Shared capitalism at a crossroads: equity compensation and factor bargaining power in the innovation economy

Broad-based employee ownership in the technology sector represents one of the most substantial market-driven forms of shared capitalism in the modern economy. This article traces its emergence to two features of knowledge-intensive industries: the scarcity of specialised human capital and the appropriability problem created by high labour mobility. When workers can exit freely and take tacit knowledge with them, equity compensation functions as both a retention mechanism and a means of internalising knowledge spillovers. The article conceptualises equity compensation as a site where bargaining power between labour and capital is expressed through the allocation of surplus in the innovation economy. It then argues that artificial intelligence may constitute a structural break in this arrangement, contrasting two plausible scenarios: one in which displacement and rising capital intensity concentrate rewards at the top, and another in which AI augments a broader range of workers and compresses skill premia. In both cases, the technology tends to shift value towards capital owners and erodes the human capital scarcity that historically justified widespread equity grants. The article concludes by examining the institutional conditions under which shared capitalism might persist even as its market-driven foundations weaken.