Does a religious affiliation make the CEO more likely to use internal CSRs? Evidence from Chinese privately owned firms

Abstract

In recent years, the role of religion in shaping corporate behaviour has drawn much attention. Unlike the more common focus on the effect of religion on corporate social responsibility (CSR) towards external stakeholders, this study investigates whether religion affects focal firms’ CSR towards internal stakeholders – that is, employees. Using a unique data set from a 2008 national survey of Chinese private firms, this study finds strong evidence that firms whose CEOs have some religious affiliation engage in more labour-friendly practices than their non-religious counterparts, as measured by employees’ social insurance coverage. This finding indicates that religion may motivate executives to take more responsibility for their employees. Further, the positive association between religious affiliation and labour-friendly practices is more pronounced in firms with CEO duality (one person serves as both CEO and board chair) and in firms that depend more on human than physical capital. These findings survived several robustness checks and a test for endogeneity. Overall, our findings enrich the literature on the corporate consequences of a leader’s religion and the determinants of internal CSR. These findings also have important implications for policymakers and stakeholders.