ESOP Academic Research - Succession Plus

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ESOP Academic Research

It is impossible to deny the positive implications on the work environment and overall business achievements that the Employee Share Ownership Plan incurs. There exists a large volume of academic research, beginning as early as 1987, that is almost overwhelmingly positive in terms of the impact of an ESOP on employee attitude and performance (Klein, 1987).

The study by Klein ( 1987 ) identified three key aspects of employee ownership affecting attitudes and behavioural change – intrinsic satisfaction, where ownership per se is sufficient to bring about attitudinal and behavioural change; extrinsic satisfaction, when ownership leads to attitudinal and behavioural change because it is financially rewarding; and instrumental satisfaction, where ownership brings about change by facilitating other outcomes that are desired by employees, such as more involvement and participation in decision making (Klein, 1987). This work was further developed by Brown, Pierce and Crossley (2014) who proposed that employee share ownership leads to a change in employee mindset, and ultimately, attitudinal and behavioural change.

The relationship between the level of employee share ownership and the level of performance is also strongly linked to culture and employee involvement (Beyster, 2007). Ownership alone does not necessarily lead to performance improvements, but employee involvement (Kato & Morishima, 2002) and company culture combined with ownership tend to lead to improved performance (Sengupta, Whitfield, & McNabb, 2007).

 

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