Return on Safety Training

68 Pages Posted: 22 Jul 2021

See all articles by Yixing Chen

Yixing Chen

Mendoza College of Business, University of Notre Dame

Kyuhong Han

Korea University Business School, Korea University

Taehoon Im

Jones Graduate School of Business, Rice University

Sonam Singh

Alvarez College of Business, University of Texas at San Antonio

Shrihari Sridhar

Texas A&M University - Department of Marketing

Vikas Mittal

Rice University

Date Written: July 20, 2021

Abstract

Firms devote significant resources to safety-training programs with the aim to mitigate financial loss due to safety incidents and create customer value. From both practical and theoretical perspectives, it is important to know (1) whether safety-training programs mitigate financial loss, so that senior management can maintain the support for them, and (2) whether safety-training programs contribute to firm sales so firms can use them as a critical marketing lever to communicate value to customers. Yet, there is a lack of empirical evidence on the return on safety-training programs. The authors establish a consistent set of links between safety-training programs and financial outcomes in different settings across three studies. Study 1 shows that a 10-percentage-point increase in safety-training completion mitigates financial loss by 6% to 13% using safety reports from 1,199 locations of a business-to-business oilfield services company. Study 2 shows that firms emphasizing safety training in their Form 10-Ks are associated with 4% to 15% higher sales among 8,824 publicly traded companies between 1998 and 2018. Study 3 finds a positive association between safety investments and sales among 4,236 workplaces based on a national survey in South Korea. These effects are more pronounced among smaller locations, firms, and workplaces, suggesting that firms need to tailor safety-training programs to maximize their financial return.

Keywords: safety, safety training, financial loss mitigation, return on investment, observational data

Suggested Citation

Chen, Yixing and Han, Kyuhong and Im, Taehoon and Singh, Sonam and Sridhar, Shrihari and Mittal, Vikas, Return on Safety Training (July 20, 2021). Available at SSRN: https://ssrn.com/abstract=3890177 or http://dx.doi.org/10.2139/ssrn.3890177

Yixing Chen (Contact Author)

Mendoza College of Business, University of Notre Dame ( email )

396 Mendoza College of Business
Notre Dame, IN 46556
United States

Kyuhong Han

Korea University Business School, Korea University ( email )

Anam-Dong, Seongbuk-Gu
Seoul 136-701, 136701

Taehoon Im

Jones Graduate School of Business, Rice University ( email )

6100 South Main Street
P.O. Box 1892
Houston, TX 77005-1892
United States

Sonam Singh

Alvarez College of Business, University of Texas at San Antonio ( email )

ONE UTSA Circle
San Antonio, TX 78249
United States

Shrihari Sridhar

Texas A&M University - Department of Marketing ( email )

430 Wehner
College Station, TX 77843-4218
United States

HOME PAGE: http://mays.tamu.edu/directory/shriharisridhar/

Vikas Mittal

Rice University ( email )

6100 South Main Street
250 McNair
Houston, TX 77005-1892
United States

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