boundaries on ownership; PO is “self-derived” (2015: 1). As a result, PO is most commonly defined in contrast to legal ownership, although findings on this are mixed.

Intuitively, it is tempting to assume that formal ownership rights, such as those conferred by employee share options (ESOs), employee-owned companies, or profit sharing schemes would automatically increase the sense of PO (and productivity); however, evidence is mixed. Some studies have found that introducing such schemes can increase PO (Pierce et al., 1991; Buchko, 1992), but this is by no means a consistent result. McCarthy and Palcic (2012) found that shared ownership failed to foster PO or improve productivity. McConville et al. (2016) found that ESO had little effect on PO, and was seen simply as a form of investment. Buchko (1992) found that those employees who still left the company, despite owning shares in it, were those who felt they had little influence, despite their formal ownership. As outlined in section 2.1, without control over the target, it is difficult to feel PO, and the desire for efficacy remains unfulfilled.

Combining formal ownership with other practices, particularly the routes to PO (control, investment of oneself, and intimate knowledge of the target), reveals more consistent results than formal ownership on its own. Pierce and Rodgers (2004) show that formal ownership only enhances employee performance where it is accompanied by “employee participation in organizational decision making” (2004: 592). They distinguish between employee ownership from an “equity stake”, through formal ownership, and as a “form of governance”, where employees influence decision-making. Although the majority of firms with employee ownership experienced increased productivity, a few showed no improvement or even reduced profits (Pierce and Rodgers, 2004: 592). Those that improved productivity were those where employees took part in decision-making. Although shares in a company increase formal ownership and may increase employee motivation, without the sense of self-investment, formal ownership does not necessarily confer PO.

The fact that ESO does not consistently increase PO is explained by the interaction of formal ownership with the routes to PO: (i) a measure of control over the owned concept; (ii) an intimate knowledge of it, possibly having created or learnt it; and (iii) personal investment of time and effort into it. To be effective in building PO, Pierce and Rodgers (2004) show how ESO plans can enable parallel development of formal and psychological ownership:

...an employee ownership arrangement constructed around equity, information, and influence parallels these three routes. ...the individual’s financial ownership stake in the organization, in part, derives from investments of the self (e.g. tenure, hours worked, and performance) into the organization. (2004: 598)

McCloy et al. (1994) develop the idea of investing the self through learning the required skills and knowledge, then investing both time and effort. It has been suggested that employee ownership is both motivating (Pierce and Rodgers, 2004: 601) and enhances self-esteem (Rubenowitz et al. (1983), particularly where participation and ESO make employees feel valued. A striking example of the effect of employee participation is Pendleton et al.’s (1998) finding that participation was more strongly associated with a perception of ownership than shareholding. This cross-section of results suggests that combining some type of formal ownership with employee participation will optimise the conditions for PO.

Chi and Han (2008: 693) find that formal ownership is a route to PO (Figure 1) because practices associated with formal ownership, such as participation in decision-making and access to information, affect employees’ feelings towards the firm. Formal ownership affects employees’ perceptions of perceptions of distributive and procedural justice. Distributive justice, referring to the allocation of resources, can influence whether an employee feels valued and well-treated (Chi and Han, 2008). Procedural justice, or the way in which decisions are made, also affects an employee’s perception of control and having a voice (Chi and Han, 2008). In the case that formal ownership does not change employees’ perceptions of distributive and procedural justice within the firm, PO may not take root. As with Pierce and Rodgers (2004) and Rubenowitz et al. (1983), Chi and Han see formal ownership as leading to PO because it builds emotional ties with the company, here through perceptions of fairness and participation.

Figure 1: Links Between Formal and Psychological Ownership
[Source: Chi and Han, 2008.]

 
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Apart from actual profit sharing, however, the routes outlined in Figure 1 can lead to PO without formality. Access to information, influence in decisions, satisfaction with the distribution of resources and treatment by employers, are all ways to increase PO without introducing profit sharing – which, as previously mentioned, may in fact be ineffective on its own. As a result, and since conclusive results on formal ownership are still lacking, the importance of it remains in question. [1]

Collective PO

With respect to PO in an organization, the sense of ownership can be defined on the individual or group level. Individuals have been the main focus of the literature, with “how much do I feel this organization is mine?” as the question often used to evaluate PO (Lee and Suh, 2015). There is growing recognition however that collective psychological ownership (CPO) has a comparably important role in the workplace.

Dawkins et al. (2015) describe collective PO as an “emerging” construct that currently lacks empirical evidence. In theory, it has been characterised as the shift from “this is my company” to “this is our company” (Dawkins et al., 2015: 4). In order for CPO to be cultivated, individuals must feel the need for a “social identity” (Rantanen and Jussila, 2011: 141). They then must have or develop a “single and shared mind-set” on the “individual and collective rights and responsibilities” related to the target of ownership (Pierce and Jussila, 2010: 810; Rantanen and Jussila, 2011: 141). This social identity may be affected by tenure: an individual who has been with the organization a long time may feel individual rather than collective PO in a group of employees who have only recently joined (Dawkins et al., 2015). Therefore, facilitating CPO in a team with varying tenure is complex and would require the generation of the “shared mind-set” through other means.

While there is limited empirical evidence around CPO, some findings suggest that it can exist independently of individual PO. Henssen et al. found this when considering family firms, in which 17 percent of CEOs felt CPO (“this is OUR company”) and low individual PO (“this is MY organization”) (2014: 314). In other firms, the findings were reversed (Henssen et al., 2014). These findings are important since higher CPO from a CEO is linked to stronger stewardship behaviour, which can improve the overall working environment (Henssen et al., 2014). The authors further contend that by increasing autonomy and aligning interests between the family and the family firm a CEO promotes the sense of “our-ness”, which may have implications for building CPO amongst employees (Hensen et al., 2014: 316).

Job-Based vs Organization-Based PO

As previously stated, individuals can feel PO toward an organization as a whole or specifically over their job (Bernhard and O’Driscoll, 2011: 349), manifesting in different ways. While both forms of ownership are credited with generally producing positive effects for the organization as a whole, the main difference is that they transfer across contexts in different ways.

O’Driscoll et al. (2006) found PO felt towards an organization as a whole had a stronger effect than PO towards one’s own job on organizational citizenship behaviours (OCBs, extra-role behaviours that improve the environment or function of the organization). [2] Bernhard and O’Driscoll (2011) found that employees with high organizational PO in small, family-owned firms are less likely to intend to quit. However, this may not be the same for larger firms or those with shareholders; Peng and Pierce (2015) found the opposite, with job-based PO having the stronger effect. They suggest that for most employees in most companies, they feel closer to their job, and are more likely to be influenced by it, than the organization as a whole. They conclude that job-based and organization- based PO are unlikely to be symmetrical (2015: 155), since employees will have more control over their own job than the organization. Nevertheless, developing job-based PO is a potential route to organization-based PO (2015: 163), which is important for maintaining PO when job roles change.

Effect of Culture

Since the focus of PO is on the individual or group’s relationship with the workplace, changing the cultural context can complicate our understanding of its roots and routes. Dawkins et al. (2015) highlight that research around how culture can affect PO is lacking, although they hypothesise that collective PO may arise in cultures that are more collectivistic, while individual PO will be stronger in individualistic cultures. PO was first broadly theorised for Western culture, and is based on an individualistic premise that possessions are part of the expression of the self (see section 2.1). However, much of the more recent work in Asia, especially East Asia, is expanding the concept to less individualistic, more collective cultures. For example, Han et al. (2010) suggest that a Confucian philosophy both contributes towards employers sharing power with employees, and employees sharing knowledge through a sense of altruism.

Further research is required to understand the changing implications of PO across cultures. Just as PO can have different antecedents and results with different personalities, so too will the drivers and outcomes vary when understandings of the self and work change. This is important for all organizations, but particularly for multinational companies that have operations around the world.

Potential Negative Effects of Individual PO on Organizations

Much of the literature has emphasised the positive aspects of PO: good worker integration, stewardship, organizational citizenship, personal responsibility to remain informed, and sharing colleagues’ burdens, among others. The research, however, does not support a uniformly positive view of the concept – depending on the individuals’ motivations, PO can have negative consequences including resistance to (or promotion of) change, refusal to share, and alienation. Whether the outcome of PO is positive or negative largely depends on the individual but it can also be affected by the organization and leadership.

Drawing from regulatory focus theory, Avey et al. (2009: 174) divided PO into “promotion-focused” and “prevention-based” forms. Promotion-focused individuals tend to be goal-oriented whereas those who are prevention-based tend to do what is needed to avoid punishment. These two motivations can be directly linked to certain “constructive” or “defensive” behaviours (Avey et al., 2009: 174). For example, in the former case an individual may be open about sharing information over which they feel ownership because it will benefit the company. in the latter a person may be territorial about that information out of fear of change or loss of ownership (Avey et al., 2009).

Depending on how the individual experiences PO, it can positively or negatively impact organizational commitment, job satisfaction, organization-based self-esteem, work engagement, and intention to remain in the job (Dawkins et al., 2015). Van Dyne and Pierce (2004) found that individual PO is likely to result in extended employee roles beyond formal requirements. However, several studies found that neither job-oriented nor organization-oriented PO enhanced performance (including Mayhew et al., 2007; Van Dyne & Pierce, 2004; Wagner et al., 2003). Indeed, in their literature review, Baer and Brown (2012) summarised some of the studies that have analysed the potentially negative effects of PO for organizations:

  • Reluctance to share ideas with co-workers (Brown and Robinson, 2007; Webster et al., 2008)

  • Reluctance to share knowledge (Peng, 2013)

  • Rejection of new knowledge (Choi and Levine, 2004; Pierce et al., 2009)

  • Resistance to change (Baer and Brown, 2012)

Different managerial practices and leadership behaviours can encourage different expressions of PO. Yet even if the PO is promotion-focused, it can negatively impact the sense of self if the target of ownership is removed. As previously mentioned, two of the routes to PO are investment of self and intimate knowledge of the target. Attempts to remove psychologically-owned targets from the control of the agent are therefore likely to be met with resistance. An employee who has put time and emotional energy into a job, and who feels strong ownership as a result, may lose motivation if he or she loses a degree of control over the project. They may have to adjust their sense of identity and take time to develop a new sense of PO if moved to a new job or site. It is important for the health and benefit of employees and organizations that ownership is experienced and conveyed in positive ways; and that when a position or job function is changed or lost, the individual is supported.

While not directly addressed in the literature, the question of whether PO is good for an employee merits consideration. Even when manifested positively, the additional burdens and responsibilities taken on by the employee may open him or her up to exploitation by the organization. The perspective of the employee is largely absent from the literature, which leaves this important question unanswered.

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[1] For more information on the debate around formal ownership, see the excellent discussion in Olckers and du Plessis, 2012
[2] OCBs, their importance to organizations, and ways managers can promote them are discussed in detail in the MiB Briefing “Organizational Citizenship Behaviour: Definitions and Dimensions”.

Introduction >
Definition >
Dimensions >
Organizational Applications: Management Practices to Foster PO >
Conclusion >
Works Cited >


Organizational Applications: Management Practices to Foster PO

The connection between PO and positive employee behaviour raises the question of what managers or owners can do to encourage this attitude. The roots of PO cannot be changed by managers, but the routes may be supported (Avey et al., 2009).

Practices such as increasing employee autonomy, participation, and access to information and resources are effective because, psychologically, feelings of ownership can come from control over the target, an intimate knowledge of it, investment of the self into it, and a sense of accountability for it (Pierce et al., 2001; Avey et al., 2009). These hypotheses relate to various management practices, namely the devolution of control to employees, transparency, engagement, and the conferral of rights and responsibilities (Table 1).

Table 1: Management Practices that Impact PO
[Source: Adapted from Pierce et al. (2001) and Avey et al. (2009).

  • Route - Control over target:

    • Encouraging Factors - Provide opportunities for autonomy and control over job or aspect of job

    • Discouraging Factors - Centralisation or over- formalisation of job activities

    • Example - Google’s “20 per cent” programme encouraged employees to spend 20 per cent of their time on self-driven projects

  • Route - Intimate knowledge:

    • Encouraging Factors - Opportunities to know the project, role, team, or organization better through e.g. information sharing

    • Discouraging Factors - Strong hierarchy or lack of transparency that prevents an individual from feeling connected to the organizational mission

    • Example - The John Lewis Partnership uses a robust system of reporting and information sharing to inform employees and engage them in decision- making processes

  • Route - Investment of self:

    • Encouraging Factors - Ability for personal investment of time, unique skills, ideas, etc. This can be especially strong in a complex job or a new task that allows for creativity and/or autonomy

    • Discouraging Factors - Routine tasks with limited role for discretion or personal style

    • Example - At Gore Associates, employees form their own work teams, encouraging deeper personal investment in projects

  • Route - Accountability/ Expected rights and responsibilities:

    • Encouraging Factors - Provide information and a voice in decisions, contributing to a sense of burden sharing and influence

    • Discouraging Factors - Separation of decision- making and important strategic information from employees

    • Example - The Mondragón group involves employees in democratic governance, including through representative councils

In addition to the routes and practices outlined above, other authors [3] have identified factors associated with PO. Chi and Han (2008) found that profit sharing, participation in decision-making, and access to business information were all positively correlated with measures of PO. Ozler et al. (2008) found job satisfaction and a participative organizational climate strengthened employees’ feelings of ownership. Wagner et al. (2003) found positive correlations between management practices promoting self-determination and psychological ownership.

Doh and Quigley (2014) argue that open, participative management styles create a virtuous cycle, resulting in PO and improved performance:

As leaders are more inclusive of the perspectives of various important stakeholders, those stakeholders are more likely to trust the leader, feel committed to what the organization is trying to accomplish, feel more psychological ownership over the tasks at hand, perhaps feel more of an emotional connection to the work and to the organization, and be more motivated at the individual level as a result. (2014: p. 262)

Avey et al. (2009) found that transformational leadership could lead to PO, whereas Bernhard and O’Driscoll (2011) suggest that a lack of leadership or guidance can result in employees failing to connect with the organization. Under these circumstances, employees may still develop some PO through learning from training, experience, or helpful colleagues (2011: 370). However, the addition of strong leadership can contribute to morale and productivity as well as PO: Avey et al. call it “an important contextual factor” for PO’s development (2009: 186).

Strong or transformative leadership is therefore a theme amongst those authors that link management practices to positive PO. Indeed, Henssen et al. (2014) found that high levels of individual-oriented and collective-oriented PO were related to organizational leaders’ stewardship. Even more convincing, Pierce et al. (2001) found that PO was positively impacted by transformational leadership to a greater extent than formal ownership through stock options and compensation schemes. Yet as discussed in section 3.3, the connection between formal ownership and psychological ownership remains contested. As such, financial ownership may not be sufficient or necessary to produce the desired positive effects, whereas improving the accessibility to the routes of PO through manager awareness and increased employee autonomy presents a much more compelling case.

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[3] On Google see Frauenheim, 2006; on John Lewis see Lewis, 2010; on Gore Associates see Manz et al., 2010; and on Mondragón see Ridley-Duff.

Introduction >
Definition >
Dimensions >
Organizational Applications: Management Practices to Foster PO >
Conclusion >
Works Cited >


Conclusion

PO is a complex but potentially valuable tool for organizations to increase employee satisfaction and morale while improving their own productivity. The roots and routes of PO indicate that the sense of ownership and the satisfaction of its rewards, even if it is not formal, can fulfil essential human motivations and needs. Yet with ownership comes certain expectations. The development of PO can lead to the attendant responsibilities of being an owner, and the wish to fulfil them by participating in decision-making and holding themselves and others accountable for success. This may in turn require more inclusiveness and openness on the part of the organization.

The negative sides of PO warn of what can happen when it is experienced in an exclusive and unproductive way. Fostering PO by enabling the routes through increased autonomy and control over one’s job, information sharing, allowing an increased role in decision-making, and making scope for creativity – combined with strong leadership – can be beneficial to individuals, their colleagues, and the organization. While it can and does occur naturally, care should be taken when it develops or when managers try to encourage it, since the personal investment of time and self into the target can make separation from it traumatic.

Finally, although the literature deals with PO largely from the perspective of the organization (and its potential benefits), it should be considered from multiple perspectives, including the employees’. When experienced positively, PO can benefit the organization, and confirm the employees’ identity and accountability; but does it always benefit the employee to feel these additional responsibilities? The relative neglect of the employee perspective from the literature leaves our understanding of PO incomplete. In future empirical research, it will be important to include the employee voice in order to understand when it may be better to simply inspire commitment, promote satisfaction, and encourage organizational citizenship.

Introduction >
Definition >
Dimensions >
Organizational Applications: Management Practices to Foster PO >
Conclusion >
Works Cited >


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About This Paper

First published 20 October 2016 by the Mutuality in Business Research Team. The web text is based on the paper written by researchers at Saïd Business School, University of Oxford. The views of the authors and/or the University from are distinct from other content on this website.

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Authors

Helen Campbell Pickford, Post-doctoral Researcher with a background in development and education. Genevieve Joy, Research Associate with a background in international development and public policy. Kate Roll, Research Fellow - leads research for the Mutuality in Business Project and also lectures in Politics at the University of Oxford.

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Please note: The header photograph is illustrative and does not directly portray the subject matter. Some editorial changes have occurred during the process of converting the paper from the PDF version above into this web page version.


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