The effects of employee stock ownership plans on career development in a new era: Evidence from China’s manufacturing transformation

Abstract

Purpose

China’s workforce is currently experiencing increased career-related stress. Employee stock ownership plans (ESOPs) may be used to help employees overcome these challenges. Little is known about how ESOPs affect employee career development. The purpose of this paper is to investigate the relationship between ESOPs and employee career sustainability and provide guidance for corporate management.

Design/methodology/approach

The authors employed a multiple linear regression model using a sample of 614 companies that implemented ESOPs between July 2014 and September 2017.

Findings

Employees’ career development benefited when ESOP funds originated from employee compensation and self-raised funds, and when the plan’s stock came from a source other than the secondary market. Career development also improved when employees and senior executives held a higher proportion of a firm’s total shares. In addition, the benefits to employee career development were greater in manufacturing enterprises, non-state-owned enterprises, and in Southern China.

Research limitations/implications

This study combined individual and organization research using person–organization fit theory and demonstrated that well-designed ESOPs are beneficial for career stability and sustainability. This work was based on data from Chinese companies; future studies could usefully investigate the effects of ESOPs in other countries and their particular impact in technology-intensive industries.

Practical implications

Decision makers in firms or government can use ESOPs to address employees’ career-related stress and challenges, especially during industry transformation.

Originality/value

The paper fills a gap in ESOPs research by showing the positive effects of ESOPs on career development.

Citation

Xiao, H., Shi, Y. and Varma, A. (2019), "The effects of employee stock ownership plans on career development in a new era: Evidence from China’s manufacturing transformation", Career Development International, Vol. 24 No. 5, pp. 453-474. https://doi.org/10.1108/CDI-05-2018-0126