Institutional Duality in the Adoption of Employee Share Ownership by Multinationals in Europe

Abstract

The debate on convergence and globalisation of national economies emphasises the role, in particular, of US-based Multinational Corporations (MNCs) with regard to the transfer of home-country policies in countries where they have their subsidiaries. MNCs set a process of change in motion in which local companies attempt to catch up with the more internationalised companies. In this article, we studied the differential effect of US-based and EU-based MNC on the incidence of Employee Share Options Schemes in European companies using a mixed methods approach of investigating institutional profiles of host countries and analysing a survey of subsidiaries in the same host countries. We distinguished between two types of share options schemes, i.e. narrow-based schemes eligible for management and executives, and broad-based share option schemes open to all employees. We found substantial effects of countryspecific institutions and of the country of origin of MNCs, which clearly support the institutional duality thesis. The diversity we find in predictors between countries and the strong significant effects of country suggest that local corporate and institutional factors are more important in the case of broad-based share schemes than in the case of narrow-based share schemes.