Management Accounting Section Midyear Meeting

Tend to One’s Own House: The Effect of Firm CSR on Employee Effort

• In Event: Social Mission

Abstract

We examine how employee effort is affected by their firm’s corporate social responsibility (hereafter CSR) actions that are not directed towards the employee. We expect how employees are treated by the firm (well or poorly) and whether CSR uses financial resources to determine their effort response to CSR. Specifically, we expect that when employee treatment is poor and CSR uses financial resources, employees will view the firm’s CSR actions as unfair and thus will react negatively to CSR. Results support our expectations and our theory. That is, we find that employees respond negatively to CSR only when they are treated poorly by their firm and CSR uses financial resources. In line with our underlying theory we find that these effects are driven by employees’ perceptions of firm fairness. Our study suggests that firms may wish to consider how they are treating their employees before expending financial resources on CSR actions that benefit external parties.

Authors

• Jeremy Douthit, University of Arizona

• Zhiping Mao, University of Arizona

• Patrick R. Martin, University of Pittsburgh