The Relationship between Employee Stock Ownership Plans and Enterprise Performance in the Home Appliance Industry: A Case Study of Midea Group and Gree Electric Appliances

School of Management, Sichuan Agricultural University, Chengdu, 625014, China

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Abstract

Against the backdrop of deepened mixed-ownership reforms and the pursuit of high-quality development in the home appliance industry, Employee Stock Ownership Plans (ESOPs) have emerged as a critical mechanism for firms to optimize corporate governance and integrate human and material capital. This study conducts a comparative case analysis of Midea and Gree to examine the implementation characteristics, performance effects, and underlying causes of differential outcomes associated with ESOPs in the home appliance sector. The findings reveal that ESOPs exert a significant positive impact on the financial performance of both firms, with their average return on equity (ROE) substantially exceeding industry benchmarks. However, notable disparities exist in innovation and market performance. Midea’s composite ESOP model, deeply integrated with corporate strategy, fosters synergistic and sustained performance growth. In contrast, Gree, due to delayed ESOP initiation and a relatively simplistic incentive structure, achieves only short-term financial improvements. The efficacy of ESOP implementation in home appliance enterprises fundamentally depends on the alignment with corporate development stages and strategic objectives, as well as the scientific design of incentive mechanisms. The conclusions offer valuable insights for firms seeking to optimize ESOPs and contribute to the empirical literature on the economic consequences of ESOPs.