The Role of Employee Stock Purchase Plans — Gift and Incentive? Evidence from a Multinational Corporation

Employee share purchase plans (ESPPs) give free or discounted shares of stock to workers who buy shares in the hope that the greater share ownership will retain workers, build loyalty and raise productivity, as in gift exchange models. Using measures of workers’ organizational loyalty and sense of o...

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Bibliographic Details
Published inBritish journal of industrial relations Vol. 57; no. 1; pp. 86 - 106
Main Authors Bryson, Alex, Freeman, Richard B.
Format Journal Article
LanguageEnglish
Published London Blackwell Publishing Ltd 01.03.2019
Subjects
Compensation
Incentives
Labor relations
Loyalty
Ownership
Participation
Productivity
Reciprocity
Stock options
Work
Workers
Workplaces
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Summary:Employee share purchase plans (ESPPs) give free or discounted shares of stock to workers who buy shares in the hope that the greater share ownership will retain workers, build loyalty and raise productivity, as in gift exchange models. Using measures of workers’ organizational loyalty and sense of ownership in a multinational firm that puts the ESPP at the heart of its compensation policy, we find that workers who join the ESPP have lower turnover intentions and do less on‐the‐job search than others, motivated in part by gift exchange reciprocity, and also respond to the group incentive of ownership with greater work effort, longer hours, and lower absence rates. Workers in workplaces with high perceived rates of ESPP participation are more likely to intervene against shirkers. The results appear robust to the selectivity of who joins the ESPP. The mix of gifting shares to workers who buy shares and the group incentive of ownership makes ESPPs a unique dual form of compensation.
ISSN:0007-1080
1467-8543
DOI:10.1111/bjir.12420