he Role of Behavior and Leadership Dynamics in a Health Care Organization

S P E C I A L I S S U E A R T I C L E

All for one and one for all: A mechanism through which broad- based employee stock ownership and employee-perceived involvement practice create a productive workforce

Andrea Kim1 | Kyongji Han2

1SKK Business School, Sungkyunkwan (SKK)

University, Seoul, South Korea

2Hankamer School of Business, Baylor

University, Waco, Texas

Correspondence

Andrea Kim, SKK Business School, #33515

Business Bldg. 25-2 Sungkyunkwan-ro,

Jongno-gu, Seoul 03063, South Korea.

Email: [email protected]

Funding information

The Employee Ownership Foundation; The

Rosen Ownership Opportunity Fund

Drawing on social identity theory, this research frames a multimediational model that delineates

how broad-based employee stock ownership (BESO) and employee-perceived involvement prac-

tice in tandem yield a productive workforce at the organization level. In our theoretical model, we

propose that social cohesion and voluntary turnover are collective attitudinal and behavioral out-

comes resulting from the shared perception of we-ness that employees experience through both

participatory practices. Our path analysis of a multisource, time-lagged dataset from 176 large

U.S. companies revealed the sequential mediating roles of social cohesion and voluntary turnover

between these organizational practices and labor productivity. Our theoretical claims and empirical

evidence will contribute to a systematic understanding of how and why BESO and employee

involvement leverage greater organizational productivity from employees.

KEYWORDS

cohesion, employee involvement, employee participation, internal fit, labor productivity, stock

ownership, turnover

1 | INTRODUCTION

Broad-based employee stock ownership (BESO), in which equity

shares are offered to employees (Frye, 2004), has been widely utilized

by many organizations worldwide since the early 20th century

(Carberry, 2011) and in particular has been applied to approximately

28 million U.S. workers according to 2015 statistics from the National

Center for Employee Ownership. In accordance with its prevalence,

researchers have examined the effects of BESO on diverse outcomes

at the individual and organization levels, with compelling evidence for

performance effects (Mullins, 2018) such as positive attitudes and

behaviors of employees, improved labor productivity, greater financial

performance, and higher survival rates (Kruse, 2002; Kruse, Free-

man, & Blasi, 2010; Park, Kruse, & Sesil, 2004).

Although these favorable results indicate that BESO confers sus-

tained competitive advantages to organizations, several limitations are

present in the existing literature. For example, prior research is pre-

dominantly fragmented as a result of efforts to connect the effects of

BESO to only a particular facet of performance (e.g., employee, opera-

tional, or financial) outcomes. In the field of strategic human resource

(HR) management, researchers have long agreed that organizational

performance does not directly stem from HR practices, but instead

from the HR outcomes that these practices are designed to coherently

induce (Dyer & Reeve, 1995; Gerhart, 2005; Guest, 1997). In this vein,

it is essential to determine attitudinal and behavioral outcomes medi-

ating the effect of BESO on labor productivity at the organization

level. Furthermore, BESO has often been examined in isolation with-

out considering its relationships with other HR practices. Given that

employees in large organizations are typically exposed to BESO as

well as other relevant HR practices (Kim, Han, & Kim, 2017) such as

employee involvement (Kruse et al., 2010), it is imperative to investi-

gate the performance impact of BESO in relation to other HR

practices.

This research seeks to fill these gaps using a multimediational

model that delineates the mechanism through which BESO affects

organizational performance in relation to another HR practice. First,

based on social identity theory (Ashforth & Mael, 1989; Tajfel &

Turner, 1985), we propose that social cohesion and voluntary turn-

over are collective workforce outcomes mediating the link between

BESO and labor productivity. Second, we derive employee involve-

ment, which functions to empower employees as well as facilitate

their participation in decision-making and information sharing (Cotton,

1993; Lawler, 1986), as a “partner” HR practice of BESO from existing

ownership research (Milgrom & Roberts, 1992; Pendleton, Wilson, &

DOI: 10.1002/hrm.21958

Hum Resour Manage. 2019;58:571–584. wileyonlinelibrary.com/journal/hrm © 2019 Wiley Periodicals, Inc. 571

Wright, 1998; Pierce, Rubenfeld, & Morgan, 1991). Extending social

identity theory to the common goal of these participatory practices,

we suggest that BESO and employee-perceived involvement practice

jointly foster the shared perception of we-ness among employees,

promoting an array of organizational outcomes of interest. Finally, we

test our research model by conducting a path analysis using a

multisource- (i.e., supervisors, employees, and objective data) lagged

dataset for 176 large U.S. companies, combining the 2010 and 2011

Great Place to Work (GPTW) datasets.

Our findings provide significant insights into the employee own-

ership literature. They shed new light on the link between BESO and

labor productivity by illuminating intermediate outcomes such as

social cohesion and voluntary turnover. Although positive associations

between employee ownership and organizational outcomes have

been demonstrated in more than 100 studies at the organization level,

much less is known about the factors that mediate these associations

(Arthur & Aiman-Smith, 2001; Gerhart, Rynes, & Fulmer, 2009). Most

macro studies focusing on organizational outcomes have assumed

that shared ownership plans elicit productive attitudes and behaviors

from employees, while micro studies delving into individual attitude

and/or behavior at work have not been extended to organizational

performance. Given that participatory practices (i.e., BESO and

employee involvement) have long been acknowledged as ways to effi-

ciently produce organizational outputs (Y. Jiang, Colakoglu, Lepak,

Blasi, & Kruse, 2015) and are thereby a noteworthy feature of highly

productive organizations (J. A. Wagner, 1994), we focus on identifying

collective attitudinal and behavioral outcomes, such as social cohesion

and voluntary turnover, which eventually affect labor productivity.

Corresponding to the growing awareness of the need to explore the

psychological foundations of organizational effectiveness (Ployhart &

Hale, 2014), our integrative framework goes beyond prior research by

investigating how BESO in tandem with employee involvement con-

tributes to the intraorganizational environment, where employees

consort with each other and work together to improve organizational

labor productivity.

2 | THEORETICAL BACKGROUND AND HYPOTHESES

2.1 | “We-ness” emanating from BESO and employee-perceived involvement practice: Social identity theory

Our argument that BESO immediately leads to collective attitudinal

and behavioral outcomes for labor productivity is underpinned by

social identity theory, which explains how individuals identify the self

with their social group and how their social identity affects their atti-

tudes and behaviors in the social group (Ashforth & Mael, 1989;

Tajfel & Turner, 1985). Social identity is defined as an individual's self-

concept (i.e., the way an individual perceives the self) deriving from

his or her knowledge of group membership (Tajfel, 1978) and shaped

by the social identification, which refers to a psychological state

reflecting an individual's readiness to define the self as a member of

his or her social group (Haslam, 2004) or the perception that “I

becomes we” (Brewer, 1991, p. 476). Social identity serves as a promi-

nent precursor for heightened commitment to the social group

(Meyer, Becker, & van Dick, 2006), as the identification process

engenders an individual's sense of sharing his or her fate with the

social group (Ashforth & Mael, 1989). In this vein, employees' social

identities are formed by their perceived one-ness with their organiza-

tions, which in turn motivates attitudinal and behavioral reactions

among employees benefiting their organizations rather than their self-

interest (Ashforth & Mael, 1989; Hogg & Terry, 2000; van Knippen-

berg, 2000). Furthermore, because group members share their social

identities with the social group and thereby perceive a collective

sense of similarity (Lee, Park, & Koo, 2015), the overall social identity

of the workforce shapes organizational membership, which both

describes and prescribes organizationally based attitudes and behav-

iors (Hogg & Terry, 2000).

Social identity theory catalyzes our understanding of the effec-

tiveness of BESO in two ways. First, it supports the consensus that

employee attitudes and behaviors may intervene between organiza-

tional practices and performance in the strategic HR management lit-

erature (Dyer & Reeve, 1995; Guest, 1997). From this standpoint,

organizational performance does not fully stem from the use of BESO

per se, but rather at least partially from the workforce attitude and

behavior intended by the practice (Schuler & Jackson, 1987). Second,

implementing BESO in broader groups of employees is effective for

inducing more employees to exhibit the attitudes and behaviors

required by BESO, because this can enlarge the group of employees

experiencing BESO and thereby foster the organizational identifica-

tion process (i.e., perceiving a sense of we-ness) among more

employees.

We extend social identity theory to determine some of the collec-

tive attitudinal and behavioral outcomes that may link the extensive

use of BESO to improved labor productivity at the organization level.

Specifically, we conjecture that social cohesion and voluntary turn-

over are the two outcomes connoting “we-ness” perceived through

the organizational identification enacted by BESO. We-ness generally

refers to closeness among members in social groups, which is built on

proximity and mutuality (Baumeister & Leary, 1995). That is,

employees who intimately interact with others (Weisband & Atwater,

1999) and perceive interdependence (Brewer & Gardner, 1996) tend

to like, and stick with, one another. Given that social identity arises

when an individual shares interests with his or her social group

(Meyer et al., 2006; Rousseau, 1989), BESO generates a situational

cue indicating that employees' interests (i.e., equity) are shared with

others in their organizations, which guides them to perceive the posi-

tive self as a share owner and mutual interdependence.

In addition to BESO, social identity theory also compels us to

regard employee involvement as another organizational practice

enhancing situational cues fostering social identity in the workforce.

According to social identity theory, employees estimate their relation-

ships with their organizations in terms of their roles and status, which

implies that employees perceiving themselves to have high status are

likely to sense a positive social identity (Tajfel, 1978; Tajfel & Turner,

1979). Employee involvement is an organizational practice intended

to facilitate communication and codetermination between employers

and employees (Kim et al., 2017). Employee involvement is grounded

572 KIM AND HAN

on “a conscious and intended effort by individuals at a higher level in

an organization,” and provides “opportunities for individuals or groups

at a lower level in the organization to have greater voice in one or

more areas of organizational performance” (Glew, O'Leary-Kelly, Grif-

fin, & VanFleet, 1995, p. 402). Thus, in decentralized organizations,

similar to high-status management, employees are formally encour-

aged to influence their organizational decision-making on diverse

proximal (e.g., work-related) and distal (e.g., firm level) issues

(Joensson, 2008), through information shared by the organizational

authority as well as communication between employees and manage-

ment (Cotton, 1993; Lawler, 1986). In fact, past studies (e.g., Fuller

et al., 2006; Joensson, 2008) have revealed that employee involve-

ment leads employees to identify themselves with their organizations.

This positive association between employee involvement and social

identity makes sense, because employee involvement signals that

employees are included in their organizations and that their opinions

are valued by the organizational authority (Fuller et al., 2006). These

findings are also attributed to a climate of open and participative com-

munication (Smidts, Pruyn, & Riel, 2001) and procedural justice

(Tyler & Blader, 2003), which promote organizational identification

that affirms employees' acceptance and worth as organizational mem-

bers. Taken together, in line with BESO sharing return rights or equity,

we suggest that employee involvement sharing control rights

(Milgrom & Roberts, 1992) or information and influence with

employees (Pierce et al., 1991) is another component fostering a par-

ticipative and shared work structure (Ben-Ner & Jones, 1995; Kruse,

2002; Pendleton et al., 1998), in which employees are likely to feel

we-ness. As such, although other theoretical views may support the

inclusion of different HR practices, social identity theory supports that

employee-perceived involvement practice is incorporated into our

multimediational model of BESO.

In particular, in line with prior research (e.g., Conyon & Freeman,

2004), we predict that BESO and employee-perceived involvement

practice have independent effects on organizational outcomes of

interest. K. Jiang et al. (2012) asserted that to improve work out-

comes, multiple HR practices pursuing a common goal have additive

relationships, in which practices independently affect desired out-

comes and the total effects of utilizing such practices are greater than

the effects of utilizing any single practice alone. As discussed above

based on social identity theory, BESO and employee-perceived

involvement practice facilitate the common goal of promoting the per-

ceived we-ness of the workforce. However, each practice has a sepa-

rate path to the desired goal: BESO allows employees to participate in

financial distribution, whereas employee involvement encourages

them to participate in other forms of decision-making at work. Hence,

both participatory practices exert their own effects on organizational

outcomes in an additive fashion.

On balance, BESO and employee-perceived involvement practice

independently contribute to a social context in which employees per-

ceive we-ness by experiencing managerial principles for common

prosperity based on sharing equity and joint decision-making. In this

sense, social cohesion and voluntary turnover constitute collective

attitudes and behaviors manifested by the social identity of the work-

force under BESO and employee involvement, and further result in

increased labor productivity.

2.2 | A collective attitudinal outcome: Organizational social cohesion

In this research, we define organizational social cohesion as the aggre-

gate of shared senses of friendship, family, teamwork, and loyalty to

one another among employees at the organization level. Social cohe-

sion is a unit level variable (Friedkin, 2004) that captures shared

attraction and mutual liking among individuals based on their social

relations (Seashore, 1954; M. E. Shaw, 1981) and desire to maintain

social relationships (Brawley, Carron, & Widmeyer, 1993) and mem-

bership (Lott & Lott, 1965). Social cohesion is an essential element of

social integration (O'Reilly, Caldwell, & Barnett, 1989; Webber &

Donahue, 2001). Employees can be socially integrated at the organiza-

tion level (Hogg & Terry, 2000), and, therefore, organizational social

cohesion signifies how well employees in various units or departments

are integrated within an organization. Just as groups may possess

group level characteristics equivalent to individual characteristics

(Cohen & Bailey, 1997), organizations may possess organization level

characteristics analogous to group characteristics, such as justice per-

ceptions (Konovsky, 2000) and learning (Crossan, Lane, & White,

1999). In addition, since social cohesion can be understood in the mul-

tilevel nature of organizations, in which employees can be attracted

individually or collectively (Gully, Devine, & Whitney, 1995),

employees should have a collective identity and stick together in

socially cohesive organizations.

Given that sharing is an endeavor for building social relationships

(Gottman & DeClaire, 2001), BESO and employee involvement can

promote unity within organizations through a sense of we-ness and

strong psychological bonds. According to social identity theory, peo-

ple identify the self with their organization to enhance their self-

esteem (Ashforth & Mael, 1989) and thus have positive social identity

with enhanced self-esteem (Tajfel & Turner, 1979). People also recog-

nize their organizational memberships based on their social relation-

ships and roles (Hogg, Terry, & White, 1995). That is, they generally

have strong desires for positive sense of self and thereby seek to

maintain positive self-image by engaging in socially important and

salient roles (Ashforth & Kreiner, 1999). These key principles of social

identity theory imply that organizational social cohesion may be inten-

sified by HR practices that enable employees to define themselves

and others as constituents of the organization's positive identity.

Employee ownership and involvement are also positively related to

the organizational identification process (Long, 1980), and so the per-

ceived we-ness emanating from these HR practices can stimulate the

self-enhancement of organizational members. Furthermore, BESO and

employee involvement can pave pathways of interpersonal influence

among organizational members, which are essential to establish a

socially cohesive organization (Friedkin, 2004).

Specifically, BESO may enable employees to view their roles as

significant, and their coworkers as valuable partners. The financial

benefits of BESO, determined by stock prices reflecting entire busi-

ness outcomes at the organization level, are shared among employee

owners. BESO, in which the financial benefits of employees are posi-

tively correlated (Deutsch, 1949) and interdependent (Wageman &

Baker, 1997), can be described as a positive-sum game, providing

extrinsic rewards that prevent factionalism among eligible employees,

KIM AND HAN 573

as opposed to competition for limited valuable resources (as it occurs

when there is a single fixed pool of financial benefits).

In the case of employee involvement, such HR practices construct

a decentralized situation in which authority for decision-making and

access to organizational information are shared widely among organi-

zational members (Jackson, 1983). In such context, employees can

perceive enhanced self-esteem and the significance of their roles, as

they participate in making decisions with high-status managers

(Mitchell, 1973) and gain a better understanding about their jobs and

their organization's operations through communication and informa-

tion sharing with management (Schuler, 1979). Employees can also

acknowledge that their coworkers are important partners to achieve

common goals because they make decisions about work-related issues

together through a process of information and knowledge sharing

(Wright, Gardner, & Moynihan, 2003).

BESO and employee involvement for sharing equity and control

are hypothesized to imbue positive social identity among organiza-

tional members and provide the “glue” to unify their interests in a way

that fosters perceptions of we-ness. The extensive use of these HR

practices may create strong social cohesion in which employees feel a

sense of kinship with colleagues because everyone's roles are per-

ceived as more valuable, salient, and visible in their daily work rou-

tines. Thus, we propose:

Hypothesis 1 BESO (a) and employee-perceived involve-

ment practice (b) are positively related to social cohesion

at the organization level.

2.3 | A collective behavioral outcome: Organizational voluntary turnover

In this research, we define organizational voluntary turnover as the

aggregate rate of voluntary employee separations within organizations

during a certain period. Voluntary turnover refers to employee-

initiated departures requiring replacement (McElroy, Morrow, & Rude,

2001) and has consistently been indicated to have a strong negative

relationship with organizational performance (Holtom, Mitchell, Lee, &

Eberly, 2008). Collective voluntary turnover is a collective emergent

phenomenon (Nyberg & Ployhart, 2013) that not only originates from

the behavior of individuals (Kozlowski & Klein, 2000) but also depends

on their social contexts and relationships (J. D. Shaw, 2011), including

supervisor turnover (Kacmar, Andrews, Van Rooy, Steilberg, & Cer-

rone, 2006) and colleagues' job search behaviors (Felps et al., 2009).

In line with a contextual view challenging the conventional

assumption that voluntary turnover is an individual level construct

(Hausknecht & Holwerda, 2013), we examine whether social cohesion

shaped by BESO and employee-perceived involvement practice

reduces voluntary turnover at the organization level. As proposed by

social identity theorists, employees maintain social identity by retain-

ing social memberships (Tajfel, 1974). Employees are more likely to

want to stay with colleagues in an organization where social identity

is positive and satisfactory (Tajfel & Turner, 1979). Socially cohesive

organizations established by BESO and employee involvement are

places where employees wish to stay to sustain their self-esteem and

thereby maintain positive social identity. As Harrison, Newman, and

Roth (2006, p. 307) noted, “the depth and breadth of interpersonal

relationships” are a major driver of retention (Mitchell, Holtom, Lee,

Syblynski, & Erez, 2001), such that employees with strong (i.e., deep

and broad) relationships with their colleagues are less likely to quit

their jobs and move to another employer (Mossholder, Settoon, &

Henagan, 2005). Organizational social cohesion is a reflection of

strong social bonds tying individuals together. In socially cohesive

organizations, employees can have not only affective benefits such as

increased morale and job satisfaction (Locke & Schweiger, 1979), but

also positive social identity. Consequently, cohesion resulting from

BESO and employee involvement leads to employee retention

(Gardner, Wright, & Moynihan, 2011).

In summary, if effectively and widely implemented, BESO and

employee involvement may benefit employees by providing enhanced

social relationships with other colleagues in the organization. Due to

the benefits (e.g., positive identity, increased morale, and satisfactory

relationships) engendered by teamwork, social interactions, and inclu-

sion in group communication inherent in BESO and employee involve-

ment, employees are likely to intensify social cohesion among

organizational members (Osterman, 1995) and subsequently deter

their voluntary turnover (Krackhardt & Porter, 1986). This leads to:

Hypothesis 2 BESO (a) and employee-perceived involve-

ment practice (b) are negatively related to voluntary turn-

over through social cohesion at the organization level.

2.4 | The sequential mediation of social cohesion and voluntary turnover

Finally, in this study, we incorporate social cohesion and voluntary

turnover as two intermediate outcomes into a black box through

which BESO and employee-perceived involvement practice affect

labor productivity at the organization level. Stronger social cohesion

and lower voluntary turnover are potential advantages helping organi-

zations that extensively implement BESO and employee involvement

become more productive.

Social cohesion may be an immediate psychological outcome

enabling organizations to realize the productivity effects of BESO and

employee involvement. Previous research has identified that strong

social cohesion is a key feature of highly productive groups (Darley,

Gross, & Martin, 1952), due to the fact that the members of such

groups tend to be more oriented toward group goal attainment

(H. J. Klein & Mulvey, 1995), to be more responsible in their roles

(M. E. Shaw, 1981), and to engage in extra-role behaviors (Kidwell,

Mossholder, & Bennett, 1997). In addition, the members of strongly

cohesive groups tend to work as hard collectively as they do individu-

ally (Karau & Hart, 1998) and to perceive that other group members

also work as well as they can (Mulvey & Klein, 1998). Indeed, Liden,

Wayne, Jaworski, and Bennett's (2004) field study confirmed that

social cohesion is negatively related to social loafing by group mem-

bers in organizational settings. In socially cohesive groups, employees

are psychologically attracted to and attached to their colleagues. To

fulfill their need to sustain social affiliations with their favorite

574 KIM AND HAN

colleagues, they work harder and contribute to group goals

(M. E. Shaw, 1981). Likewise, employees who work in socially cohe-

sive organizations are more likely to perform their jobs in a productive

manner. Organizational social cohesion helps to establish and enforce

norms that encourage hard collaborative working while alienating free

riders. Employees who are strongly attracted and attached to other

members in their organizations are likely to maintain organizational

membership to work within a cooperative community of workers, as

well as to have work motivation that helps sustain their organizations.

Voluntary turnover may be an intermediate behavioral outcome

activating the productivity effects of BESO and employee involve-

ment in socially cohesive organizations. It has widely been recognized

that voluntary turnover is more disruptive and costly to organizations

than other types of turnover (Holtom et al., 2008). The negative con-

sequences of voluntary turnover are attributed to depletion of human

capital resources (e.g., employee knowledge, skills, abilities, and per-

sonality traits; Nyberg & Ployhart, 2013) and subsequent fracturing of

social capital (Dess & Shaw, 2001). Organizational voluntary turnover

also leads to disruptions in the collective functioning of the workforce

and entails extra costs of recruitment, selection, newcomer socializa-

tion, and training (Bluedorn, 1982; Hausknecht & Trevor, 2011; Mob-

ley, 1982; Staw, 1980). Due to such inefficiency in cooperation and

coordination, aggregate voluntary turnover is detrimental to labor pro-

ductivity at the organization level (Osterman, 1987), as confirmed by

meta-analytical reviews (e.g., Heavey, Holwerda, & Hausknecht, 2013;

T.-Y. Park & Shaw, 2013). As such, lower voluntary turnover due to

social cohesion in organizations that effectively and widely implement

BESO and employee involvement is likely to result in better labor

productivity.

In conclusion, all aforementioned theoretical reasoning and dis-

cussions suggest that social cohesion and voluntary turnover lead to

sequential mediating effects between participatory practices and labor

productivity. That is, the extensive use of BESO and employee

involvement encourages wider groups of employees to perceive we-

ness. This in turn fosters social cohesion, which is an important social

mechanism that suppresses collective voluntary turnover (Nyberg &

Ployhart, 2013), ultimately leading to improved labor productivity.

Hence, we propose the following:

Hypothesis 3 BESO (a) and employee-perceived involve-

ment practice (b) are positively related to labor produc-

tivity through social cohesion and voluntary turnover at

the organization level.

3 | METHODS

3.1 | Sample and data

In this research, we combined and analyzed 2010 and 2011 datasets

from the GPTW Institute (www.greatplacetowork.com), which has

been administering surveys since 1998 to create a list of the “100

Best Companies to Work for in America” that is published by Fortune

magazine every January. To test our theoretical model, we used the

2010 GPTW dataset for BESO, employee-perceived involvement

practice, organizational social cohesion, and collective voluntary turn-

over, as well as the 2011 GPTW dataset for organizational labor pro-

ductivity. The GPTW Institute provided access to data from

companies included in the “100 Best Companies to Work for in Amer-

ica” list, as well as those that applied but were not ranked in the list,

under a confidentiality agreement that allowed data analysis on a

GPTW Institute server. After excluding some outliers and matching

participant companies during the period of 2010–2011, we analyzed

information for 176 companies and 73,195 full-time employees (aver-

age 415.88 full-time employees per company).

The GPTW dataset consists of two parts compiling different

sources of information. One comprises company survey data, col-

lected from management representatives of companies who provided

answers to survey items asking about employment circumstances and

practices at the time the companies applied to be ranked in the “100

Best Companies to Work For in America” list. The other part com-

prises employee survey data including 57 questions concerning

employee perceptions of their own and colleagues' attitudes and

behaviors and perceived or experienced organizational practices. This

survey was randomly sent to representative employees in each com-

pany. Once groups of representative employees were identified, com-

panies were responsible for sending out questionnaire packets

containing preaddressed stamped envelopes to return the question-

naire directly to the data processor in the GPTW Institute. Thus, the

survey responses of employees were not seen by anyone in the par-

ticipating companies. As a follow-up step, participant company con-

tacts were also asked for information about how companies

generated their random samples (e.g., by Social Security number or

employee ID) and how they distributed questionnaires (e.g., by inter-

nal mail or regular mail). All responses to the employee survey were

rated on a 5-point Likert scale ranging from 1 (almost always untrue)

to 5 (almost always true).

3.2 | Measures

As seen in Figure 1, the constructs of this study were measured by

different informants during two different periods.

3.2.1 | BESO

We operationalized BESO as an HR practice in which the overall

workforce experiences the conscious and intended efforts of the man-

agement to share equity. To measure this variable, we focused on the

extensive use of broad-based stock options and thus incorporated

information regarding the percentage of full-time employees who

received stock option awards over the past year, which is a significant

dimension of employee ownership (Kruse, 2002; Long, 1980). This

information was provided by management representatives in each

company survey. The coverage of employees under an HR practice is

instrumental for capturing precisely how the practice is experienced

by employees in large firms (Jones, Kalmi, & Kauhanen, 2010) as com-

pared to other measures such as dummy variables for its adoption

(Jones, Kato, & Pliskin, 1997). Such operationalization, which reflects

the alignment in interests between employers and their workforce,

has typically been employed in existing employee ownership studies

KIM AND HAN 575

(e.g., Conyon & Freeman, 2004; Kruse, 1992; Long, 1980). This

employee coverage measure is theoretically appropriate for our study,

in which we examine the impact of BESO on social cohesion, volun-

tary turnover, and labor productivity at the organization level, because

it measures how broadly stock ownership is spread throughout the

workforce. Using information about the percentage of BESO recipi-

ents, we measure the extent to which full-time employees extensively

experienced BESO and connect the percentage of employee participa-

tion in BESO to variation in collective performance outcomes

(i.e., social cohesion, voluntary turnover, and labor productivity).

3.2.2 | Employee-perceived involvement practice

Employee-perceived involvement is operationalized in this research as

an HR practice in which the overall workforce experiences conscious

and intended efforts by the management to communicate with rank-

and-file employees and encourage their participation in decision-mak-

ing. This variable was constructed by aggregating the average

responses of full-time supervisory employees to the following three

statements in the employee survey (α = 0.72): (a) “Management is

approachable, easy to talk with”; (b) “Management genuinely seeks

and responds to suggestions and ideas”; and (c) “Management

involves people in decisions that affect their jobs or work environ-

ment.” These three questions are comparable to other published items

measuring employee-perceived involvement practice. For example,

Wayne, Shore, Bommer, and Tetrick (2002) developed survey items to

measure how well a company facilitates employee involvement in

ways that involve asking employees for their opinions on important

issues, that discuss the implications of decision-making with

employees, and that provide employees with privileged communica-

tions from management. Although measuring specific practices

(e.g., quality circle) for employee involvement would be ideal, it would

also be less practical and efficient to enumerate all specific workplace

practices in survey items to establish a comprehensive dataset from

firms in diverse industries, such as GPTW datasets. Thus, prior studies

(e.g., Blasi, Freeman, & Kruse, 2016) have regarded management

intent and behavior as a workplace practice. We used responses by

supervisory employees rather than nonsupervisory employees to bet-

ter assess the extent to which management efforts regarding

employee involvement are experienced by the entire workforce,

because supervisors are responsible for organizing and managing the

work of employees on behalf of management in large organizations

(Hales, 2005) and, therefore, have more chances to experience

employee involvement practices executed by the management in an

organizational hierarchy. The mean rwg value was 0.77 and values for

the Intraclass correlations (ICCs) were 0.05 for ICC(1) and 0.95 for

ICC(2). The relatively low value of ICC(1) indicates that the companies

in our sample show little variance in the degree of using employee

involvement from the respondent perspective. This makes sense,

given that most of the companies applying for the GPTW competition

are likely to be employee-oriented. Indeed, calculation of the design

effect (Kish, 1965) yielded a value of 20.79; as this value was greater

than 2, we proceeded with aggregation.

3.2.3 | Organizational social cohesion

As discussed here, organizational social cohesion is operationalized as

the shared perceptions of the workforce regarding their commitment

to interpersonal relationships and positive feelings for one another.

To avoid the common method bias that often plagues the results of

studies analyzing data collected from a single source (Blasi et al.,

2016), organizational social cohesion was measured by aggregating

the average responses of full-time nonsupervisory employees to the

following three statements in the employee survey (α = 0.78):

(a) “People care about each other here”; (b) “There is a ‘family’ or

‘team’ feeling here”; and (c) “We're all in this together.” Conceptually,

these three questions are appropriate to capture the degrees of social

bonds that lead organizational members to stick together and remain

united (Carron, 1982; Casey-Campbell & Martens, 2009), which are

the core attributes composing the concept of social cohesion. The

mean rwg value was 0.70 and values of ICC(1) and ICC(2) were 0.05

and 0.95, respectively. The relatively low value of ICC(1) is under-

standable because GPTW applicants are largely characterized by the

high quality of social relationships. These items also measured how

rank-and-file employees assess the typical level of social cohesion

among all individuals in the organization. As the design effect was

20.79, we conducted further analysis.

Organizational

Labor Productivity

(Management survey in 2011)

Employee-Perceived

Involvement Practice

(Supervisory employee survey in 2010)

BESO

(Management survey in 2010)

Organizational

Social Cohesion

(Nonsupervisory employee survey in 2010)

Organizational

Voluntary Turnover

(Management survey in 2010)

FIGURE 1 A sequential mediational model of BESO and employee-perceived involvement practice for labor productivity. Note. Solid lines denote

hypothesized linkages whereas dotted lines denote nonhypothesized linkages; sources and years of data collection are given in parentheses. BESO: broad-based employee stock ownership

576 KIM AND HAN

3.2.4 | Organizational voluntary turnover

The organizational voluntary turnover rate was calculated by dividing

the number of voluntary separations (excluding retirements) of full-

time employees by the average number of full-time employees occur-

ring in the previous 12 months (J. D. Shaw, Gupta, & Delery, 2005).

3.2.5 | Organizational labor productivity

One-year-lagged organizational labor productivity was measured as

the natural logarithm of the ratio of firm revenue to the number of

full-time employees (Datta, Guthrie, & Wright, 2005).

3.2.6 | Control variables

We controlled for industry membership through six dummy variables

representing seven industrial classifications (agricultural and food pro-

duction, construction and real estate, manufacturing, transportation

and communication, retail, finance, and service), firm size (number of

employees), firm age (number of years since foundation), union pres-

ence (1 = yes; 0 = no), experience of layoff (1 = yes; 0 = no), and

experience of M&A (1 = yes; 0 = no). These variables have been

widely included in prior research due to their potential influence on

voluntary turnover and labor productivity (e.g., Hausknecht & Trevor,

2011; Iverson & Pullman, 2000; Yanadori & Kato, 2007).

4 | RESULTS

Table 1 presents means and SDs for the principal variables and corre-

lations among the variables of interest. Overall, 26% of the sample

firms had unions, and 22 and 18% of the sample firms experienced

layoffs and M&A, respectively. On average, the sample firms had a

voluntary turnover rate of 8% and provided stock awards to 9.03% of

full-time employees. In our sample, 34.66% of the participant compa-

nies granted stock to full-time employees, which is comparable to

prior studies ranging from 23.4% in Europe (Richter & Schrader, 2017)

to 44.5% in the United States (Blasi et al., 2016). Among the 34.66%

of companies with BESO, an average of 44.17% of full-time

employees received stocks. The differences in stock recipient rates

across firms in our sample are consistent with prior research

(e.g., Jones & Kato, 2012) indicating the presence of substantial

between-firm and within-firm variation in implementing and distribut-

ing financial participation.

In general, correlations among the variables of interest showed

patterns expected according to theory and previous research.

Although we detected a high correlation (r = 0.63, p < 0.001)

between employee-perceived involvement practice and social cohe-

sion in the GPTW dataset, multicollinearity should not substantially

affect the findings of this study because no variable had a variation

inflation factor (VIF) value greater than 10 and tolerance (1/VIF) lower

than 0.1.

Using LISREL 9.1 (Jöreskog & Sörbom, 2012), we conducted con-

firmatory factor analysis (CFA) to confirm the distinction between the

perceptual measures of employee involvement and social cohesion,

which were concurrently rated by the same respondents in the GPTW

employee survey. Fit indices of CFA at the individual level

(N = 73,195; χ2[8] = 2,839.32, p < 0.001, comparative fit index

[CFI] = 0.99, root-mean-square error of approximation [RMSEA] =

0.07) and at the organization level (N = 176; χ2[8] = 13.41, n.s., CFI =

1.00, RMSEA = 0.06) suggested that the two-factor model fits the

data well, demonstrating that these perceptual measures are

distinguished.

4.1 | Structural model analysis

A path analysis was conducted to test Hypotheses 1 to 3 by imputing

correlation matrices (Table 1) into LISREL 9.1 (Jöreskog & Sörbom,

2012). To identify the most acceptable model from a path analysis

(James, Mulaik, & Brett, 2006), our hypothesized full mediation model,

which excluded the direct paths from BESO and employee-perceived

involvement practice on voluntary turnover and labor productivity as

well as the direct path from social cohesion on labor productivity, was

compared with several partial mediation models, such as Model 1 in

which we added all of the excluded direct paths, Model 2 in which we

added the direct paths from BESO on voluntary turnover and labor

productivity, Model 3 in which we added the direct paths from

employee-perceived involvement practice on voluntary turnover and

labor productivity, and Model 4 in which we included the direct paths

TABLE 1 Correlations and descriptive statistics

Mean SD 1 2 3 4 5 6 7 8 9

1. Firm sizea 13,419.47 27,055.80

2. Firm agea 68.28 43.90 0.06

3. Union presence 0.26 0.44 0.12 0.11

4. Layoff 0.22 0.41 −0.08 −0.01 −0.03

5. M&A 0.18 0.39 0.08 −0.06 −0.01 0.16

6. Broad-based employee stock ownership 9.03 21.04 0.01 −0.20 −0.11 0.26 0.13

7. Employee-perceived involvement practice 4.27 0.20 −0.29 −0.09 −0.07 −0.12 −0.15 −0.06

8. Organizational social cohesion 4.26 0.19 −0.35 −0.11 −0.20 −0.02 −0.14 0.10 0.63

9. Organizational voluntary turnover 0.08 0.06 0.01 −0.24 −0.14 −0.12 −0.16 −0.12 0.03 −0.08

10. Organizational labor productivitya 0.51 0.71 −0.21 0.09 0.03 0.21 −0.02 0.21 0.02 0.18 −0.24

N = 176. Numbers 1–9 in the top row correspond to variables in the respective sections of the table. Correlations with absolute values greater than or equal to 0.15 are statistically significant at p < 0.05; those greater than or equal to 0.20 are statistically significant at p < 0.01; and those greater than or equal to 0.26 are statistically significant at p < 0.001. a The logarithms for these variables were used in all subsequent analyses.

KIM AND HAN 577

from BESO and employee-perceived involvement practice on volun-

tary turnover. Our hypothesized full mediation model provided an

acceptable fit (χ2[16] = 34.39, p < 0.01, CFI = 0.95, RMSEA = 0.08),

and the partial mediation models also produced an acceptable fit

(χ2[11] = 26.85, p < 0.01, CFI = 0.96, RMSEA = 0.09 for Model 1;

χ2[14] = 28.77, p < 0.01, CFI = 0.96, RMSEA = 0.08 for Model 2;

χ2[14] = 33.62, p < 0.01, CFI = 0.95, RMSEA = 0.09 for Model 3;

χ2[14] = 33.74, p < 0.01, CFI = 0.95, RMSEA = 0.09 for Model 4).

We also conducted a chi-square difference test to identify the best

model among diverse models in structural equation modeling (James,

Mulaik, & Brett, 1982). The results of the chi-square difference tests

between our hypothesized full mediation model and partial mediation

models were not significant, indicating that our full mediation model

was the most parsimonious (i.e., fewer paths in the model) and was

therefore acceptable. Finally, we detected nonsignificant direct path

coefficients of both BESO and employee-perceived involvement prac-

tice on voluntary turnover and labor productivity, as well as a nonsig-

nificant direct path coefficient of social cohesion on labor

productivity, in the partial mediation models. All of these results sug-

gest that the full-mediation model should be retained in this study.

As seen in Figure 2, BESO (β = 0.13, p < 0.05) and employee-

perceived involvement practice (β = 0.63, p < 0.001) showed signifi-

cant positive relationships with social cohesion. In addition, social

cohesion fostered by these two practices was found to reduce volun-

tary turnover (β = −0.17, p < 0.05). Finally, reduced voluntary turn-

over through enhanced social cohesion formed by the extensive use

of both BESO and employee-perceived involvement practice ulti-

mately improved labor productivity in the following year (β = −0.16,

p < 0.05). Consequently, these results supported Hypotheses 1, 2,

and 3.

4.2 | Bootstrapping analysis for mediation

Following the recommendations of Preacher and Hayes (2008), we

performed a parametric bootstrap test to confirm the significance of

the indirect effects described here. Table 2 shows 95% bias-corrected

confidence intervals (CIs) for each bootstrap estimate with 1,000

bootstrap samples. As shown in Table 2, the indirect effects of BESO

and employee-perceived involvement practice on labor productivity

through social cohesion and voluntary turnover were 0.004 (CI: 0.00,

0.01, p < 0.05) and 0.02 (CI: 0.00, 0.05, p < 0.05), respectively. Similar

results were found for bootstrapping analyses with 5,000 and 10,000

bootstrapping samples. Hence, we confirm the sequential mediation

of social cohesion and voluntary turnover between both participatory

practices and labor productivity.

5 | SUPPLEMENTAL ANALYSIS

We additionally conducted a regression-based moderated mediation

analysis to see if BESO and employee-perceived involvement practice

interact to affect labor productivity sequentially through social cohe-

sion and voluntary turnover. Extending social identity theory to the

internal fit perspective, we previously proposed that there is an addi-

tive relationship between BESO and employee-perceived involvement

practice on the organizational outcomes of interest. However, in the

existing employee involvement and participation literature, some

researchers (e.g., Ben-Ner & Jones, 1995; Milgrom & Roberts, 1992)

have traditionally suggested that there is an interactive relationship

between financial participation and employee involvement based on

economic ownership theory. Our additional analysis indicated nonsig-

nificant interplay between BESO and employee-perceived

Organizational

Labor Productivity

R2 = .24***

Employee-Perceived

Involvement Practice

BESO

Organizational

Social Cohesion

R2 = .41***

Organizational

Voluntary Turnover

R2 = .19***

.13*

.63***

-.17* -.16*

FIGURE 2 Results of path analysis. Note. N = 176. Standardized path coefficients are reported. For ease of presentation, effects of control

variables are not reported. BESO: broad-based employee stock ownership. *p < 0.05; ***p < 0.001

TABLE 2 Summary of bootstrapping tests for mediation

Indirect paths Indirect effects

95% confidence interval

BESO ! organizational social cohesion ! organizational voluntary turnover

−0.02* [−0.06, −0.00]

Employee-perceived involvement practice ! organizational social cohesion ! organizational voluntary turnover

−0.11* [−0.21, −0.02]

Organizational social cohesion ! organizational voluntary turnover ! organizational labor productivity

0.03* [0.00, 0.08]

BESO ! organizational social cohesion ! organizational voluntary turnover ! organizational labor productivity

0.004* [0.00, 0.01]

Employee-perceived involvement practice ! organizational social cohesion ! organizational voluntary turnover ! organizational labor productivity

0.02* [0.00, 0.05]

BESO: broad-based employee stock ownership. *p < 0.05.

578 KIM AND HAN

involvement practice for social cohesion (B = −0.00, n.s.) and volun-

tary turnover (B = 0.00, n.s.) but a significant interplay between both

participatory practices for labor productivity (B = 0.04, p < 0.05).

These results did not support that BESO and employee involvement

have an interactive relationship to indirectly improve labor productiv-

ity through social cohesion and voluntary turnover at the organization

level. Instead, we found only that employee involvement facilitates

the main effect of BESO on labor productivity. These results indicate

a nuanced role of employee involvement, which serves as a supple-

mentary practice for BESO to influence social cohesion, voluntary

turnover, and in turn labor productivity, while playing a complemen-

tary role for BESO to directly influence labor productivity. Our addi-

tional analysis provides supporting evidence for the findings of prior

research (e.g., Pendleton & Robinson, 2010), which tested a comple-

mentarity between financial participation and employee involvement

on labor productivity. It further suggests that the role of an HR prac-

tice and especially BESO or employee involvement in relation to other

HR practices depends on the types (e.g., attitudinal, behavioral, opera-

tional, and financial) of performance outcomes derived from pertinent

theories.

6 | DISCUSSION

Our study proposed a comprehensive theoretical model that illus-

trates how BESO and employee-perceived involvement practice influ-

ence organizational labor productivity. Based on social identity theory,

we explored psychological and behavioral processes that may inter-

vene to realize the productivity-enhancing effects of such participa-

tory practices. Our path analysis using a sample of large

U.S. companies in various industries identified two unique organiza-

tion level routes that connect BESO and employee-perceived involve-

ment practice to labor productivity. The results of this study showed

that the extensive use of both participatory practices immediately fos-

ters social cohesion among organizational members, decreases volun-

tary turnover through enhanced social cohesion, and eventually

improves labor productivity through enhanced social cohesion and

reduced voluntary turnover at the organization level.

6.1 | Theoretical implications

The results of this study constitute a primary contribution to research

on employee stock ownership by illuminating concrete outcomes and

specific workforce characteristics that are cultivated by BESO. We

theorized how BESO turns employees into a more productive work-

force and incorporated employee involvement into the theoretical

framework as a partner HR practice of BESO. Although micro studies

have suggested that stock ownership plans positively affect individual

work attitudes (e.g., organizational commitment, job satisfaction),

much less is known about their potential collective attitudinal out-

comes as well as specific links between each type of employee stock

ownership and potential outcomes. We proposed that social cohesion

is an immediate attitudinal outcome of BESO at the organization level,

and our analysis revealed that a socially cohesive workforce results

from BESO. We also indicated that employee involvement helps to

develop a dependable workforce that is responsible for organizational

labor productivity, in tandem with BESO. Our theorization and find-

ings provide new insights, such as the unique collective attitudinal

outcome and partner practice associated with BESO. By identifying

such factors, this research enriches our understanding of how

employee stock ownership affects organizational performance. We

encourage future research to regard other HR practices as other part-

ners of BESO and to examine workforce outcomes (e.g., collective

attitudes and behaviors, organizational climate) resulting from the

combination of those HR practices.

Our investigation also helps to promote a systematic understand-

ing of the effectiveness of organization-based incentives for organiza-

tional labor productivity. Researchers have widely recognized

compensation as an HR practice that profoundly affects organizational

performance and thus have called for more studies on its implications

for organizational bottom-lines (Brown, Sturman, & Simmering, 2003).

In addition, some researchers (Gerhart et al., 2009; Kruse & Blasi,

1997) have pointed out that there is a lack of research investigating

the mechanisms, especially psychological processes (S. H. Wagner,

Parker, & Christiansen, 2003), linking incentives and organizational

performance. As such, most previous work has focused on the impacts

of pay for lower level performance (e.g., individual, group, team, or

unit) on lower level performance outcomes and usually examined its

direct effects on outcome variables. Furthermore, a group of opposing

scholars have taken a negative stance regarding the efficacy of

organization-based incentives due to the unclear line of sight and

social loafing problems (Gerhart et al., 2009; Pendleton, 2006). These

researchers have asserted that such concerns undermine individual

employees' work motivations and ultimately impact organizational

performance. Although such skeptical views make sense to some

extent, they are usually based on psychological microfoundations. To

accurately understand whether and how organization-based incen-

tives increase organizational labor productivity, theory and evidence

should be developed at the organization level. Following social iden-

tity theory, we identified psychological (i.e., enhanced social cohesion)

and behavioral (i.e., reduced voluntary turnover) properties that medi-

ate the effect of BESO on labor productivity at the organization level.

Accordingly, future research on other macro level psychological pro-

cesses for other types of organization-based incentives is needed.

Finally, our work contributes to the existing social cohesion litera-

ture, in which much less is known about the determinants of cohesion

(Kozlowski & Ilgen, 2006). We found that BESO and employee-

perceived involvement practice are positively related to social cohe-

sion at the organization level. Thus, these participatory practices are

useful organizational vehicles to develop a socially cohesive work-

force. On the other hand, it is interesting to note that employee-

perceived involvement practice outperforms BESO with regard to the

formation of social cohesion. This finding is somewhat consistent with

field theory (Lewin, 1943), which argues that an individual reaction to

a social environment depends on the proximity and salience of the

individual perceptions on constituents of the social environment

(Mathieu & Hamel, 1989). It is likely that employee involvement is

more frequently experienced by employees than BESO. Whereas

BESO enables employees to perceive a sense of solidarity due to

interconnected rewards, it is only occasionally experienced and

KIM AND HAN 579

recognized. As such, the effectiveness of these two participatory prac-

tices for fostering organizational social cohesion may vary.

6.2 | Managerial implications

According to the results of our path analysis, BESO and employee

involvement have indirect effects on voluntary turnover and labor

productivity. These two organizational outcomes have been widely

investigated in the management literature due to the prevailing inter-

ests of practitioners (Hausknecht & Trevor, 2011). The findings of the

present study provide U.S. employers with practical suggestions to

maximize benefit from participatory practices. Historically,

U.S. employers have adopted diverse employee involvement and par-

ticipation programs to improve organizational efficiency and produc-

tivity. However, not all employers have benefited from the use of

participatory work structures, and BESO and employee involvement

are not always implemented together. Given that the adoption of

these practices does not automatically lead to a better performance, it

is important to understand how and why participatory practices

improve labor productivity. The results of this study indicate that the

extensive use of BESO and employee involvement immediately cre-

ates a shared positive psychological experience among organizational

members (i.e., strong social cohesion), which is in turn manifested as a

collective behavioral outcome (i.e., low voluntary turnover). As we fur-

ther demonstrated, these collective attitudinal and behavioral out-

comes lead to positive changes in labor productivity. The theoretical

routes from participatory practices, to organizational social cohesion,

to collective voluntary turnover suggest useful metrics that managers

may assess and utilize for improving organizational labor productivity.

Our findings underline the significance of not merely implementing

participatory practices, but also paying attention to employee atti-

tudes and behaviors and diagnosing whether they are positive.

One might argue that the magnitude of the indirect productivity-

enhancing effects of BESO (0.4%) and employee involvement (1.7%)

in this study is modest. As reviewed in Kruse and Blasi (1997), most

prior studies using longitudinal data have found average productivity

increases of 4–5% after the adoption of organization-based incen-

tives. J. A. Wagner III (1994) reviewed prior studies that examined

diverse forms of organization-based incentives and employee involve-

ment programs and concluded that “though statistically significant,

the average effects revealed in this article are so small as to raise

questions about practical significance” (p. 325). However, the findings

of the present study cannot be interpreted the same way, because we

found only indirect effects. In addition, we cannot simply conclude

that the indirect effect sizes of both participatory practices are trivial.

Our findings are more reasonable for fostering an understanding of

comprehensive relationships because HR practices are distal from

organizational outcomes and thus their effect sizes are typically small

(Haggerty & Wright, 2009). Nonetheless, as T.-Y. Park and Shaw

(2013) noted, quoting Prentice and Miller (1992), modest indirect

effect sizes are more practically impressive from a qualitative stand-

point “when the outcome variable has many legitimate predictors and

when the outcome is difficult-to-influence” (p. 281). Hundreds of

empirical studies on labor productivity have identified a whole raft of

determinants at the organization level. Hence, it is reasonable to

expect that a single predictor can explain only a modest amount of

productivity compared with the potential amounts explained by other

phenomena with fewer antecedents (T.-Y. Park & Shaw, 2013). In par-

ticular, given the select nature of our sample comprising the “upper

tail” of companies in which alternative positive characteristics of the

workplace are more likely to be abundant (Blasi et al., 2016), it is more

difficult to detect significant effects and any findings of significant

effects are, therefore, all the more noteworthy. Finally, BESO and

employee involvement are not as costly as other HR practices. For

example, BESO results in tax savings. As a form of idea capturing

schemes (Wright et al., 2003), the extensive use of employee involve-

ment can also generate ideas for short-term efficiency as well as

future growth. Taken together, our results suggest that leaders and

managers should develop productive organizations through the exten-

sive use of BESO and employee involvement, which entails more

advantages than disadvantages.

6.3 | Limitations and suggestions

As with most research, this study is not without limitations. First, the

study sample may be affected by selection bias, because these compa-

nies belong to the “upper tail” of companies with very supportive HR

practices. The potential impacts of omitted variables potentially

describing workplace situations and practices in more representative

samples of companies may be mitigated in our sample of best compa-

nies, in which alternative positive characteristics of the workplace are

more likely to be abundant (Blasi et al., 2016). However, the nonrepre-

sentative nature of the sample might compromise the generalizability

of our results. Hence, subsequent research is needed to confirm the

generalizability of our theory and findings by analyzing data collected

from additional organizations.

Second, future research should advance our theoretical model by

investigating diverse forms of organization-based incentives and mea-

suring both the extensity and intensity of various plans. Due to limita-

tions of data availability and theoretical relevance, only data regarding

the extensive use of broad-based stock option were included in our

analysis. However, broad-based stock option might be somewhat lim-

ited in representing various forms of organization-based incentives. In

terms of the line of sight, stock plans are less clear than profit sharing

or other forms of organization-based incentives. Nonetheless, broad-

based stock option is a genuine scheme of organization-based incen-

tives, because its financial benefits are determined only by stock

prices that comprehensively reflect entire business outcomes at the

organization level. In addition, owning company stock can encourage

employees to feel that they possess a piece of their organization

(K. J. Klein, 1987; Pierce et al., 1991). In other words, stock-based

rewards have a symbolic effect in establishing ownership-sharing cul-

ture (Han & Kim, 2018), because they can be an organizational attri-

bute triggering the organizational identification process among

nonrecipients who see stock-owning colleagues and thereby realize

how much their organization conceives of employees as partners and

emphasizes their common responsibility regarding the long-term inter-

ests of the organization. We encourage researchers to investigate

whether the same pattern of organizational outcomes is found after

the extensive use of other organization-based incentives schemes.

580 KIM AND HAN

Third, our findings cannot be completely interpreted in a causal

order because our integrative model was tested with a partially lagged

dataset. Apart from 1-year lagged labor productivity data, BESO,

employee-perceived involvement practice, organizational social cohe-

sion, and collective voluntary turnover were measured during a similar

period. To address this causality issue, we carefully framed our inte-

grative model based on social identity, collective turnover, and macro

HR research, which in common suggest sequential linkages among HR

practices, attitudinal outcomes, behavioral outcomes, and organiza-

tional outcomes. Nonetheless, further research is needed to confirm

the causal relationships among the variables of this study by analyzing

longitudinal datasets.

7 | CONCLUSION

This study elucidated how an organization can predispose employees

to feel a sense of unity, and subsequently benefit from a socially cohe-

sive workforce. Our results show that organizations can foster organi-

zational social cohesion, reduce collective voluntary turnover, and

improve organizational labor productivity through the extensive use

of BESO and employee involvement. Our integrative model was not

only underpinned by social identity theory and previous research but

was also substantiated via a multisource and partially lagged company

dataset. We hope that our theory and findings will help to unite orga-

nizational members, thus maximizing their collaborative contributions

to organizational performance and ultimately sharing the rewards of

organizational success.

ACKNOWLEDGMENTS

This research originates from the first author's doctoral dissertation. A

previous version of this manuscript was presented at the 29th Annual

Conference of the Society for Industrial and Organizational Psychol-

ogy, Honolulu, HI, USA, and at the Mid-Year Fellows Workshop in

honor of Louis O. Kelso, 2014. We thank the action editor Frank

I. Mullins and two anonymous reviewers for their constructive com-

ments and suggestions. We also appreciate Douglas L. Kruse and

Joseph R. Blasi for the datasets. We received financial support from

the Employee Ownership Foundation and the Rosen Ownership

Opportunity Fund.

ORCID

Andrea Kim https://orcid.org/0000-0001-7842-627X

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AUTHOR BIOGRAPHIES

ANDREA KIM (PhD, Rutgers) is an Assistant Professor of Orga-

nization and Human Resources in the SKK Business School at

Sungkyunkwan (SKK) University, Seoul, South Korea. His research

interests include the strategic use of human capital resources and

practices and the development of a productive and socially

responsible workforce.

KYONGJI HAN (PhD, Rutgers) is an Assistant Professor in the

Department of Management of Hankamer School of Business at

Baylor University, Waco, Texas. Her research focuses on strategic

human resource (HR) management, employee ownership plans

and psychological ownership, ethics in HR management, and envi-

ronmental sustainability.

How to cite this article: Kim A, Han K. All for one and one

for all: A mechanism through which broad-based employee

stock ownership and employee-perceived involvement prac-

tice create a productive workforce. Hum Resour Manage. 2019;

58:571–584. https://doi.org/10.1002/hrm.21958

584 KIM AND HAN

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