, September 28, 2021

Re-think Corporate Structure and the rise of Steward Ownership


  •   4 min reads
Re-think Corporate Structure and the rise of Steward Ownership

In October 2020, more than 600 entrepreneurs issued a call to the German federal government to introduce a new legal form for companies which provides a new legal basis for a steward ownership model for companies.

Steward ownership is a foundation stone of the social market economy, which is characterised by numerous small and medium-sized family businesses that do not look at quarterly profits or the greatest possible revenue growth but pursue a long-term perspective. Steward ownership enables sustainable management and long-term entrepreneurial independence. The entrepreneur of a company considers himself a 'trustee' who controls the business but cannot extract profits or sell the company. The company's assets and the profits generated (after deducting appropriate compensation for shareholders working in the company) are available to the company for reinvestment, to build up security cushions for times of crisis, to pay better wages or to donate to charitable causes.

Yet this understanding of ownership is not at all new: The original idea of a steward-ownership model was invented by Ernst Abbe, co-owner of the successful German optics manufacturing company ZEISS, founded in 1846. Abbe had worked as a professor at the University of the city of Jena, where he invented the technology behind ZEISS' success. His background probably led to the insight that ZEISS's value and profits did not belong just to him but to everyone working at the company and society at large. After the company's founder, Carl Zeiss, died in 1888, Abbe created the Carl Zeiss Foundation, which has owned ZEISS ever since. The foundation ensures that the company cannot be sold and profits are either reinvested or donated to the common good. A similar, long-existing example is the John Lewis Partnership, a leading retail organisation in the UK, which operates a trustee partnership model since the 1920s.

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