Does Corporate Social Responsibility Spending Affect Strike Risk? Evidence from Union Elections

48 Pages Posted: 24 Nov 2020

See all articles by Steven Xianglong Chen

Steven Xianglong Chen

University of Liverpool - Management School (ULMS)

Edward Lee

University of Manchester - Alliance Manchester Business School

Konstantinos Stathopoulos

The University of Manchester - Alliance Manchester Business School

Date Written: August 1, 2020

Abstract

This paper investigates the effect of corporate social responsibility (CSR) spending on labour unions’ propensity to initiate strikes. Given limited financial resources, we posit that firms’ inability to satisfy the demands from all of their stakeholders leads to resource competition among those stakeholders. By exploiting the unique setting of union elections in U.S. firms as plausibly exogenous shocks to labour power, we employ a triple-differences specification and find that firms with high levels of (non-employee) CSR spending are exposed to a significantly higher risk of union strikes. We interpret this finding as evidence consistent with CSR spending intensifying resource competition between employees and other stakeholders. We also document evidence that firms strategically curtail CSR expenditure in non-employee dimensions in response to unionisation in order to mitigate the increased strike risk. Such downward adjustment in CSR spending, however, is less pronounced in financially constrained firms, firms in “sin” industries and firms facing high levels of product market competition, due to their strong incentives to signal quality through CSR spending. Overall, our study sheds light on the inter-stakeholder relationship through the lens of a powerful stakeholder, i.e., organised labour, and has important implications for managers facing severe labour risk.

Keywords: stakeholder management, resource competition, corporate social responsibility, labour union, strike risk,

JEL Classification: J51, J52, J53, M14

Suggested Citation

Chen, Steven Xianglong and Lee, Edward and Stathopoulos, Konstantinos, Does Corporate Social Responsibility Spending Affect Strike Risk? Evidence from Union Elections (August 1, 2020). Available at SSRN: https://ssrn.com/abstract=3708243 or http://dx.doi.org/10.2139/ssrn.3708243

Steven Xianglong Chen

University of Liverpool - Management School (ULMS) ( email )

Chatham Street
Liverpool, L69 7ZH
United Kingdom

Edward Lee

University of Manchester - Alliance Manchester Business School ( email )

Booth St. West (Crawford House)
Manchester, M15 6PB
United Kingdom

Konstantinos Stathopoulos (Contact Author)

The University of Manchester - Alliance Manchester Business School ( email )

AMBS Building
Booth Street West
Manchester, M15 6PB
United Kingdom
+44 161 275 6863 (Phone)
+44 161 275 4023 (Fax)

HOME PAGE: http://www.research.manchester.ac.uk/portal/K.Stathopoulos.html

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
42
Abstract Views
277
PlumX Metrics