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How do expatriates influence employees’ ESOP participation?

Date:05 July 2018
Author:Jana Oehmichen
Jana Oehmichen is professor of organisation and management studies at the Faculty of Economics and Business of the University of Groningen
Jana Oehmichen is professor of organisation and management studies at the Faculty of Economics and Business of the University of Groningen

In the modern workplace, employee stock ownership plans (ESOPs) are increasingly seen as important tools of employee satisfaction, retention, and productivity. They present an attractive investment opportunity for employees, who base their investment decision on an evaluation of both, the financial value and the value of psychological ownership that result from the ESOP investment.

Yet, the participation rates in these programs remain low. In our recent research, we focused on the ESOP participation of foreign subsidiary employees on a global scale. Specifically, we posed the questions regarding the role of expatriates in foreign subsidiary employee ESOP participation and the role of institutional distance within that context. Our focus on expatriates is motivated by the fact that expatriates in an employee workgroup can affect both, employees’ financial and psychological evaluation of the ownership.

The empirical setting of our research was based on one large European multinational corporation (MNC) with subsidiaries worldwide that offer a global ESOP to almost all its employees. Our results indicated that expatriate ESOP participation positively influences foreign-subsidiary employees’ willingness to participate in ESOPs. This result is particularly stronger in subsidiaries that are more distant from the MNC’s headquarters.

These results extend the literature by providing evidence that expatriates act as knowledge facilitators that can transfer implicit knowledge in an adaptable way. We also added to the recently developing literature on the motives of individual employees to participate in ESOP programs. The implication of these results is that MNEs that promote a global ESOP program should take an active interest in workgroup level determinants of ESOP participation such of the role model effect of expatriates.

The paper can be downloaded here.

About the author

Jana Oehmichen
Jana Oehmichen
Jana Oehmichen is a profssor of organisation and management studies at the University of Groningen
www.rug.nl/staff/j.d.r.oehmichen/