Employee stock ownership schemes have been gaining increased attention in Australia. Recent statements by the opposition federal coalition concerning their industrial relations policy, as well as initiatives by the employee ownership lobby, have contributed to the re-emergence of the idea of employee owned or managed business enterprises as a viable form of organization. However, unlike the situation in countries such as the United States and the United Kingdom, the taxation laws in Australia do not provide any real financial advantages for either sponsoring companies or participating employees. A review of analytical models shows that employee stock ownership plans are hypothesized to affect the motivational states, morale and job effort of participating employees and that these effects are expected to lead to improvements in organizational performance and reductions in absenteeism, turnover and grievances. Available evidence, from a variety of countries, shows only limited support for the hypothesized motivational and organizational performance effects. The implications for the adoption of employee stock ownership plans by Australian organizations are discussed.