AN independent inquiry into the performance of employee-owned businesses and their impact on the economy has praised Scotland for leading the way in its approach to growing the popularity of employee ownership.

The Ownership Effect Inquiry was launched after research showed that the sector outperformed the conventional business sector during the economic downturn. It sought to further examine the performance of employee-owned businesses against other businesses and identify opportunities to “grow the effects of employee ownership as an economic and social enabler”.

Its findings were set out in the Employee Ownership Dividend, which included the recommendation that the UK Government “invest in ownership capacity building that echoes Scotland’s successful scheme that has delivered a tenfold return on investment for every £1 devoted to on-the-ground support”.

The scheme is driven by Co-operative Development Scotland (CDS), the arm of Scotland’s economic development agencies whose remit is to promote awareness of employee ownership and provide advice to businesses considering adopting the model. CDS director Sarah Deas said: “The employee ownership model is seen by the Scottish Government as a means to root businesses in their communities, drive productivity and share wealth more widely.

“Our work to promote employee ownership and drive these benefits has seen the number of employee-owned businesses operating in Scotland treble to around 100 in the past five years, with approximately 7,000 employee-owners generating a combined turnover of around £940 million.”

Ms Deas said the organisation aimed to further increase the number of employee-owned businesses tenfold over a 10-year period, and was currently averaging a deal a month.

The inquiry was conducted by the Employee Ownership Association (EOA) in partnership with the eaga Trust and the John Lewis Partnership, the UK’s largest employee-owned business.

Examples of employee-owned businesses including Stewartry Care, a care at home provider in Dumfries & Galloway which became an employee-owned business in 2004 and saw its turnover increase by 16 per cent in the first year. Dyce-based Woollard & Henry, a manufacturer of paper-forming products such as dandy rolls, became employee-owned in 2002 when Scotland’s once-thriving paper sector was in decline and is on target to increase turnover this year to over £10 million.

Earlier this year, luxury resort Auchrannie, on the Isle of Arran, announced it had completed its transition to become an employee-owned business.