The organization was established in 1981 by Corey Rosen, then a staff member in the United States Senate who had become involved in drafting legislation on employee stock ownership plans (ESOPs).

[2][3][4] Rosen had gone to graduate school at Cornell University, where he was awarded a Ph.D. in 1973;[6] his doctoral thesis concerned aspects of the politics of U.S. state legislatures.

[9] In 1994, sociologist William Foote Whyte, one of the founding members of the NCEO board of directors,[5] described the circumstances preceding the foundation of the NCEO, writing that "in the Reagan landslide of 1980, Senator Gaylord Nelson and Representative Peter Kostmayer lost their seats in Congress... That ended the congressional careers of Corey Rosen, Karen Young, and Joseph Blasi.

[5] As of 1994, Whyte wrote that the NCEO had come to be recognized as the prime source for information and ideas on employee ownership", and that it was "increasingly well financed by membership and conference fees and research grants".

[1] For most of its existence, it has also published the bimonthly periodical, Employee Ownership Report,[1][5] which "features a wide range of topics, such as legal cases, legislative updates, original research, and significant events".