Do ESOPS motivate employees? Worker effort, monitoring and participation in employee-owned stock ownership plans

Abstract

This study uses data from a 90% employee owned ESOP and six comparable private firms in the same region to investigate the effects of employee ownership and participation on effort, shirking and horizontal monitoring. Participation turns out to be a strong determinant of effort and horizontal monitoring. It was found that, on average, employees who perceive their participation level to be higher will, on average, exert greater effort, have an incentive to horizontally monitor and engage in horizontal monitoring. It is also found that participation does not have to be coupled with employee ownership to elicit motivational effects. Firms without employee ownership may achieve efficiency gains from increasing workers' perception of their level of participation in the firm.

Citation

Ros, A.J. (2003), "Do ESOPS motivate employees? Worker effort, monitoring and participation in employee-owned stock ownership plans", Advances in the Economic Analysis of Participatory & Labor-Managed Firms (Advances in the Economic Analysis of Participatory & Labor-Managed Firms, Vol. 7), Emerald Group Publishing Limited, Leeds, pp. 83-103. https://doi.org/10.1016/S0885-3339(03)07006-6