Wages and corporate social responsibility: entrenchment or ethics?

Abstract

PurposeIn this article the authors examine how corporate social responsibility (CSR) affects the wage policy of firms. At the first glance, one may think that socially responsible firms want to attract employees via ethical concerns and corporate culture, thereby inducing a negative link between CSR and wages. On the other side, socially responsible firms can be expected to increase wages as social entrenchment strategies.Design/methodology/approachIn order to correct for potential endogeneity bias, the authors employ a simultaneous equation model (SEM) on a French data set that includes 13,186 employees.FindingsThe authors show that CSR has an ambiguous impact on corporate wage policy depending on the type of monetary incentives and employee's occupation considered.Originality/valueThe authors extend prior research on the CSR–wage relationship by distinguishing between different forms of monetary incentives: the base wage, total wage and premium wage. Their results draw attention to the fact that the employees' occupation do matter. The evidence confirms that the effect of CSR on the wage is not to be taken for granted: it is wage form and occupation specific.