The Influence of Expatriates on Employees’ ESOP Participation and the Moderating Effect of Distance

Abstract

We investigate the influence of expatriate behavior and presence on foreign subsidiary employee participation in employee stock ownership plans (ESOPs). Additionally, we examine the moderating effect of institutional distance. Based on the knowledge-based view, we expect that expatriates have a positive influence on employees’ ESOP participation. We conduct an empirical analysis based on data from a large European multinational enterprise (MNE) and examine the ESOP participation of 185,291 employees in 28 countries. Our empirical results show that expatriate ESOP participation increases whereas the pure presence of expatriates decreases employee’s willingness to participate in the ESOP. These effects are intensified by institutional distance. Nevertheless, we see a positive effect of expatriate presence when distance is low. Our findings lead us to the following implications: MNEs should select expatriates carefully when distance is high. High distance demands for the deployment of participating expatriat...