How "partnership capitalism" could work better.
3/1/2004
Though the idea of distributing stock options has been widely criticized in the wake of the option-heavy 1990s, it's a debate that continues to rage in high-tech circles. This book, though released in early 2003, is worth revisiting as a well-researched argument for a return to the original intent of stock options: turning employees into corporate partners by offering options to most of the workforce. In the Company of Owners is collaboration between two Rutgers professors—Blasi, a sociologist and Kruse, an economist—along with Bernstein, a senior writer at BusinessWeek. Using the earliest example of employee profit sharing from the late 1950s, they describe the formation of Fairchild Semiconductor, started by eight renegade scientists who left Shockley Semiconductor Laboratories to create their own firm where their intellectual contribution could be better acknowledged. With the help of investment banker Arthur Rock, the group received financial backing and Fairchild Semiconductor established a business plan that would eventually become a model for high-tech start-ups. The authors go on to chart the evolution of "partnership capitalism" (sharing property ownership to produce greater economic wealth) as adopted by high-tech firms in the Internet's boom years. They call for a change to the "top-down capitalism" that defines most of corporate America, and discuss how shareholders can profit when ownership is equitably shared throughout the firm.