In this paper we explore the norm of shareholder primacy with the aim of identifying
its applicability in companies with employee ownership. We pose the following research
question: Can companies with employee ownership respond better to the demands of
society, or do they instead reaffirm the norm of shareholder primacy? We argue that
companies with employee ownership are better positioned to generate a greater benefit
for society because compared to other kinds of companies they can achieve a better strategic
alignment and their employees have an incentive to care more about their actions, to
develop a greater awareness of social identity, and to be more willing to share the benefits
that accrue from their improved performance. However, for this surplus value to be
transferred to society, at least in part, these companies must adopt corporate governance
structures that enable employees to exercise their rights as owners, including participation
in company decision-making.