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Article Excerpt
Employee stock ownership plans (ESOPs) have become common among large US companies since the ERISA Act of 1987, and are the most common type of employee ownership scheme (Pierce & Furo, 1990). ESOPs are a type of employee benefit plan and operate through a trust that accepts tax-deductible contributions from the company to accumulate stock. This company stock is then allocated to accounts for individual participants and is thought to provide personal incentives to promote company viability and performance. In addition to tax advantages, ESOPs are attractive because they confer actual ownership and are thought to improve employee work attitudes. For example, certain aspects of well-implemented ESOPs, such as employer commitment, employer supportiveness, and increased employee influence over company outcomes, i.e. empowerment (Stein, 1976), are highly relevant to psychological processes described in the commitment literature as leading to multiple forms of organizational commitment (Allen & Meyer, 1990; Meyer & Allen, 1991, 1997).
With the increasing proliferation of employee stock ownership plans (ESOPs), researchers have sought a better understanding of their relationship to important work attitudes, particularly organizational commitment. Virtually all previous ESOP research has conceptualized commitment as what many researchers, for example Meyer and Allen (1991, 1997), would term an 'affective bond' to the organization, despite emerging consensus in the literature that organizational commitment is a multifaceted phenomenon (Angle & Perry, 1981; Mayer & Schoorman, 1992; Meyer & Allen, 1991; O'Reilly & Chatman, 1986; Wiener, 1982). Although many previous ESOP studies have included a 'commitment' variable, without the 'affective' modifier, almost all have used Mowday, Steers, and Porter's (1979) measure (e.g. Rosen, Klein, & Young, 1986), the Occupational Commitment Questionnaire (OCQ). Mowday et al.'s commitment variable is highly similar to Meyer and Allen's affective commitment variable because, under both conceptions, an employee identifies with, is involved in, and enjoys membership in the organization. The Mowday et al. OCQ commitment measure has also been shown to be factor-analytically indistinguishable from the Allen & Meyer (1990) Affective Commitment Scale (ACS) items (Dunham, Grube, & Castaneda, 1994). It should be noted, however, that respective measures for these highly similar conceptualizations of commitment, the OCQ and the ACS, contain items that do not deal with affect. Indeed, Meyer and Hersovitch (2001) are quite explicit in explaining affective commitment as more than positive emotions towards the organization (see Jaros, 1997), emphasizing the sense of attachment that accompanies positive affect.
Multifaceted approaches account for a broader spectrum of an employee's psychological attachments to the organization and, in turn, are relevant to an array of outcomes relating to employee well-being, productivity and retention (Meyer & Allen, 1997). In addition, multifaceted approaches can be used to address conflictedness in psychological attachment (Meyer & Allen, 1991), such as when an employee wants to leave but feels compelled to stay, or wants to stay but feels empowered to leave, although this line of inquiry is still embryonic. The most popular of the multifaceted approaches has been Meyer and Allen's three-component commitment (e.g. Dunham et al., 1994; Hackett, Bycio, & Hausdorf, 1994; Jaros, 1997; Meyer & Allen, 1997), in which overall commitment is made up of three facets. First, individuals possessing affective commitment identify with, are involved in, and enjoy membership in the organization. Second, continuance commitment is a function of (1) perceived costs of leaving or 'side-bets' (Becker, 1960), and (2) perceived lack of alternatives (low alternatives). Employees feel that they must remain with the organization based on circumstances. Third, individuals possessing normative commitment believe that remaining loyal to the organization is the right thing to do, based on internalized loyalty norms developed in early childhood or during their organizational tenure. According to theory, normative commitment may also arise from a sense of unfulfilled obligation to reciprocate unusually good treatment by the employer (Meyer & Allen, 1997).
Among theorized antecedents and processes leading to the three commitment attitudes, some are particularly relevant to ESOPs. First, prominent among supported antecedents of affective commitment (Meyer & Allen, 1997) has been organizational supportiveness (Eisenberger, Fasolo, & Davis-LaMastro, 1990; Guzzo, Noonan, & Elron, 1994; Shore & Tetrick, 1991). Companies' provision of ownership opportunities clearly offers some increment of supportiveness, but the manner in which they implement ESOPs may be much more important to employees. Employees may see implementation as commendable or deficient in terms of supportiveness. For example, employees who think management is doing a good job of providing explanation, information, help, effort and leadership to further the ESOP, i.e. they perceive high employer supportiveness and commitment to it, should feel more emotional attachment to the company in general than those who view management efforts on the ESOP's behalf as lacking. Second, perhaps the most fundamental of the processes thought to influence affective commitment is an employee's personal fulfillment based on met needs and positive work experiences (Meyer & Allen, 1997). Though employees may well develop affective commitment through relatively unconscious associations with positive work experiences--classical conditioning--recent work regarding causal attributions made about human resource practices and positive work experiences indicates that the formation of emotional bonds to the company probably involves considerable conscious reflection by employees over time (Meyer & Allen, 1997). We suggest that the more strongly an ESOP fosters a sense of empowerment, the more positive are employees' work experiences, thus leading to stronger emotional bonds to the organization. Also likely to enhance an employee's sense of met needs and affective commitment are the financial characteristics of ESOPs. Empirical findings linking ESOP characteristics to affective commitment have been consistent with the above theoretical expectations. ESOP-related empowerment, management commitment to the ESOP and financial characteristics have been consistently related to affective commitment (e.g. Buchko, 1992, 1993; French & Rosenstein, 1984; Klein, 1987; Long, 1978; Tannenbaum, 1983).
However, previous work in the ESOP literature has focused exclusively on affective commitment and overlooks other important components of psychological attachment to the organization. There are salient theoretical and empirical reasons for expecting ESOPs to influence other facets of commitment. First, a considerable body of theory suggests that clear, formal reward systems should foster 'side-bet', or instrumental-type, commitment (Becker, 1960; Etzioni, 1975; Gould, 1979). There can be little doubt that ESOP contributions represent significant side-bets (Becker, 1960) because they offer, among other things, ongoing income that can only be sustained if organizational membership persists. Thus, larger company contributions should strengthen the side-bet, or 'high sacrifice', component (Dunham et al., 1994; Hackett et al., 1994; Meyer, Allen, & Gellatly, 1990) of Meyer and Allen's formulation of continuance commitment, by raising perceived leaving costs. Contribution size, however, has little apparent relevance to the other element of Meyer and Allen's continuance commitment, 'perceived low alternatives' (Hackett et al., 1994; Iverson & Buttigieg, 1999; McGee & Ford, 1987; Meyer et al., 1990; Somers, 1993). On the other hand, high account values, representing accrued contributions, may actually correspond to a weaker sense of low alternatives, and thus lower commitment. Attained benefits that stand alone as financial assets--as distinguished from ongoing benefits contingent on organizational membership--should provide employees with greater 'economic choice' and 'lower financial requirements' (Brett, Cron, & Slocum, 1995; Doran, Brief, Stone, & George, 1991; George & Brief, 1990; Steers &...
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