What Business Leaders can learn from the Psychology of Ownership

A GUEST COMMENTARY BY FABIAN BERNHARD, ASSOCIATE PROFESSOR OF MANAGEMENT AT EDHEC BUSINESS SCHOOL IN FRANCE

TSOO: You have been doing research  in the field of ownership, could you please tell us the main insights?

Our constitution* states that „Property entails obligations.” Accordingly, owners of an object have certain rights and duties how to act with their possessions. Most people are very much familiar with this legal aspect of ownership. Less known, however, are the psychological aspects of the feeling of ownership. Research during the past decade has started looking into this phenomenon referred to as “psychological ownership”.

Psychological ownership influences human thinking and acting. And indeed latest research in the field of neuroscience confirms what philosophers, psychologists, sociologists, and business scholars have suspected and theorized for a long time. Ownership about material and immaterial objects has a strong motivational force on the way we act and our attitude towards things. Once we call an object “ours” and feel like having the right to possess it we tend to taking better care of it. We are motivated to closely paying attention to the owned object, supporting it, improving it, and also have difficulties relinquishing it.

While the psychological effects of ownership are present in all aspects of our daily lives, it is particularly the business world that has become interested in using psychological ownership as a motivational tool managing their workforce. The idea is to make employees feel and act like owners. When they feel like the organization is ‘theirs’ they potentially put more effort into it. However, rather than giving out shares and making employees factual and “legal” owners, it has been shown that the mere ownership feeling can increase individual commitment and performance.

Given these desirable outcomes the question arises how to actively influence employees’ psychological ownership. Together with a psychologist we looked deeper into this phenomenon. In a quantitative study of 50 companies we examined the ownership feelings of over 200 employees. We found that psychological ownership can depend on the business owners’ leadership style. Certain business owners in our study were more transformational in their leadership to their employees than others. They acted as role-models, provided their workforce a general vision but left enough autonomy for their followers to find their own ways to fulfill goals. Employees under such leadership were more likely to develop ownership feelings. On the other side, results showed that transactional leaders, meaning those that put emphasis on extrinsic rewards and control created them to a lesser degree. While transactional leaders were still effective, a third group of leaders, those who followed a “laissez-faire” approach, meaning not giving enough guidance to employees, blocked the emergence of ownership feelings.

In line with these findings, the study also showed that those employees with higher degrees of psychological ownership demonstrated more positive attitudes and behaviors. For example, the psychological owners displayed higher levels of performance and were more willing to go the extra mile. They helped their colleagues more often, were more committed, and more satisfied in their jobs. As a consequence psychological ownership also created more loyalty towards the company and among the workforce.

In a second series of more recent studies with colleagues from the universities of Mannheim and Rostock, we investigated in more depth how some leaders exert their influence on psychological ownership. For example, we examined the effects of emotional exhaustion of service workers and customer appreciation of their work. Similarly, we could show a relationship of certain leadership styles on employee welfare and an organizational climate of initiative taking.

Overall, the studies illustrated the potential power of ownership feelings in organizational settings and the difference well-suited leadership can make. Psychological ownership also plays a particularly relevant role in closely-held companies in several ways. First, it has been argued that founders of businesses work harder and longer hours than most employees. This may have to do with ownership feelings. When we work for our “own” ideas or projects our motivation is usually highest. We regularly observe such effect in enthusiastic start-up entrepreneurs working long hours to make their business “fly”. So, ownership feelings may be the motivational fire in entrepreneurial business endeavors.

Second, many business founders would like to see that the entrepreneurial spirit and commitment to the business transfers to the next generation. Accordingly, they ask how to convey ownership feelings to their future successors. In a research project with American colleagues we tackled this issue and investigated several teaching approaches to stimulate emotional attachment and psychological ownership in the next generation of young family business members.

And lastly, it is also of interest for family-owned businesses to find ways to include and keep those motivated who are not part of the family, namely the nonfamily employees and external managers. Together with two colleagues from the University of St. Gallen we found that justice and fairness perceptions play an essential role for the development of ownership feelings in the nonfamily personnel. By means of creating a fair environment family-owners could create a motivated and committed team.

Prof. Dr. Fabian Bernhard is an Associate Professor of Management and a member of the Family Business Center at EDHEC Business School in France. He is also a research fellow at the University of Mannheim in Germany, where he also had studied business administration. A scholarship led him to the University of Oregon from where he graduated with an MBA. After working several years at a large, international consulting company in New York, he returned to academia in 2007. During the following years as a PhD student at the European Business School (EBS) and the WHU Otto Beisheim School of Management in Germany, he developed the ideas of his book on “Psychological Ownership in Family Businesses”. After having completed his doctoral degree in 2011, he was a research professor at INSEEC Business School in Paris and an adjunct professor at the Family Enterprise Center (FEC) at Stetson University of Florida in the US.

Fabian Bernhard’s current topics of interest revolve around the intersection of organizational behavior, organizational psychology, and family business research. In particular, Fabian is interested in the emotional dynamics in family businesses, moral emotions (such as shame and guilt), the education and preparation of next generational family business leaders, as well as all kinds of  attachment to the family business, such as psychological ownership, commitment, social identity, and their influence on the decision-making process in family businesses. If you want to know more about Fabian, feel free to visit his profile at EDHEC [CLICK HERE].

This article was originally published in transfer – Werbeforschung & Praxis, (03/ 2017) 

Exposing myself and my research at conferences – or: I have no dog, but a PhD topic to take care of

animal-dog-pet-cute

Going to conferences is always exciting (like going to the VHB conference 2015 and participating in the Ownership Symposium). It is particularly exciting, if you are about to present something that is of great importance to you – something like YOUR dissertation project. A project you already spent a lot of thought and effort on (personal investment), you (think you) know the topic very well (intimate knowledge), and to a certain extent you feel like influencing this area of research through your (anticipated) contribution (perceived control). These very well-known experiences (Pierce, Kostova, & Dirks, 2003) of course make your dissertation project something special to you, make you feel like you own this very niche of research interests – it became a reflection of yourself, part of who you are (Belk, 1988). This is what makes presentations so exciting, because it feels like offering something private and very personal to others.

However, who really enjoys sharing his/her very personal and intimate details with a rather unknown audience? It might feel like this nightmare, where you are standing on a stage and suddenly notice that you are naked, finally comes true. The very moment when you present YOUR topic, your own flesh and blood, to a greater audience, you open up yourself for (constructive) critique and, suddenly, you start to totter about your feelings of ownership. Did I really spend enough thought and effort on it? Do I really know the topic well, or do the others know it better? Is my expected contribution really as impactful as I thought it might be? In essence, when you present your topic, you let others tackle your knowledge about, your investment in, and your influence on your research area. It might be like your feelings of ownership for your research and topic are questioned.

But why at all do I voluntarily face or even seek these confrontation(s)? I suspect that I have been tricked by ownership, as my answer to this question is – because it is MINE (my dissertation topic). It is mine and I want to take care of it, I am proud of it, I feel responsible for it and no matter what, I will try to do the best for it. Even if this means that I have to undergo potential embarrassing and uncomfortable situations. I will go and take the extra step, neglect related costs and focus on the benefits. At the end we, my project and me, will mutually prosper from being exposed to “our community” (the scientific community) and flourish from the feedback we will get. Somewhat this makes me feel a little like a new dog owner, but instead of a dog, I have a PhD topic to take care of and instead of the veterinarian, I visit conferences.

Editor’s note: