Employee Share Ownership and Labor Productivity: Integrating the HR Bundle Perspective

Abstract

The moderating effects of internal staffing and investment in training on the relationship between employee share ownership (ESO) and labor productivity were examined in a longitudinal sample of 580 organizations (1,507 organization-year data points) in Korea. It was theorized that the relationship between ESO and labor productivity is the strongest in a positive direction when the levels of internal staffing and investment in training are both high. In alignment with our expectation, we were able to observe the three-way interaction effect of ESO, internal staffing, and investment in training on labor productivity. The ESO-productivity relationship was positive only when the levels of internal staffing and investment in training were both high. However, we were not able to observe two-way interaction effects of internal staffing and investment in training on the relationship between ESO and labor productivity. The results are in alignment with the High Performance Work System (HPWS) perspective and demonstrate the need of ESO to be examined within the system or bundle of HR practices. Thus, this study challenges the earlier approaches of examining the productivity effect of ESO in isolation or in conjunction with a single HR practice.