What shapes CSR performance? Evidence from the changing enforceability of non-compete agreements in the United States

Date
2019-08-24
Authors
Hrazdil, Karel
Li, Xin
Kim, Jeong Bon
Contributor
Advisor
Department
Instructor
Depositor
Speaker
Researcher
Consultant
Interviewer
Journal Title
Journal ISSN
Volume Title
Publisher
Volume
Number/Issue
Starting Page
Ending Page
Alternative Title
Abstract
This paper investigates whether companies strategically engage in corporate social responsibility (CSR) practices to retain employees. Under a unique setting of exogenous variations in non-compete law enforceability in the U.S., we examine the relation between the changing enforceability of non-compete agreements and firms’ CSR performance. Using a difference-in-differences design, we find that an increase in the enforcement of non-compete agreements (which enhances a firm’s ability to retain employees) deteriorates CSR performance. In cross-sectional tests, we find that peer pressure affects CSR performance interactively with the enforceability of non-compete agreements; specifically, the strategic role of CSR performance in employee retention is more pronounced for firms facing higher peer pressure (i.e., firms that are R&D intensive and in highly competitive industries). We further find a negative relation between the absolute enforceability of non-compete agreements and CSR performance. The above findings are consistent with the notion that firms strategically engage in CSR practices to retain employees, thereby reducing the knowledge spillover associated with employee mobility.
Description
Keywords
Non-compete Agreements, Enforceability, CSR Performance
Citation
Extent
Format
Geographic Location
Time Period
Related To
Rights
Rights Holder
Email libraryada-l@lists.hawaii.edu if you need this content in ADA-compliant format.