Decisions to enrol in employee stock ownership plans: When experiences become a habit

Organisations in many countries operate employee stock purchase plans. Research has focused on employees’ current employee stock ownership (ESO) enrolment decision but, as plans are often ongoing forms of compensation, employees will likely have made the decision before. Drawing on the theory of habit, we investigate whether experience of enrolment decisions influences the current enrolment choice. We also consider how decision experience affects the decision-making process. Using employee-level data from two Australian companies, we find that the more an employee has made a particular choice in response to repeated company invitations, the more they are likely to repeat it. We also find that employees with prior experience of ESO enrolment decisions make a quicker decision whether to join or not. Those making the decision for the first time take longer and are more reliant on advice from others. The findings show that understanding share plan participation requires a temporal consideration of employee behaviour.