Summary
Huawei Technologies and ZTE are two giants among Chinese telecommunications equipment manufacturers and are direct competitors against each other. Professor John Hoffmire and his team at the University of Oxford compared the financial data of these two companies from 2006–2010, and found that the adoption of an Employee Stock Ownership Plan (ESOP) has probably provided Huawei a competitive advantage in productivity over ZTE during those years. The question to ask is whether the same conclusion is true five years later, especially since both companies went through strategic changes in 2011. Did the ESOP continue to make Huawei stronger than ZTE during the period 2010–2014?
In this paper, we first examine whether Huawei has an advantage over its competitor (i.e., ZTE) following the strategic restructurings in 2011, and then retest the hypothesis on the positive effect of an ESOP on Huawei’s competitive position five years after the study of Professor Hoffmire and his team.