Employee share ownership and performance: golden path or golden handcuffs?

Using matched employer-employee data from the 1998 Workplace Employee Relations Survey, it is suggested that the presence of employee share ownership at a workplace is not significantly associated with employee commitment to the organization. There is evidence of a significant negative relationship between share ownership and workplace turnover, which explains part of the positive share ownership/performance relationship. This calls into question the postulate that share ownership has its main impact upon performance via the closer alignment of employees' and employers' values and interests – the golden path – rather than the lowering of employee turnover – the golden handcuffs.     

Employee buyouts and employee involvement: a case study investigation of employee attitudes

This article investigates the association between employee share ownership (ESO) and employee involvement (EI) in an employee‐owned firm.Based on data from the firm’s employers and employees, the article concludes that the mere presence of share ownership is no guarantee on increased involvement for employees, highlighting instead the significance of other variables.     

Does contingent pay encourage positive employee attitudes and intensify work?

This article explores the relationships between three dimensions of contingent pay – performance‐related pay, profit‐related pay and employee share‐ownership – and positive employee attitudes (job satisfaction, employee commitment and trust in management). The article also examines a conflicting argument that contingent pay may intensify work, and this can detract from its positive impact on employee attitudes. Of the three contingent pay dimensions, only performance‐related pay had direct positive relationships with all three employee attitudes. Profit‐related pay and employee share‐ownership had a mix of negative and no significant direct relationships with employee attitudes, but profit‐related pay showed U‐shaped curvilinear relationships with all three employee attitudes. The results also indicated that performance‐related pay is associated with work intensification, and this offsets some of its positive impact on employee attitudes.     

Employee ownership and affective organizational commitment: employees’ perceptions of fairness and their preference for company shares over cash

Interest in profit-sharing and employee ownership is growing among both practitioners and researchers. This study examines the relationship between the preferences and perceptions of employees regarding an ongoing share ownership plan on the one hand, and the employees’ affective organizational commitment on the other. After controlling for various personal and work-environment characteristics and for size of the financial contribution it was found that preference for ownership and the perceived fairness of the employee ownership plan were significant predictors of affective commitment. These findings support the notion that employee ownership may have intrinsic motivating effects on employees by way of a mediating mechanism, whereby the effects of ownership on organizational commitment depend on how employees evaluate and perceive formal ownership plans.     

The Impact of Employee Share Ownership Plans On Employee Participation and Industrial Democracy

This article examines employee participation in recently-formed employee share ownership plan organisations (ESOPS) in the UK. the various legal/institutional forms of ESOP are outlined prior to considering the nature and determinants of participative institutions and processes. It is suggested that there are three ‘constellations’ of ESOP in terms of employee participation:‘technical ESOPS’, ‘paternalist ESOPs’ and ‘representative ESOPs’. There are relatively few innovations in participation in the first of these, while in paternalist ESOPs, innovations centre on individualistic forms of participation and communication at the level of the workplace. In representative ESOPs employees gain more of a say in strategic decisions through such innovations as employee representation on company boards. It is argued that these differences in the nature of participation are due neither to differences in legal structure nor to variations in the extent of employee share ownership. Instead, participative systems are viewed as the outcome of the philosophies and objectives of those involved in the conversion to employee ownership.     

创新驱动发展与企业劳动收入份额

选取2012—2020年沪深A股上市公司为样本,实证检验创新驱动发展与企业劳动收入份额之间的关系,以及高管股权激励和员工持股对上述关系的调节效应。研究发现：企业创新驱动发展能够有效提高企业劳动收入份额;实施高管股权激励和员工持股计划均能显著增强上述关系。进一步研究发现,盈利水平发挥了部分中介效应,且当企业处于成长期和衰退期、市场化程度较高的地区以及为非国有企业时,上述关系更显著。研究结论表明,特别是处于成长期与衰退期、市场化程度较高地区的企业,以及非国有企业,大力推动创新驱动发展,并辅之以高管股权激励和员工持股计划,可以提高企业劳动收入份额,实现和谐发展,推进共同富裕目标实现。     

Employee shareholders in two privatised utilities

This article draws on a survey of over 400 employees in two privatised companies. It examines the relationship between the depth of share ownership and social class and prior political orientations, and suggests that employee attitudes are best understood as a function of these standard sociological factors.     

The impact of employee‐share‐ownership schemes on performance in unionised and non‐unionised workplaces

Conventional wisdom suggests that higher performance is observed when employee‐share‐ownership (ESO) schemes coexist with employee participation arrangements. However, the evidence is inconclusive and it has been suggested that performance benefits occur in ESO workplaces only when employees are actually involved in the decision‐making process. Drawing on the cross‐section data from the 1998 Workplace Employee Relations Survey, the article shows that higher productivity is observed in those workplaces where unions coexist with ESO schemes. This result highlights the relevance of unions to High Performance Work Systems.     

Employee stock ownership and financial performance in European countries: The moderating effects of uncertainty avoidance and social trust

This study investigates how the effect of employee stock ownership on financial performance may hinge on the diverse cultural and societal contexts of European countries. Based on agency and national culture theories, we hypothesize that the positive relationship between employee stock ownership and return on assets (ROA) is stronger in those nations with lower uncertainty avoidance and higher social trust. Using a multisource, time‐lagged, large‐scale dataset of 1,741 firms from 21 countries in Europe, our multilevel, random coefficient modeling analysis found evidence for these hypotheses, suggesting that uncertainty avoidance and social trust serve as important contextual cues in predicting the linkage between employee stock ownership and financial performance. Our supplemental analysis with distinction between the managerial and nonmanagerial employee stock ownership further indicates managerial employee stock ownership has a direct positive effect on ROA. Although nonmanagerial employee stock ownership had a nonsignificant association with ROA, the relationship was positive and significant when uncertainty avoidance was low and social trust was high. This research contributes to the existing literature by illuminating some of the contextual influences altering the effectiveness of employee stock ownership. Our findings also offer practical suggestions for effectively using employee stock ownership.     

Financial participation and performance in Europe

This article assesses whether financial participation (profit‐sharing and employee share ownership plans) is associated with positive performance outcomes, and whether direct and indirect employee participation complement financial participation in this respect. It also examines whether employee involvement in the design of financial participation afects performance outcomes. The article uses data from a survey of listed firms in Finland, Germany, the Netherlands and the UK. Several outcome measures are used, based on respondents' assessments of the effects of financial participation. Higher participation in equity‐based plans, but not in profit‐sharing, is found to be associated with more successfil outcomes. None of fhe other forms of employe? pnrticipafion uins found to contribute to the success of financial participation. The results therefore cast some doubt on complementarity between financial and other forms of participation.     

The effect of employee share ownership on employee commitment and turnover: comparing the cases in Britain and South Korea and the role of the economy

Despite the consensus in the employee share ownership (ESO) literature for the need to explore contexts that influence ESO outcomes, studies examining two important factors, national context and status of the economy, are limited. In this study, the authors compare the outcomes of ESOs in Britain and South Korea during economic expansion and downturn. The results demonstrate that, during an economic expansion, the effect of ESOs in increasing employee commitment is stronger in South Korea, while their effect in decreasing employee turnover is stronger in Britain. However, during an economic downturn, the authors find no evidence for these effects in both societies. The findings lend support to the contingency perspective in managing ESOs and provide meaningful implications and guidance to the literature.     

What are the determinants and managerial motivations for employee ownership in retirement pension plans?

Using the pension database obtained from Form 5500 from 2000 to 2014, we provide the first comprehensive analysis of the determinants of employee ownership in retirement pension plans. By investigating various motivations simultaneously using the horse racing method, we find that firms with higher idiosyncratic risk, weak governance, a greater marginal tax rate, and greater union intensity are more likely to offer employee ownership. This study provides valuable insights to investors that they should properly understand the impact of employee ownership on the firm and appropriately evaluate firms with employee ownership by taking into account diverse motives.     

Opinions On the Benefits of Employee Share Ownership: A Comparison Between Managers of Two New Zealand Companies

Stephen Keef, who is a Senior Lecturer in the Faculty of Commerce and Administration at Victoria University of Wellington in New Zealand, reports on an investigation designed to determine the degree that opinions on the benefits of employee share ownership differed between managers of two organisations. Analyses of covariance showed that it was not possible, in a practical sense, to distinguish between the two firms. He goes on to consider the implications of these results.     

Friend or foe? Employee ownership and CEO dismissal

This paper examines 2 research questions. First, does the level of employee stock ownership impact the likelihood of dismissing poorly performing chief executive officers (CEOs)? Second, does the level of employee stock ownership affect the likelihood of appointing an outsider or an insider after the dismissal of an incumbent CEO? We suggest that employee stock ownership reinforces the firm performance—CEO dismissal link because employee shareholders' welfare consisting of fixed claims (wages, bonuses, etc.), residual claims (dividends, increase in stock value, etc.), and human capital (generic and idiosyncratic) are highly linked to their firm performance. Moreover, under conditions of poor performance, employee shareholders are likely to favor an outsider CEO because he or she is more likely to initiate and implement drastic changes to the strategy of the firm, and therefore, he or she is more likely to improve firm performance. Drawing on a longitudinal sample of French firms, we find that employee stock ownership strengthens the negative relationship between firm performance and CEO dismissal likelihood. We find also that the higher employee ownership, the more likely that the underperforming CEO is replaced by an outsider. In contrast, employee ownership has no moderating impact on the likelihood of insider CEO appointment.     

Employee ownership and firm performance: a meta‐analysis

Employee ownership has been an area of significant practitioner and academic interest for the past four decades. Yet, empirical results on the relationship between employee ownership and firm performance remain mixed. To aggregate findings and provide potential direction for future theoretical development, we conducted a meta‐analysis of 102 samples representing 56,984 firms. Employee ownership has a small, but positive and statistically significant relation to firm performance ( = 0.04). The effect is generally positive for studies with different sampling designs (samples assessing change in performance pre‐employee–post‐employee ownership adoption or samples on firms with employee ownership), different performance operationalisation (efficiency or growth) and firm type (publicly held or privately held). Suggesting benefits of employee ownership in a variety of contexts, we found no differences in effects on performance in publicly held versus privately held firms, stock or stock option‐based ownership plans or differences in effects across different firm sizes (i.e. number of employees). We do find that the effect of employee ownership on performance has increased in studies over time and that studies with samples from outside the USA report stronger effects than those within. We also find little to no evidence of publication bias.     

Ownership structure, corporate governance and productive efficiency in China

This paper investigates whether and to what extent ownership structure and corporate governance affect productive efficiency in a sample of 744 publicly listed manufacturing firms in China between 1999 and 2006. The paper finds that firm efficiency, as estimated using stochastic frontier analysis and data envelopment analysis, is negatively related to state ownership while positively related to public and employee share ownership. In addition, the relationship between ownership concentration and firm efficiency is U-shaped, indicating that the largest shareholder may engage in tunneling activities. As the identity of the largest shareholder changes from government, government-controlled legal entity to other types of legal entity, firm efficiency significantly improves. These results provide strong evidence that political interferences have reduced firm efficiency. Moreover, firms with more independent board are more efficient, supporting the argument that board of directors can be an effective internal governance mechanism. Furthermore, provincial market development, a proxy for the strength of external governance mechanism, is positively related to firm efficiency. Overall, the findings illustrate that restructuring state-owned enterprises via improvements in corporate governance has enhanced firm efficiency, but partial privatization without transfer of ownership and control from the state to the public remains a major source of inefficiency in corporate China.     

The impact of large-scale employee share ownership plans on labour productivity: the case of Eircom

Large-scale employee share ownership plans (ESOPs) have been a distinctive characteristic of Irish public enterprise reform, with shareholdings of 14.9% being allocated to employees as part of firm restructuring and privatisation programmes. This paper presents a case study analysis of a large-scale ESOP in Eircom, Ireland's former national telecommunications operator. We identify changes in labour productivity (LP) during 8 years before and after the establishment of the company's ESOP and use a framework based on Pierce, Rubenfeld and Morgan (1991, The Academy of Management Review, 16, 121–144) and Pierce, Kostova and Dirks (2001, Academy of Management Review, 26, 298–310) to explore the role played by the ESOP. The ESOP was found to play a key role in enabling firm-level reform through concession bargaining and changes in employee relations, and thereby indirectly affecting LP. However, despite the substantial shareholding and influence of the ESOP, we find that it has failed to create a sense of psychological ownership among employees, and thereby further impact on productivity.     

Psychological ownership and organizational optimism amid China's corporate transformation: effects of an employee ownership scheme and a management-dominated board

Ownership reform was introduced to Chinese state-owned enterprises in the early 1990s, to allow employees to own a share of their enterprises and to bring changes to the underlying structure of governance. However, effectiveness of this reform has yet to be ascertained. This study examines the effects of the new employee stock ownership scheme and board compositions on the attitudes employees hold towards their jobs and organizations, as well as their perceptions of ownership. We developed a theoretical model on how participation in a stock ownership scheme (an employee's characteristic) and the composition of the board of governance (a firm characteristic) may be linked to job satisfaction and, in turn, to outcome variables such as psychological ownership and organizational optimism. This model was tested on 510 employees randomly sampled from ten stock-holding enterprises in urban Shanghai. Results indicate that participation in a stock ownership scheme has a positive effect on attitudes towards ownership, but that a board dominated by senior managers leads to gloomy perception of a firm's future. These effects were partially mediated by the satisfaction that employees felt in their jobs. The implications of these findings for management practices in China are discussed.     

Engaging employees in company success: The UPS approach to a winning team

UPS is the world's largest package delivery company and a leading global provider of specialized transportation and logistics services. One of the company's missions is to maintain a financially sound company, with broad employee ownership, that offers a long‐term competitive return to shareowners. This ownership culture is demonstrated through ownership guidelines for managers and supervisors as well as several employee stock programs. The ownership culture is vigorously promoted throughout UPS by a variety of communication channels. Employee ownership is core to the UPS culture, and it translates into a strong work ethic, with employees engaged in growing the business and committed to the company's success. © 2005 Wiley Periodicals, Inc.     

The productivity effects of employee ownership within command economies: Evidence from Poland

The effects of employee ownership, broadly defined, are estimated for a sample of Polish producer co-operatives in three industries during 1976-8, i.e. when Poland was a centrally planned economy. The results indicate that, in general, increasing either worker participation in control and/or in economic returns provides positive effects on productivity. The pattern of the different effects of employee ownership varies significantly across sectors. This new evidence strongly suggests that workers within Soviet-type economies are responsive to economic incentives. Together with existing theoretical and empirical evidence for both Eastern and Western European firms, the findings suggest a larger role for employee ownership than typically either currently exists or that is under serious consideration in most restructuring economies.