Employee share ownership and human capital development: Complementarity in theory and practice

Abstract

The article examines the relationship between share ownership plans and employer-provided training. It is argued that share ownership plans are conducive to training provision because they help to generate employee commitment and function to lock employees into the firm. By so doing, they lower the risks faced by employers that returns to investments in training may not be realized. Share plans are more flexible for employers than other, more traditional, ways of rewarding employees for investing their human capital in the firm. The relationship between share plans and human capital development is tested empirically using the British Workplace Employment Relations Survey. It is found that the use of share plans and high employee participation in them is associated with high training coverage. Overall, the empirical evidence is supportive of the perspective discussed and developed in this article.