How Society’s Constraints Would Undermine ESPP Adaptation in Latin America: The Case of Peru

Abstract

Shared capitalism proposes that employees’ revenues or wealth are directly related to a firms’ performance, while they participate in the organizational decision-making processes as well (Kruse et al., 2010). Employee stock ownership, one of the mechanisms of shared capitalism, can be implemented through different ways including Employee Stock Purchase Plans (espp). This paper examines such plans offered to Peruvian employees by three French companies. Previous literature has documented that espps’ participation and investment are undermined by four factors: liquidity constraint, imperfect knowledge of information, asset choice, and transaction costs. We highlight the actions developed by these three companies to limit the effect of these four factors and thus stimulate employee participation and investment in their company’s shares. We also identify other important elements of participation.