Corporate Social Responsibility as an Employee Governance Tool: Evidence from a Quasi-Experiment

47 Pages Posted: 18 Jan 2014 Last revised: 5 Nov 2015

See all articles by Caroline Flammer

Caroline Flammer

Boston University

Jiao Luo

University of Minnesota - Twin Cities - Carlson School of Management

Date Written: November 3, 2015

Abstract

This study examines whether companies employ corporate social responsibility (CSR) to improve employee engagement and mitigate adverse behavior at the workplace (e.g., shirking, absenteeism, etc.). We exploit plausibly exogenous changes in state unemployment insurance (UI) benefits from 1991 to 2013. Higher UI benefits reduce the cost of being unemployed and hence increase employees' incentives to engage in adverse behavior. We find that higher UI benefits are associated with higher engagement in employee-related CSR. This finding suggests that companies use CSR as a strategic management tool -- specifically, an employee governance tool -- to increase employee engagement and counter the possibility of adverse behavior. We further examine plausible mechanisms underlying this relationship.

Keywords: employee engagement; adverse behavior; employee governance; corporate social responsibility; unemployment insurance

JEL Classification: D8; J3; J4; J65; L1; M1; M5

Suggested Citation

Flammer, Caroline and Luo, Jiao, Corporate Social Responsibility as an Employee Governance Tool: Evidence from a Quasi-Experiment (November 3, 2015). Available at SSRN: https://ssrn.com/abstract=2380336 or http://dx.doi.org/10.2139/ssrn.2380336

Caroline Flammer (Contact Author)

Boston University ( email )

Boston University Questrom School of Business
595 Commonwealth Avenue, Office 634A
Boston, MA 02215
United States

HOME PAGE: http://sites.bu.edu/cflammer/

Jiao Luo

University of Minnesota - Twin Cities - Carlson School of Management ( email )

321 19th Ave. S
CSOM 3-360
Minneapolis, MN 55455
United States
1-612-626-1907 (Phone)

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