Employee stock option and psychological ownership : a study of a foreign-invested company in China

Pao Yue-kong Library Electronic Theses Database

Employee stock option and psychological ownership : a study of a foreign-invested company in China


Author: Tan, Zhanchao Henry
Title: Employee stock option and psychological ownership : a study of a foreign-invested company in China
Degree: M.Phil.
Year: 2006
Subject: Hong Kong Polytechnic University -- Dissertations
Employee stock options -- Case studies
Employee ownership -- China -- Case studies
Department: Dept. of Management and Marketing
Pages: 145 leaves : ill. ; 31 cm
Language: English
InnoPac Record: http://library.polyu.edu.hk/record=b2069695
URI: http://theses.lib.polyu.edu.hk/handle/200/904
Abstract: Employee stock options have been widely adopted in the US, aiming to motivate employees to work hard and be more productive. However, the psychological mechanism leading to employees' attitudinal and behavioral changes is still unclear. Past literature suggests that psychological ownership is the key to the understanding of this psychological process. Thus this study explores the effectiveness of employee stock options through a psychological ownership perspective. Both the antecedents and consequences of psychological ownership are investigated. In addition, this study is conducted in the Chinese context which has significant cultural differences with the West and has rarely been addressed in the previous research on both employee stock options and psychological ownership. Drawing on psychological ownership theory, this study presents a theoretical model that predicts that employee stock options positively affect both employees' job performance and organizational citizenship toward the organization (OCBO) through the mediation of psychological ownership. The model also predicts that the influence of employee stock options on psychological ownership is much weaker than the influence of employees' perceived job control. Data was collected by a self-report survey from employees in a foreign-invested company in China, a wholly-owned subsidiary of an international bank offering stock options to all levels of employees. A total of 218 valid returns were received, representing a response rate of 52%. Of these returns, 144 were from employees who were granted stock options. Model fit indices indicate that the proposed measurement model provides a good fit to the observed data. The results of the regression analysis show that through the complete mediation of psychological ownership, employee stock options are effective in influencing OCBO, but not job performance. Psychological ownership is positively associated with OCBO but not job performance. In addition, job control is found to be much more influential than employee stock options in affecting psychological ownership. These mixed findings of the effectiveness of employee stock options in China are discussed in light of the institutional and organizational factor as well as the cultural factor. Finally, implications for managerial practice and directions for future research are presented.

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