The Power of the People: Labor Unions and Corporate Social Responsibility

58 Pages Posted: 12 Jan 2021 Last revised: 21 Dec 2021

See all articles by Amanda Heitz

Amanda Heitz

A.B. Freeman School of Business Tulane University

Youan Wang

The University of Hong Kong

Zigan Wang

The University of Hong Kong - School of Economics and Finance; Columbia University

Date Written: December 21, 2021

Abstract

Recent legislation stipulates that corporations may become more stakeholder-focused if employees are given more power. We examine the impact of employee labor unions on external stakeholders by examining unionization’s effect on environmental and social (E&S) scores. We find that unionization is associated with a decrease in E&S scores, and these reductions are driven by categories that primarily benefit non-union member stakeholders. However, unionization leads to an increase in categories which directly benefit their members, such as better working conditions. Our results are magnified when labor unions have more bargaining power and firms have greater levels of financial constraints. Within a close union election setting, we find that unionization leads to decreases in environmental scores by 19.8% and social scores by 21.3%. We highlight stakeholders’ heterogeneity and value-maximizing nature and suggest that policymakers consider implications for all stakeholders before implementing policies that prioritize the corporate influence of one stakeholder group.

Keywords: labor union, elections, corporate social responsibility

JEL Classification: J51, D73, M14

Suggested Citation

Heitz, Amanda and WANG, Youan and Wang, Zigan, The Power of the People: Labor Unions and Corporate Social Responsibility (December 21, 2021). Available at SSRN: https://ssrn.com/abstract=3725784 or http://dx.doi.org/10.2139/ssrn.3725784

Amanda Heitz (Contact Author)

A.B. Freeman School of Business Tulane University ( email )

6823 Saint Charles Avenue
New Orleans, LA
United States

Youan WANG

The University of Hong Kong ( email )

Pokfulam Road
Hong Kong
China
59353876 (Phone)

Zigan Wang

The University of Hong Kong - School of Economics and Finance ( email )

8th Floor Kennedy Town Centre
23 Belcher's Street
Kennedy Town
Hong Kong

Columbia University ( email )

3022 Broadway
New York, NY 10027
United States

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