Powerful CEOs and employee relations: evidence from corporate social responsibility indicators

The influence of diversity and employee relations on corporate philanthropy and performance

“…Companies that treat their employees well can expect to be reciprocated with their dedication and loyalty (Cropanzano et al, 2017). Empirical evidence shows that managerial attention to employees has a positive impact on the company's financial performance (Becker & Gerhart, 1996;Berman et al, 1999;Huselid, 1995;Wiggenhorn et al, 2016), helps avoid financial distress (Kane et al, 2005), and creates value for the company (Hillman & Keim, 2001), substantiating the prediction that high quality employee relations will intensify the positive impact of corporate philanthropy on performance, just as poor quality relations may exacerbate its negative effects.…”

“…Scholars also propose that relations with primary stakeholders, including employees, should be seen as more than transactions, as they require investments from both employees and employers that result in value creation (Hillman & Keim, 2001). As such, employee relations become about the quality of the relationship and include practices such as ownership of company stock, involvement in the decision-making process, cash profit sharing, and freedom to unionize (Surroca et al, 2010;Wiggenhorn et al, 2016). Companies that maintain high-quality relations with their employees by establishing profit sharing programs, proactively protecting their health and safety, and encouraging their involvement in management decisions through stock or option ownership value their workforce and are rewarded with positive financial results (Wiggenhorn et al, 2016).…”

“…As such, employee relations become about the quality of the relationship and include practices such as ownership of company stock, involvement in the decision-making process, cash profit sharing, and freedom to unionize (Surroca et al, 2010;Wiggenhorn et al, 2016). Companies that maintain high-quality relations with their employees by establishing profit sharing programs, proactively protecting their health and safety, and encouraging their involvement in management decisions through stock or option ownership value their workforce and are rewarded with positive financial results (Wiggenhorn et al, 2016). There is evidence that high-performance companies rely on progressive HR practices, such as performance-related pay, formal participation mechanisms, and information-sharing processes (Kehoe & Wright, 2013), to lower turnover and absenteeism and increase productivity and commitment levels (Berman et al, 1999;Huselid, 1995).…”

“…KLD ratings were used to measure corporate philanthropy in past studies (see Cuypers et al, 2016;Kabongo et al, 2013). To create the corporate philanthropy measure, we followed the strategy used in other studies (e.g., Bellinger & Hillman, 2000;Hillman & Keim, 2001;Kabongo et al, 2013;Wiggenhorn et al, 2016), and we aggregated KLD items, "charitable giving," "innovative giving," "community engagement," "support for education," "volunteering programs" (community), "reporting quality," and "public policy strength" (corporate governance) for each focal year. The measure reflects community strength that focuses on philanthropic support of local communities and development of social initiatives (Mattingly & Berman, 2006).…”

CEO power and labor productivity

“…Hence, it is more efficient for employees to carry out strategies of more powerful CEOs (Keltner et al, 2003). Third, Wiggenhorn et al (2016) show a positive relation between CEO power and employee involvement, suggesting that powerful CEOs can get their employees more involved in firm operations. Hence, we expect a positive relation between CEO power and labor productivity as prior research (Edmans, 2011) finds that high employee involvement may lead to superior labor performance.…”