The role of peer effects in corporate employee welfare policies

British Journal of Management

47 Pages Posted: 5 May 2021

See all articles by Asad Ali-Rind

Asad Ali-Rind

University Paris-Est Créteil (UPEC) - Institut de Recherche en Gestion; Iqra University

Saeed Akbar

Hull University Business School (HUBS)

Sabri Boubaker

EM Normandie

Souad Lajili Jarjir

Institut de Recherche en Gestion Université Paris Est

Sabur Mollah

Sheffield University Management School, University of Sheffield; Swansea Management School, Swansea University; Hull University Business School; Hull University Business School

Date Written: May 3, 2021

Abstract

This paper investigates the role of peer effects in the employee welfare policies of organizations. Using US panel data for a sample of 11,451 firm-year observations from 1996 to 2017, we find that firms’ employee welfare decisions are driven by their peers and show that peer firms play a significant role in defining corporate employee welfare policies. Our findings are robust to various sensitivity checks, including alternative definitions of employee welfare, alternative peer proxies, and several identification strategies. Our additional analysis shows that herding behaviour is prevalent in followers, who mimic leaders' behaviour, but we do not find any such relationship for industry leaders. Further, we show evidence suggesting that mimetic and normative isomorphic pressures are driving the peer effects. Finally, we document the economic consequence of peer mimicking in employee welfare policies. Our findings on firms’ peer effects and herding behaviour have policy implications.

Keywords: Peer effects; Nonwage Labour Costs and Benefits; Employee Welfare; Employee Well-being; Behavioural Finance

JEL Classification: G02, G30; J32, I03

Suggested Citation

Ali-Rind, Asad and Akbar, Saeed and Boubaker, Sabri and Jarjir, Souad Lajili and Mollah, Sabur, The role of peer effects in corporate employee welfare policies (May 3, 2021). British Journal of Management, Available at SSRN: https://ssrn.com/abstract=3838670

Asad Ali-Rind

University Paris-Est Créteil (UPEC) - Institut de Recherche en Gestion ( email )

80 Avenue du General de Gaulle
Creteil, 94000
France

Iqra University ( email )

Defence View
Shaheed-e-Millat Road (Ext.)
Karachi, Sindh 75500
Pakistan

Saeed Akbar

Hull University Business School (HUBS) ( email )

Hull, HU6 7RX
United Kingdom

Sabri Boubaker

EM Normandie ( email )

France

Souad Lajili Jarjir

Institut de Recherche en Gestion Université Paris Est ( email )

Institut d'Administration des Entreprises
Place de la Porte des Champs 4 route de Choisy
Créteil, 94010
France

Sabur Mollah (Contact Author)

Sheffield University Management School, University of Sheffield ( email )

Conduit Road
Sheffield, Sheffield S10 1FL
United Kingdom

Swansea Management School, Swansea University ( email )

Singleton Park
Swansea, Wales SA2 8PP
United Kingdom

Hull University Business School ( email )

Cottingham Road
Hull, Great Britain HU6 7RX
United Kingdom

Hull University Business School ( email )

Cottingham Road
Hull, Hull HU6 7RX
United Kingdom

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