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Psychological Ownership

Psychological Ownership of a job or organization by an employee is a feeling of having a stake in it as a result of commitment and contribution. Managers who recognise the ways in which Psychological Ownership may have positive and negative effects can ensure that both employee and organization benefit from enabling employees to increase their effectiveness; this is a powerful tool.

Psychological Ownership
Psychological Ownership

Know about Psychological Ownership

Psychological ownership is often derived from learning about an organization and investing time and effort in it.

  • Psychological Ownership is associated with positive outcomes for the organization, including increased motivation, company stewardship, and loyalty. Positive Psychological Ownership entails reciprocity between organization and employee.

  • However, it can also have negative effects, including territoriality and a reluctance to share knowledge. Leadership and management can affect these outcomes.

  • Psychological Ownership can be fostered in an organization by enabling employees to contribute to their work creatively, learning about it, and contributing to decisions.

  • Formal ownership of shares or profits may increase Psychological Ownership, but not necessarily.

PO Definition

Psychological ownership is the feeling of possession over a target – an object, concept, organization, or other person – that may or may not be supported by formal ownership. This ownership not only defines the object (“that is my team”), but also, more importantly, the owner (“my team is Black Ires; I am a Black Ires fan”). Individuals become invested in the target of ownership as an expression of who they are and that to which they belong. The individual has a personal stake in the performance of the object, as its performance reflects upon his or her identity. This leads to a feeling of possessiveness, a desire to retain ownership, which can be manifested positively or negatively, and a mental attachment to the target.

PO Dimensions

Although organizational PO has been defined as a concept, its dimensions, drivers, and results are less immediately clear. Why does PO exist and how does it come about? What positive and negative outcomes are correlated with PO? And where does our current understanding of the concept fail us? These questions are useful from both a theoretical and practical point of view as the theory continues to develop and managers seek to benefit from the positives and avoid the negatives aspects of PO.

Formal Ownership

The relationship between formal or legal ownership and PO is complex, not least because “ownership” as a psychological phenomenon is complex, with psychologists, anthropologists, and philosophers among those researching the connections between possessions and the sense of self. While legal ownership is recognised or even conferred by others, PO derives from the individual’s perception of ownership from a feeling of responsibility or accountability, or personal investment of time or effort. The legal recognition of ownership of property is upheld by a public system, which sets boundaries on ownership; PO is “self-derived”. As a result, PO is most commonly defined in contrast to legal ownership, although findings on this are mixed.

Combining formal ownership with other practices, particularly the routes to PO (control, investment of oneself, and intimate knowledge of the target), reveals more consistent results than formal ownership on its own. Research show that formal ownership only enhances employee performance where it is accompanied by “employee participation in organizational decision making”. They distinguish between employee ownership from an “equity stake”, through formal ownership, and as a “form of governance”, where employees influence decision-making. Although the majority of firms with employee ownership experienced increased productivity, a few showed no improvement or even reduced profits. Those that improved productivity were those where employees took part in decision-making. Although shares in a company increase formal ownership and may increase employee motivation, without the sense of self-investment, formal ownership does not necessarily confer PO.


PO is a complex but potentially valuable tool for organizations to increase employee satisfaction and morale while improving their own productivity. The roots and routes of PO indicate that the sense of ownership and the satisfaction of its rewards, even if it is not formal, can fulfil essential human motivations and needs. Yet with ownership comes certain expectations. The development of PO can lead to the attendant responsibilities of being an owner, and the wish to fulfil them by participating in decision-making and holding themselves and others accountable for success. This may in turn require more inclusiveness and openness on the part of the organization.

The negative sides of PO warn of what can happen when it is experienced in an exclusive and unproductive way. Fostering PO by enabling the routes through increased autonomy and control over one’s job, information sharing, allowing an increased role in decision-making, and making scope for creativity – combined with strong leadership – can be beneficial to individuals, their colleagues, and the organization. While it can and does occur naturally, care should be taken when it develops or when managers try to encourage it, since the personal investment of time and self into the target can make separation from it traumatic.

Finally, although the literature deals with PO largely from the perspective of the organization (and its potential benefits), it should be considered from multiple perspectives, including the employees’. When experienced positively, PO can benefit the organization, and confirm the employees’ identity and accountability; but does it always benefit the employee to feel these additional responsibilities? The relative neglect of the employee perspective from the literature leaves our understanding of PO incomplete. In future empirical research, it will be important to include the employee voice in order to understand when it may be better to simply inspire commitment, promote satisfaction, and encourage organizational citizenship.

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