ESOPs attempt to harness this determination and place it in an employee. As mentioned earlier numerous studies have shown a positive relationship between stock performance and employee ownership. If you break that down, on the fundamental level employees are working harder and becoming more efficient. In the modern world there are many people known as raiders that descend on unsuspecting companies and buy them out with the intention of selling off the company piecemeal. In the business world this is just another price of true capitalism.
Raiders buy companies out by slowly gobbling up stock and creating a majority ownership.
Companies are always looking for ways to avoid a hostile takeover. ESOPs provide an added benefit of being security against a takeover. No raider wants to attack a company that is owned by the employees. The employees would probably laugh at him when he tried to buy the company s stock. The ESOP is a great advantage in the corporate world, but it is also costs money to set one up.