The Development of Employee Ownership in China

Purpose: Little systematic work has been completed on the incidence of employee ownership in a Chinese context. Similar to the situation in Eastern Europe, this type of ownership was quite widespread in China, particularly during the 1990s. Based on the existing literature and available statistical data, the purpose of this paper is to identify drivers of, and barriers to, the development of employee ownership in China. Design/methodology/approach: The scattered evidence from the literature and official statistical sources are collected and structured in a systematic analysis where the drivers and barriers for employee ownership in the transition process from plan to market are identified at three levels: society, the company and the individual. Findings: Employee ownership developed as a transitory stage between state and private ownership; employees acquired ownership stakes as part of the privatisation of small- and medium-sized state-owned enterprises as well as collectively owned enterprises. However, in most cases the dynamics of ownership resulted in dominant ownership by managers. This trend became more noticeable at later stages of the privatisation process. Research limitations/implications: The paper shows how policies and institutional settings at the society level are determining for the development of employee ownership. Originality/value: The contribution of the paper is to give a general and systematic analysis of the development of employee ownership in China both based on a comprehensive literature review and by utilising existing statistical sources.