Employee Ownership In China

1063 Words5 Pages
Employee ownership refers to the phenomenon when employees own part or whole stock of the organization they work for. According to Bogetic’ (1993) employee ownership is not a complete and comprehensive way through which an organization can function rather it is a means through which profits can be enhanced. It is one of the methods that can be adopted to privatize the state owned enterprise and create a competitive mixed economy. Kruse (1996) adds on to this idea provided by stating that indeed employee ownership is encouraged in countries and organizational structures to promote the distribution of wealth. Economies of countries face a dilemma when the rich keep getting richer and nothing is done for the working class, such ownership in the…show more content…
Different countries have different views and ideas regarding this concept. Each country has different rules governing this phenomenon and has various legal contracts covering its implementation. Since the core focus of this research is to dissect the Chinese markets the rules and situation of the trade market of China shall be discussed in detail. Zhu et all (2013) wrote a comprehensive case regarding the employee ownership schemes in China with particular attention to the company Huawei. They highlight that the introduction of these schemes in China were initially just an employee incentive plan aiming to inspire the workers and making them feel involved. Jha (2012) says that although other countries were fairly quick in adopting the schemes of employee ownership the overall business scenario shows that China took what can be termed as a more cautious approach and advanced towards the concept slowly and…show more content…
The review of extant literature indicates that firms make use of employee ownership schemes as a means of reducing the free-rider problem (Poutsma et al., 2012). In most work situations, employees are required to perform tasks through collaboration with their colleagues in form of groups. As a result, the total output is a reflection of the contributions made by many individuals. Given the difficulty of identifying individual contribution in team production employees have the incentive to shirk their contributions as their colleagues will increase their output. The implication is that overall productivity of the team declines which will cause a turn down in productivity and therefore the profit margins will suffer (Blinder, 2011). Consequently, the use of employee ownership schemes has been considered as a possible solution to this free rider problem. This is because ownership schemes help in creating a culture of teamwork that consequently overrides the free-rider
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