Giving the Benefit of the Doubt: Investigating the Insurance‐Like Effect of CSR in Mitigating Negative Employee Reactions to Psychological Contract Breach

Abstract

AbstractMany studies document employees’ value‐creating reactions to perceptions of their organization's corporate social responsibility (CSR) initiatives. Unknown, however, is whether perceived CSR can have value‐protecting effects by mitigating employees’ negative responses when they believe the organization's other actions harm their interests, as proposed by theory on the insurance‐like effect of CSR. In this respect, we develop hypotheses about the moderating role of CSR‐based moral capital, such that higher levels mitigate the effect of psychological contract breach (PCB) on employees’ negative assessment of the organization (i.e., corporate hypocrisy) and associated value‐eroding responses (i.e., lower loyal boosterism and higher turnover intentions). In Study 1, we use data from time‐lagged employee surveys. In Study 2, we conduct two experiments in a causal‐chain design. The findings support nuanced hypotheses from our theorized model and provide new insights that contribute to the broader CSR literature on value‐protection and insurance‐like effects, micro‐CSR scholarship, and PCB research.