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

• In Event: Social Interactions Across Firm Hierarchies

Abstract

We examine how employee effort is affected by the firm’s corporate social responsibility (hereafter CSR) actions. We expect how employees are treated by the firm (well or poor) and employees’ perception that CSR uses transferable resources to determine their effort response to CSR. Specifically, we expect that when employee treatment is poor and employees perceive that CSR uses transferable resources, employees will react negatively to CSR because they will view the firm’s CSR actions as unfair. However, we expect employees’ will not respond negatively to CSR when employees are treated well or if they do not perceive CSR actions as using transferable resources. 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 transferable 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 resources on CSR actions that benefit external parties.

Authors

• Zhiping Mao, University of Arizona

• Jeremy Douthit, University of Arizona

• Patrick Ryan Martin, University of Pittsburgh