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Can Employee Share-Ownership Improve Employee Attitudes and Behaviour?

By Dermot McCarthy, Eoin Reeves and Tom Turner

Abstract

Purpose: To examine the outcomes of a substantial broad-based employee share-ownership scheme for employee attitudes and behaviour in a privatised firm. Methodology: Results are based on a survey of 711 employees in Eircom, an Irish telecommunications firm, which is 35 percent employee-owned. Findings: The ESOP has created sizable financial returns and has had extensive influence in firm governance at the strategic level. However, findings show only a limited impact on employee attitudes and behaviour. This is attributed to a failure in creating a sense of employee participation and line of sight between employee performance and reward. Originality: Little research has examined the impact of a large employee shareholding on attitudes and behaviour within a public-quoted firm. The substantial and unparalleled size of the Eircom ESOP presented a unique opportunity to conduct such a study. Policy implications: The aim of employee share-ownership often includes aligning employee objectives with those of other shareholders, and thus improving labour performance. The findings in this study highlight a need to provide employees with a sense of ownership and control. Findings also question the assumption that where employees have a substantial shareholding, they will focus on securing the long-term prospects of the firm

Topics: ec
Year: 2010
OAI identifier: oai:eprints.bournemouth.ac.uk:20407

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