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O'Halloran (2012) confirmed the employee productivity significant association ESOPs whereas the earlier work of Curme and Stefanec (2007) opposed the correlation between the above-mentioned variables. Nevertheless, numerous authors confirmed that there is strong positive linkage between ESOPs and the organizational performance (Goddard, 2001; Bauer, 2004; and Brown and Sessions, 2006). Interestingly, the Green and Heywood confirmed that the employees' motivation is affected by the ESOPs to some extent. However, this study was conducted in the developed economy thus, there is no conclusive evidence from the emerging economy (China)'s context. Additionally, the earlier work of researchers confirmed positive association between ESOPs and turnover (Park and Seng, 1995) and ESOPs and firm's profitability (Jensen and McCallney, 1976; Modigliani and Miller, 1958). However, O'Halloran (2012) argued that job commitment and job satisfaction are significantly positively affected due to ESOPs. Conversely, Freeman (1978) found negative correlation between job commitment and ESOPs. Additionally, earlier authors argued that productivity of the organization is correlated with the ESOPs (Park and Seng, 1995; Krus and Blaise, 1997). On the contrary, later researchers found no correlation between ESOPs and productivity of the organizations (Pugh et al. 2000; Blues and Krus (2003). Nevertheless, these all studies have been limited to the developed economies while there is still no conclusive evidence from the emerging economies (like China) to explain the nature and strength of the variables.

Although stock options have been used extensively in western countries, they become a relatively new form of managerial compensation in China since 2006. The Chinese market presents a unique case in the study of the economic determinants of stock options because the institutional context in China is very different from that of more developed western countries. First, China’s legal protection and corporate governance are weaker than those of developed countries. Second, the State often retains substantial ownership, which is undertaken by different types of agencies. Third, Chinese stock option plans have many special characteristics. While stock options represent a large component of executive compensation in U.S. companies, their share in total compensation is much lower in Chinese companies. Moreover, most of the Chinese stock option plans cover both executives and non-executive employees. In general, the Employee Stock Option (ESO) regulations in China are even stricter than those in developed economies. For example, the lower bound of the exercise price is set by law. More importantly, option plans are required to be performance-vested. In China, since stock options are required to be expensed, they are used less in poorly performing firms.

DeVos and Fouche (1998) defines a research design as the blue print or detailed plan of how a research study is to be conducted, this is of crucial importance because it determines the success or failure of the research, it guides with the logical arrangements for the collection and analysis of data so that conclusions may be drawn.Qualitative research involves a process known as induction, whereby data is collected relating to a specific area of study and from this data the researcher constructs different concepts and theories. The main characteristic of qualitative research is that it is mostly appropriate for small samples. Therefore, A qualitative approach was considered more relevant to undertake this research as it allowed greater capacity to gain more depth and meaning based on the ESOPS on employee Productivity opposed to quantitative approach which is more structured. Its basic advantage, which constitutes its basic difference with quantitative research, is that it offers a complete description and analysis of a research subject, without limiting the scope of the research and the nature of participant’s responses (Collis & Hussey, 2003).

However, the effectiveness of qualitative research is heavily based on the skills and abilities of researchers, while the outcomes may not be perceived as reliable, because they mostly come from researcher’s personal judgments and interpretations. Because it is more appropriate for small samples, it is also risky for the results of qualitative research to be perceived as reflecting the opinions of a wider population (Bell, 2005).

Interview

Semi-structured interviews were selected to carry out this research study. They allowed the participants to elaborate and with that provided more flexibility, range and therefore the capacity to elicit more information from the participant. Semistructured interviews permit scope for individuals to answer questions more on their own terms than the standardised interview permits, yet still provides a good structure for comparability over that of the focused interview (May, 1997). Kumar (2005) views the interview as the most suitable approach for studying complex and sensitive areas as the interviewer has the opportunity to prepare a participant before asking sensitive questions and to explain complex ones to them in person.

While the interview process is a valuable means of collecting rich and in-depth data, it can prove to be an expensive and time consuming process. Interaction between the interviewer and the participant can differ as each interview is unique and the quality of the responses obtained from different interviews may vary significantly (Kumar, 2005). Furthermore the quality of the data generated is affected by the experience, skills and commitment of the interviewer (Kumar, 2005). A risk of researcher bias can also exist. In addition, it can prove to be a difficult task to gain reliable data on the research subject if there are a small number of participants involved, unlike the quantitative approach which involves a higher number of participants and hence in certain circumstances can provide more far reaching and reliable data results.

Sampling and selection

The ideas behind a specific sampling approach vary significantly, and reflect the purposes and questions directing the study (Punch, 1998). In choosing the sample of participants the researcher used a purposive sampling method. This form of sampling is essentially strategic and necessitates an attempt to establish a good correspondence between research questions and sampling (Bryman, 2004). The inclusion criterion was based on participants who are currently worked for at least one year or more. In undertaking this study the researcher chose to interview individuals aged between 30 to 40 years of age due to the fact that for most, their working careers would have been associated with positive economic growth and thus the benefits that came from it. Furthermore, the age restriction aims to provide a more coherent group, which makes comparison between the subjects more relevant.

Data collection

Data collection took place in January 2018. A Dictaphone was used to record the interviews and all interviews were fully transcribed verbatim. Four of the five participants were acquaintances of the researcher; the other two were introduced by acquaintances to the study voluntarily. All participants were contacted through video containing details of the research and by social application (WeChat) with the interview particulars. All participants’ chose to have the interviews carried out in their homes, where they felt more at ease in their surroundings and thus allowed them to speak more freely and openly on the research topic. A Semi-structured interview is typically conducted with a series of questions in the general form of an interview schedule however the sequence of questions can be varied. The interviewer also has some freedom to probe and explore additional questions in response to what are seen as significant replies (Bryman, 2004), while at the same time allowing rapport and empathy to develop between the researcher and the participant.

An interview schedule was prepared in advance to aid the researcher with the structure and flow of the interview (see appendix two). Each participant was presented with a similar set of questions relating to their opinion on ESOP. The questions were mainly open-ended questions with a small number of closed questions relating to information such as age, department and so on. An example of an open-ended question included in the interview schedule is ‘What are your main feelings and emotions for ESOP?’ Open-ended questions like this allow the participant more scope to express thoughts and feelings (especially when sensitive issues are being discussed) and can offer more detail on the research subject (Sarantakos, 1988). The researcher sought to use language that was comprehensible and relevant to each of the participants being interviewed (Bryman, 2001).

Data analysis

Content analysis was used to analyze the data which was gathered from personal interviews. According to Moore & McCabe (2005), this is the type of research whereby data gathered is categorized in themes and sub-themes, so as to be able to be comparable. A main advantage of content analysis is that it helps in data collected being reduced and simplified, while at the same time producing results that May then measure using quantitative techniques. Moreover, content analysis gives the ability to researchers to structure the qualitative data collected in a way that satisfies the accomplishment of research objectives. However, human error is highly involved in content analysis, since there is the risk for researchers to misinterpret the data gathered, thereby generating false and unreliable conclusions (Krippendorff & Bock, 2008).

Ethical considerations

The current study was subject to certain ethical issues. As it was mentioned earlier, all participants reported their written acceptance regarding their participation in the research, through a signed Consent and Briefing Letter. At the same time, sample members were asked to sign a Debriefing and Withdrawal Letter. The aim of both letters was to reassure participants that their participation in the research is voluntary and that they were free to withdraw from it at any point and for any reason.

Next to this, participants were fully informed regarding the objectives of the study, while they were reassured that their answers were treated as confidential and used only for academic purposes and only for the purposes of the particular research. Except from the above, participants were not harmed or abused, both physically and psychologically, during the conduction of the research. In contrast, the researcher attempted to create and maintain a climate of comfort.

As it is for every study, this dissertation had the following limitations:

The size of the sample was relatively small - 5 participants. A bigger sample would probably enhance the reliability of the research.

Qualitative research is not allowing the measurement of the examined problems.

The analysis of the effect of Employee Stock Ownership Plan (ESOP) on employee Productivity may be influenced by factors which were not mentioned in this project.

In some cases participants may refused to speak against their organizations.

As expected, the ESOP impact of employee productivity emerged as a main theme across all five interviews. All participants reported that ESOP can have a positive impact on employee productivity. However, the findings showed that the impact was more significant for some participants than others.

It is clear from the findings that ESOPs have a psychological effect on employee attitudes. In Huawei, employee ownership programs almost cover most of the employees in the enterprise regardless to their ranks. It means they are always motivated to work hard and achieve the best so as to increase their stock values. Besides, through experiencing partial ownership, employees gain a sense of pride in their company and allow it to become a part of their identity, thus allowing employees to become emotionally invested in their company.

Second, ESOPs create a financial incentive for employees to be productive. Employees are given the opportunity to earn more money, long-term, through their ownership and high productivity. The findings illustrate that equity dividend income of employees far exceeds employee's salary income in Huawei. Therefore, Stock-owning employees’ interests are aligned with the interests of the company because firm profits usually determine the value of an employee’s stock. Stock-owning employees will thus gain a greater benefit if they are productive and contribute to the growth of the company.

Employees who have some stock in the company have an incentive to remain within the company thus having a probability to reduce employee turnover and improve employee productivity. In Huawei Limited Company, each employee shares are held within the company’s ESOP trust department until when the employee retires or leaves the organization. If the employees leave, they must sell the shares back to the company. In order to fully more benefit from ESOPs, employees usually must stay with their company for a number of years. This allows employees to develop a further loyalty to their companies, discourages employee turnover and promotes the formation of more firm-specific human capital.

It is clear from the findings and literature review that in China, the reasons for offering employee stock options may not be entirely the same as those in Western countries. It would appear from analyzing the data collected and contrary to the literature review that The ESOP was introduced mainly as an employee incentive scheme in China. Blasi and Kruse summarized the studies conducted in the past 20 years on US companies and provided a list of factors influencing the adoption of ESOPs. The most popular reason for adopting ESOPs is to provide employee benefits (91%). Besides, since the stocks held by the U.S. employees may not be stocks of the company, and the stocks held by them can only be used after retirement, the equity incentive effect of US ESOP is not very strong. However, the Chinese employee stock ownership plan is more of an incentive method. On the one hand, the employee stock ownership plan refers to the stock of the company, and on the other hand, it can be used after the lock-up period of 12 to 36 months. But the general employee shares in China do not play any role in the major decision-making of the corporate. These shares can only be divided into corresponding profit shares according to the proportion of shares held when the company’s annual company profits are shared. Therefore, the Chinese ESOP is a direct product of motivating employee. As in an emerging market without well-designed incentive schemes, the Chinese ESOP is expected to be relatively more important compared with the U.S. counterparts in providing employee incentives.

Financing is also an important reason for many Chinese enterprises to implement ESOP, especially private enterprise because it was difficult to find financing externally. According to the interviewee statement, in the early days, Huawei needed a great amount of money to fund marketing and expansion. However, Huawei, as a private enterprise, does not have a strong government background at that time, so it was difficult to find financing in society. But Huawei had to implement an ESOP to resolve this problem by turning to employees for financing.

Another factor emerging from the study findings was that employees need to pay for the stock and in most cases do so out of their own personal savings or with loans from friends and relatives. But in the U.S., employees may purchase the stock or be given it as a gift outright (inauguration, 2009). They may acquire the stock through an employee stock ownership trust created on their behalf by the company or through a profit-sharing scheme (Staff, 2011).Therefore, some participants reported that it is not unusual for some employees in China to be unwilling to join these schemes, because they cannot pay for these costs. Besides, long waiting time and the uncertainties associated with such rewards are also leading some employees to refuse to join the ESOP.

Conclusion

The aim of this research was to determine the effects of ESOP on the employee productivity. The foregoing chapters examined how ESOP impacts on employee productivity, which is mainly impacted by psychological and financial. In addition, the differences between China and the U.S. in implementing ESOP were examined. The research questions were examined through a qualitative approach in the form of semi-structured interviews. The use of semi-structured interviews allowed for more in-depth insight into the personal opinion of ESOP allowing the advantages and disadvantages to be discussed in an open and candid manner, which made the interpretation and analysis of the findings more meaningful. A review of the literature was presented corresponding to the research topic on the effects of employee productivity. Finally, an interpretation of the findings obtained was provided, along with why the findings were relevant to the research with comparisons to the U.S. research.

The study concludes that ESOPs have a positive influence on the employee productivity. Besides, ESOPs are used for many reasons in China, but mainly including motivating employees to be productive and solving financing issues. Employees, given an ownership stake in the company, would have the incentive to increase its productivity. Improvements in morale and low turnover rate were expected to promote the overall productivity and competitiveness. ESOPs are used by corporate managers to take advantage of finance and boost profits.