To Join or Not to Join? Factors Influencing Employee Share Plan Membership in a Multinational Corporation
Many firms encourage employees to own company stock through share plans that subsidize the price at favorable rates, but even so many employees do not buy shares. Using a new survey of employees in a multinational with a share ownership plan, we find considerable variation in joining among observationally equivalent workers and explore the reasons for the variation. Participation in the plan is higher the greater the potential pay-off from joining the share plan, which indicates that rational economic calculations affect the decision to join. But there is also evidence that psychological factors affect the decision to join. Some non-members say they intend to join in the future, which means they forgo the benefits of immediate membership. The proportion of workers who purchase shares varies across workplaces beyond what we predict from worker characteristics. This suggests that co-worker behavior influences decisions. Indeed, workers say that they pay most attention to other workers and little attention to company HR management in their decision on joining.
We thank ShareCo (a pseudonym) for their collaboration with this survey. Alex Bryson acknowledges the support of the British Academy for this research through the award of a British Academy Research Development Award (grant number BR100020). The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
Bryson, A. and Freeman, R. B. (2010) 'To join or not to join? Factors influencing employee share plan membership in a multinational corporation', in T. Kato (ed.) Advances in the Economic Analysis of Participatory & Labor - Managed Firms, Volume 11 , pp.1 - 22, Emerald Group Publishing Limited (previously NBER Working Paper No. 16292, CEP Discussion Paper No. 1001 and NIESR Discussion Paper No. 361)