Toward an Understanding of Corporate Social Responsibility: Theory and Field Experimental Evidence

Abstract

We develop theory and a tightly-linked field experiment to explore the supply side implications of corporate social responsibility (CSR). Our natural field experiment, in which we created our own firm and hired actual workers, generates a rich data set on worker behavior and responses to both pecuniary and CSR incentives. Making use of a novel identification framework, we use these data to estimate a structural principal-agent model. This approach permits us to compare and contrast treatment and selection effects of both CSR and financial incentives. Using data from more than 1100 job seekers, we find strong evidence that when a firm advertises work as socially-oriented, it attracts employees who are more productive, produce higher quality work, and have more highly valued leisure time. In terms of enhancing the labor pool, for example, CSR increases the number of applicants by 25 percent, an impact comparable to the effect of a 36 percent increase in wages. We also find an economically important complementarity between CSR and wage offers, highlighting the import of using both to hire and motivate workers. Beyond lending insights into the supply side of CSR, our research design serves as a framework for causal inference on other forms of non-pecuniary incentives and amenities in the workplace, or any other domain more generally.

Intentions for Doing Good Matter for Doing Well: The (Negative) Signaling Value of Prosocial Incentives

“…5 Second, our paper contributes to the growing literature on the importance and functioning of CSR in motivating and selecting workers (for a review about the management literature on CSR as a HR tool, see, e.g., Flammer and Luo, 2017). 6 For example, in a recent field experiment, Hedblom et al (2016) show that jobs with a CSR component are able to attract more productive workers and generate higher quality work output (for other papers on the effect of having a social mission, see, e.g. Fehrler and Kosfeld, 2014;Kosfeld et al, 2014;Koppel and Regner, 2014;Carpenter and Gong, 2016;Gartenberg et al, 2016).…”

The Impact of Management Practices on Employee Productivity: A Field Experiment with Airline Captains

“…While prosocial incentives and motivations are not explicitly considered within the traditional management toolkit (e.g., Bloom and Van Reenen, 2007), they have recently received considerable attention in the literature both theoretically (Ellingsen and Johannesson, 2008;Bénabou and Tirole, 2010) and empirically (Tonin and Vlassopoulos, 2010;Anik et al, 2013;Imas, 2014;Charness et al, 2016;Hedblom et al, 2016). Moreover, according to a recent survey, 67% of CEOs believe prosocial considerations are increasingly essential for acquiring and motivating high-skilled labor (PricewaterhouseCoopers, 2016).…”

Beyond COVID-19 Pandemic: A Systematic Review of the Role of Global Health in the Evolution and Practice of Corporate Social Responsibility

“…Along this CSR evolutionary trajectory, different revolutionary occurrences of historical signi cance have serenaded the principles, theories, practices, mechanisms, approaches, driving dynamics and stratagems of corporate social responsibility [3] Early theorists in CSR advocacy in the early 19 th century provided con icting evidence as to why a rm should support CSR or not. In his 'magnum opus' "the wealth of nations", renowned Scottish philosopher; Adam Smith enlisted consumers into "social sentinels" that must only support organisations whose actions advance the interest of the society [4]. Adam Smith as cited in Hedblom, et al [4] argues that industry players will always act out of sel sh reasons to satisfy their personal bene t. To this end, he contends that consumers are the best stakeholders to guard the welfare of the society.…”

“…In his 'magnum opus' "the wealth of nations", renowned Scottish philosopher; Adam Smith enlisted consumers into "social sentinels" that must only support organisations whose actions advance the interest of the society [4]. Adam Smith as cited in Hedblom, et al [4] argues that industry players will always act out of sel sh reasons to satisfy their personal bene t. To this end, he contends that consumers are the best stakeholders to guard the welfare of the society.…”

“…The dissenting voices to corporate social responsibility were heralded by Milton Friedman who believed that business organisations were established just to satisfy the pro t motives of their shareholders [4,5].…”