Allowing employees to hold company equity is also associated with increased productivity and less turnover, and a 2004 Rutgers University study found companies offering employee ownership stakes of at least 5% have a higher likelihood of survival than those without the benefit, which researchers attributed to greater employment security.

“When you align everyone’s incentives with a common goal, everyone will work harder to achieve that goal,” Ethan Rouen, a Harvard Business School professor of business administration, said in an interview for the college about Harvard’s research. “When you have an equity stake, all of a sudden you have a claim on the upside, and so that incentivizes you to work harder to increase that upside. It is something that has the potential to grow the pie and create wealth for everyone involved.”