UPSI Digital Repository (UDRep)
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Abstract : Universiti Pendidikan Sultan Idris |
This study aimed to analyze the impact of employee ownership on the organizational
performance of state-owned firms with the mediation of employee loyalty, motivation and
satisfaction, and psychological ownership as a moderator in Pakistan. Agency theory is used as a
theoretical underpinning to operationalize the research framework. This study employed
quantitative research design. The data was collected through primary and secondary data
collection tools. For primary data, a survey was conducted on a sample of 283 employees of the
state-owned firms under the scheme of employee ownership. The secondary data was collected for
financial performance, productivity, and financial cost. The findings showed a significant,
positive impact of employee ownership on net profit margin (β=1.3198), return on assets
(β=1.167), and productivity (β=0.0087), while the negative impact on financial cost (β=-0.0654) as
predicted. Mixed findings are shown for moderated-mediation analysis for each mediating
variables (p=0.0236, p=0.1268, p=0.0427) and moderation (p=0.0247, p=0.1183, p=0.0448).
Consequently, the impact of employee ownership on public limited companies is significant as
compared to private limited companies. Based on the findings, it can be concluded that employee
ownership impacts the organizational performance of the state-owned companies in Pakistan.
The findings of this study have several implications for companies and policymakers.
The reshaped equity structure of state-owned companies will contribute to
national development through investment in human capital (employees). Results also
indicated that granting ownership rights to employees and involving them in the decision-making
process will improve the performance of state-owned entities. The state-players need to design
their policy as per companies’ objectives and design to improve organizational
performance. This study also provided recommendations to improve the employee ownership
scheme in Pakistan. The shares provided to the employees must have transferability power
and buyback options. The newly recruited and existing employees
can be motivated through maximum benefits on the dividends.
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