Abstract
Privatization has long been a prevailing strategy worldwide for promoting economic liberalization. During privatization of state-owned enterprises employees are often encouraged, as part of policy design, to become equity shareholders through buying priority shares reserved for them with the goal of expediting privatization and building employees' organizational identification. Using risk-taking behaviour as a lens to observe individual-level entrepreneurial orientations after privatization, this study, in a sample of 328 employees in 14 privatized firms in Taiwan, aims to examine the behavioural consequences of two distinct types of motivation behind employee ownership and the contextual influences on such relationships. Because of the hierarchical nature of the individual- and firm-level data, we use the hierarchical linear modelling (HLM) method to test the hypotheses and find that intrinsic motivation ex ante for employee ownership can cultivate innovative behaviour ex post, whereas extrinsic motivation yields the similar effect only in the presence of a climate of self-determination and the absence of environmental hostility.
Acknowledgements
We thank the Council for Economic Planning and Development (CEPD) in Taiwan for providing financial support (contract no. 94070503) and administrative assistance to this research.
Notes
1. For example, ownership may result from employee stock ownership plans (ESOP), stock option plans, Section 401(k) plans and so forth.
2. For example, Blasi et al. (Citation1996) and Faleye et al. (Citation2005) extensively review American samples; Jones and Kato (Citation1993) do so in a Japanese context; and Bogetic (1993) considers samples in Eastern and Central Europe.
3. The employees are entitled to subscribe pre-emptively to a specific amount of shares, with the ceiling either that each employee is allowed to buy shares equal in value up to 48 months' salary, or that total priority shares for employees shall not exceed in total 35% of outstanding shares of that company.
4. Despite serving as a better governance arrangement for encouraging managerial risk taking, the use of stock options remains under development in Taiwan. None of privatized enterprises thus far in Taiwan has ever designed and conducted an option programme for employees during privatization.