The Influence of Unions on CSR: Is There a Trade‐Off Between Employee‐Oriented and Non–Employee‐Oriented Policies?
| Published date | 01 December 2020 |
| DOI | http://doi.org/10.1111/bjir.12530 |
| Date | 01 December 2020 |
| Author | Muhammad Umar Boodoo |
British Journal of Industrial Relations doi: 10.1111/bjir.12530
58:4 December 2020 0007–1080 pp. 816–843
The Influence of Unions on CSR: Is
There a Trade-Off Between
Employee-Oriented and
Non–Employee-Oriented Policies?
Muhammad Umar Boodoo
Abstract
Strategic managers are consistently faced with decisions of how to allocate
a company’s scarce resources to meet the demands of shareholders and other
powerful and legitimate stakeholders. This article analyses whether higher union
density at company level pushes management to engage more in corporate
social responsibility (CSR). Drawing from stakeholder theory and the resource
allocation approach of CSR as well as union voice and monopoly models, this
article finds that companies have to substitute non–employee-orientedCSR with
employee-oriented CSR as union density increases but is still at low levels.
At higher levels of union density, companies can complement both types of
CSR. This perhaps represents a reinforcement of mutual interests between
management and organized labour, which has implications for managerial
prerogatives as well as union positioning in the labour and political process.
1. Introduction
The spread of voluntary corporate initiatives in the environmental, social
and governance domains — commonly referred to as ‘corporate social
responsibility (CSR)’ — can be attributed to increased institutional and
social pressures for ethical, responsible and sustainable business practices
(Aupperle 1991; Campbell 2007; Carroll 1979; Waddock 2008). Firms can
respond to such pressures by taking actions thatare visible and directly related
to its external stakeholders (e.g. suppliers, consumers) via better disclosure
practices, branding, low involvement with ‘sinful’ industries and improved
product quality control. They can also take actions that are most salient to
Muhammad Umar Boodoo is at WarwickBusiness School, University of Warwick.
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2020 John Wiley & Sons Ltd.
The Influence of Unions on CSR 817
internal stakeholders (e.g. employees). Such actions can be in the form of
setting up conditions and work environments that foster health and safety.
The scope of CSR activities that a company may undertake can, therefore,
aect multiple stakeholders both inside and outside the firm.
The traditional boundary between internal and external stakeholders
is based on the level of direct supervisory control that management has
over the stakeholder. However, as research points out, it is possible to
manage external stakeholder relationships as well, making the distinctions
blurred between internal and external stakeholders (Harrison and St. John
1996). This article distinguishes between internal and external stakeholders
based on the three-dimensional dierences between insiders and outsiders
by Fanelli and Misangyi (2006). First, internal stakeholders are motivated
by management to produce and maintain internal eectiveness, whereas
external stakeholders are motivated at arms’ length by management to
participate in order to facilitate the firm’s activities via, for example,
supplier contracts and consumer purchases. Second, the relationship between
internal stakeholders and management is hierarchical, while the relationship
between outsiders and management is network based. Third, management
communication with internal stakeholdersis captive, where the social distance
between the stakeholder and management does not impact the salience and
eect of the communication from management. With external stakeholders,
management communication is more competitive, where management is
competing with other firms and actors for the attention of the outsiders.
Mattingly and Berman (2006) also distinguish corporatesocial action between
technical stakeholders and institutional stakeholders. Employees are more
closely associated with the technical environment of the firm based on
resource exchanges between input (eort) and output (production) rather
than the institutional environment of the firm, which governs the normative
expectations from the firm. They are, therefore, primarily technical internal
stakeholders rather than institutional external stakeholders. Corporate social
action towards employees would consist of elements dierent to corporate
social action towards institutional external stakeholders.
While a big section of the literatureon CSR has been populated with studies
that have related social performance to financial performance (see Margolis
et al. (2007) for a meta-analysis), therestill remains a relative paucity of papers
with regard to the influence of stakeholder demand on corporate supply of
CSR. In other words, the particular stakeholder pressure that impacts CSR
has not been well established. The gaps are both theoretical and empirical.
Consider, specifically, the case of employees as a stakeholder group. Do they
have enough power internally — or can they draw sucient attention to
the company — such that their employment rights are upheld in the most
suitable manner? Can they, as a stakeholder, pressure the company to mend
and improve its health and safety procedures? Can they push the company to
indulge in practices that are also beneficial to society and to the environment?
The main theoretical focus of this article is the influence of stakeholder
pressure on corporate delivery of CSR. Stakeholder theory (e.g. Freeman
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2020 John Wiley& Sons Ltd.
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