The three‐way interaction effect of (broad‐based) employee share ownership (ESO), training, and early promotion policy on labor productivity was examined in a longitudinal sample of 614 organizations (1,605 organization‐year data points) in Korea. The ESO–productivity relationship was positive only when the investment in training was high and the opportunity for early promotion was present. However, we found no evidence for the two‐way interaction effects of ESO and training and ESO and early promotion policy on labor productivity. The results are in alignment with the emergent view that the productivity benefits of ESO can be better realized when ESO coexists with a bundle of complementary human resource management (HRM) practices. Thus, this study meaningfully extends the contingency perspective and related studies in the ESO literature, which tend to examine the productivity effect of ESO in isolation or in conjunction with a single HRM practice.

The moderating effect of pay dispersion on the relationship between employee share ownership (ESO) and labor productivity is examined in an unbalanced panel sample of 533 organizations (1,156 organization‐year data points) in Korea. Pay differential between job levels (vertical pay dispersion) is theorized to negatively moderate the ESO–productivity relationship. On the other hand, pay differential within a job level (horizontal pay dispersion) is theorized to positively moderate the ESO–productivity relationship. These predictions are partially supported. Consistent with the prediction, vertical pay dispersion negatively moderates the ESO–productivity relationship in that the relationship is more negative when vertical pay dispersion is high. However, we found no support for the moderating effect of horizontal pay dispersion in this relationship. The results challenge the simplistic view that pay dispersion per se can be detrimental to the ESO–productivity relationship.

Despite the consensus in the employee share ownership (ESO) literature for the need to explore contexts that influence ESO outcomes, studies examining two important factors, national context and status of the economy, are limited. In this study, the authors compare the outcomes of ESOs in Britain and South Korea during economic expansion and downturn. The results demonstrate that, during an economic expansion, the effect of ESOs in increasing employee commitment is stronger in South Korea, while their effect in decreasing employee turnover is stronger in Britain. However, during an economic downturn, the authors find no evidence for these effects in both societies. The findings lend support to the contingency perspective in managing ESOs and provide meaningful implications and guidance to the literature.

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PurposeStudies comparing the consequences of payroll cost reduction methods (i.e. cutting pay and downsizing) have been limited, with no studies comparing these methods' impact on job-seeker attraction. The current research tries to close this gap by comparing the effects of cutting pay and downsizing on job-seeker attraction outcomes.Design/methodology/approachTwo studies are conducted. The first study compares the effects of the two payroll cost reduction methods (i.e. cutting pay vs downsizing) on job-seeker attraction through a within-subject design experiment of people in the United States. The second study analyzes secondary data in South Korea to compare the two methods' effects on the number of job applicants applying for job openings.FindingsThe results demonstrate that organizations with a history of pay cuts yield more favorable job-seeker attraction outcomes than organizations with a history of downsizing.Practical implicationsAlthough firms that choose to downsize may better maintain the morale of surviving employees, the decision of downsizing can have long-term costs, such as having a worse capability to attract job-applicants than firms that choose to cut pay and share the pain as a group.Originality/valueThe research provides an insight into which payroll cost reduction method yields better outcomes in terms of job-seeker attraction. The research responds to the call in the payroll cost reduction method literature of identifying a feasible alternative to downsizing in terms of various outcomes other than the morale of current (or remaining) employees.