Employee Share Schemes in Europe. the Influence of US Multinationals**
Poutsma, Erik, Ligthart, Paul E. M., Schouteten, Roel, Management Revue
The debate on convergence and globalisation of national economies emphasises the role of Multinational Corporations (MNCs) with regard to the export of home-country policies in countries where they have their plants. MNCs set a process of change in motion in which local companies attempt to catch up with the more internationalised companies, particularly those from the Anglo-Saxon world. This process is called Anglo-Saxonisation. In this paper we focus on share (option) schemes. Analysing a European survey of HRM practices in workplaces in selected countries, we can trace a US-MNCs effect in the case of the narrow-based executive type of share (option) schemes in continental Europe. We can also trace a minor effect in the case of broad-based schemes open to all employees. The diversity we find in predictors between countries and the strong significant effects of country suggest that local corporate and institutional factors are more important in the case of broad-based share schemes than in the case of the narrow, executive type of share schemes.
Key words: Employee Share Ownership, Stock Options, Human Resource Management, Multinationals, Europe
This paper focuses on the possible transfer of specific HRJM practices of US multinationals to European establishments. We focus on the use and spread of share (option) schemes in selected European regions and countries. We make a distinction between narrow-based schemes open to executives and management only, and broad-based schemes open to all employees. The literature offers several explanations for the extent of adoption of broad- and narrow-based employee share schemes. The transfer literature emphasises that, in their striving for internal consistency, MNCs try to disseminate successful practices throughout the entire organisation (e.g. Whitley 1992). However, systematic national differences force MNCs to adapt to local situations. From an institutional perspective, therefore, it is possible to find explanations for differences between European countries in the adoption of employee share schemes. Differences in cultural attitudes and institutional contexts, such as regulatory regimes, state involvement, industrial relations structure and tax incentives, may influence the adoption of HRJM practices, such as employee share schemes.
In addition, the agency theory perspective offers insight into the principal-agent relationships between owners (share holders) and management and the employment relationship between management and employees (Eisenhardt 1989). The first can be used to explain the adoption of narrow-based schemes, whereas the latter can be used to explain the adoption of broad-based schemes. Alongside this principle-agent perspective, a human resource perspective can offer more detailed insight into the adoption of employee share schemes.
This article contributes to the transfer literature by adopting an international comparative approach to the adoption and spread of employee share ownership as HRM practices of MNCs. While most of the employee share ownership literature has a national focus, this contribution shows the national institutional embeddedness of employee share ownership in an international comparative approach, and clarifies the diversity of schemes currently not well researched in the literature. While research on share schemes is divided in two separate strands, focusing on executive type of schemes and schemes for all employees, this article combines the two and compares both schemes with respect to their respective determinants.
The article begins with a description of narrow- and broad-based share schemes. Next we discuss the debate on the transfer of HRJM practices of multinationals. Then we move on to the institutional perspective, suggesting that, when entering a nation state, MNCs have to cope with institutional contexts that affect, or even shape, the nature of share schemes, their adoption and spread. …