Effect of organizational status on employment-related corporate social responsibility: Evidence from a regression discontinuity approach

Tanya Y. Tian*, Brayden G. King, Edward B. Smith

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

3 Scopus citations

Abstract

Research Summary: We examine the effect of organizational status on employment-related corporate social responsibility (CSR). As employees derive nonpecuniary benefits from both organizational status and employment-related CSR, lower status firms may invest in nonpecuniary employment-related CSR to compete in a status-segmented labor market. We identify the effect using a regression discontinuity design (RDD) in the context of the Fortune 1000 rankings, as we contend that the 500th rank position marks an artificial breakpoint in status where quality follows a smooth distribution. We find that firms just failing to make the Fortune 500 perform significantly better in nonpecuniary employment-related CSR. Our findings provide causal evidence for the labor market advantage of organizational status and a richer window into the strategic motivations behind CSR investments. Managerial Summary: We examine one strategic investment that lower status firms make to compete in a status-segmented labor market: employment-based corporate social responsibility (CSR). We identify the effect using a regression discontinuity design (RDD) in the context of the Fortune 1000 rankings, as we argue that the 500th rank position creates a discontinuity in status at a precise location where quality differences can be assumed to follow a smooth distribution. We find that firms just failing to make it into the Fortune 500 perform significantly better in nonpecuniary employment-related CSR as compared to firms just in the Fortune 500. The findings demonstrate that building a reputation for being socially responsible may offset differences in status and make a lower status organization more appealing to employees.

Original languageEnglish (US)
Pages (from-to)2833-2857
Number of pages25
JournalStrategic Management Journal
Volume44
Issue number12
DOIs
StatePublished - Dec 2023

Funding

We would like to thank the editor Caroline Flammer and two anonymous reviewers for their valuable feedback. We also thank Ying Bai, Forrest Briscoe, Jillian Chown, Olga Hawn, Olenka Kacperczyk, David Kryscynski, Ben Lewis, Jiao Luo, Anita McGahan, Damon Phillips, Michael Toffel, Jane Zhang, and participants in seminars at Bocconi University, New York University, The University of North Carolina at Chapel Hill, The University of Toronto, Yale School of Management, the Academy of Management annual meetings, the Alliance for Research on Corporate Sustainability annual meetings, the Strategic Management Society annual meetings and the Wharton People and Organizations Conference for their helpful suggestions on earlier versions of this paper. This paper is dedicated to Finnegan, Beckett, Eliza, and Cecily Smith.

Keywords

  • corporate social responsibility
  • nonpecuniary benefits
  • organizational status
  • quasi-experiments
  • strategic human capital

ASJC Scopus subject areas

  • Business and International Management
  • Strategy and Management

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