The impact of large-scale employee share ownership plans on labour productivity: the case of Eircom |
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Authors: | Dermot McCarthy Donal Palcic |
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Institution: | 1. Department of Accounting and Finance , Executive Business Centre, Bournemouth University , Bournemouth , UK dmccarthy@bournemouth.ac.uk;3. Department of Economics , Kemmy Business School, University of Limerick , Limerick , Ireland |
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Abstract: | 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. |
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Keywords: | broad-based stock options employee share ownership employee share ownership plans (ESOPs) labour productivity privatisation public sector reform |
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