Psychological Ownership and Financial Firm Performance

The Interplay of Employee Stock Ownership and Participative Leadership

Research output: Contribution to journalJournal articleResearchpeer-review

Abstract

Based on a survey among 295 of the top 500 Danish companies, we develop and test an integrated model of the simultaneous effects of employee stock ownership (ESO) and a participative leadership style (PLS) on the creation of psychological ownership (PO) and link this to financial firm performance. While the effect of PO on employee behaviour and attitudes is widely recognised, our study finds a significant positive effect on financial performance, emphasising the importance and relevance of enhancing PO. Our results also show that while PLS supporting employee involvement and empowerment as well as incentives in the form of formal ownership (i.e. ESO) individually supports the creation of PO, combining the two may lead to a crowding-out effect. This suggests that the combination of different human resource management (HRM) practices might impede rather than enhance performance, highlighting the need for more research into the combined effects of bundles of HRM practices.
Original languageEnglish
JournalAustralian Journal of Management
Volume43
Issue number3
Pages (from-to)476-492
Number of pages17
ISSN0312-8962
DOIs
Publication statusPublished - Aug 2018

Bibliographical note

Published online: 29. March 2018

Keywords

  • Psychological ownership
  • Crowding out
  • Employee stock ownership
  • Participative leadership
  • Performance

Cite this

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abstract = "Based on a survey among 295 of the top 500 Danish companies, we develop and test an integrated model of the simultaneous effects of employee stock ownership (ESO) and a participative leadership style (PLS) on the creation of psychological ownership (PO) and link this to financial firm performance. While the effect of PO on employee behaviour and attitudes is widely recognised, our study finds a significant positive effect on financial performance, emphasising the importance and relevance of enhancing PO. Our results also show that while PLS supporting employee involvement and empowerment as well as incentives in the form of formal ownership (i.e. ESO) individually supports the creation of PO, combining the two may lead to a crowding-out effect. This suggests that the combination of different human resource management (HRM) practices might impede rather than enhance performance, highlighting the need for more research into the combined effects of bundles of HRM practices.",
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Psychological Ownership and Financial Firm Performance : The Interplay of Employee Stock Ownership and Participative Leadership. / Torp, Simon; Nielsen, Bo Bernhard.

In: Australian Journal of Management, Vol. 43, No. 3, 08.2018, p. 476-492.

Research output: Contribution to journalJournal articleResearchpeer-review

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