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Purpose: This paper is to prove the effectiveness of the antecedents regarding the ESOP which are composed of three independent variables by collecting 216 survey responses from Korean conglomerates and mid-sized corporations in the engineering and construction industry. This study examines how a firm can be influenced by the company’s adoption, owner prerogatives, earnings, employees’ characteristics, bonding through the ESOPs. Next research could have great payoffs and balances in understanding employee ownership and promoting economic stability for the firm sustainability. Research design, data, and methodology: The hypotheses on the determinants of ESOP adoption as follows: (1) ESOPs can provide prerogatives of cost reduction to selling-owners. (2) In cyclical and highly competitive industries, it is easier to generate enough earnings to pay off the debt and the retirement fund. (3) ESOP decreases the company’s ability to bond work. 216 survey responses were collected as ESOP cases from Korean general contractors in the engineering and construction industry. This study applies binary logistic regression analysis for the ESOP adoption. Results: Hypothesis 1 and 3 are statistically significant, but the hypothesis 2 is not statistically significant. It is important for the contractors in the engineering and construction industry to remain selling-owner prerogatives and meet bonding requirements for the adoption of ESOPs. Conclusions: The theoretical contribution in this study is to clarify whether securing the selling-owner prerogatives and bonding requirements would be competitively advantageous to maximize the values through ESOPs in the perspective of corporate management and leadership including many topics such as human resource performance management, governance, decision making process efficiency, and so on. Regarding selling-owner prerogatives, the practical contributions in this study are to provide the counterplans for flexibility management in decision making, cost minimization in establishing ESOP, and tax reduction with dividends. Additionally, regarding bonding requirements, since the ESOP is a system that allows employees and the company to co-exist and induce a virtuous cycle, many tax benefits are granted.
