responsible or redundant engaging the workforce through corporate social responsibility
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http://aum.sagepub.com/Australian Journal of Management
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DOI: 10.1177/0312896211415459
2011 36: 425Australian Journal of ManagementVictoria Smith and Peter Langford
responsibilityResponsible or redundant? Engaging the workforce through corporate social
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Article
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Responsible or redundant?Engaging the workforce throughcorporate social responsibility
Victoria SmithDepartment of Psychology, Macquarie University, Australia
Peter LangfordVoice Project, Macquarie University, Australia
AbstractIncreasing attempts are being made to determine whether corporate social responsibility leads to commercial
benefits. Research to date has demonstrated that corporate social responsibility is associated with attracting
job-seekers and enhancing the engagement of employees. However, much of this research focuses on the impact
of corporate social responsibility on employee outcomes independent of the impact of traditional human
resource practices (e.g. training, rewards). Using a variation of an existing employee opinion survey, and applying
Carrolls (1979) model of corporate social responsibility, this paper assesses the relationship between employee
engagement, traditional human resource practices, and corporate social responsibility. Data collected from 3147
employees showed a significant positive correlation between corporate social responsibility and employee
engagement. However, corporate social responsibility explained little additional variance in engagement beyond
that explained by traditional human resource practices. This paper concludes that allocating attention and
resources to corporate social responsibility may not be as advantageous as investing in the improvement of
core human resource practices, when the goal is to improve employee engagement. Future research needs
to examine why corporate social responsibility explains little additional variance in employee engagement,
specifically examining the manner in which employees perceive corporate social responsibility and the extent
to which corporate social responsibility encompasses traditional human resource practices.
Keywordsbusiness ethics, corporate social responsibility, employee engagement, human resources, corporate
performance
1. Introduction
Corporate social responsibility (CSR) has increased in importance over time, advancing in both
academic and practitioner circles (Carroll and Shabana, 2010). While we depend on corporations
Corresponding author:
Victoria Smith, PO Box 204, Lennox Head, NSW, 2478, Australia.
Email: [email protected].
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426 Australian Journal of Management 36(3)
for products and services, corporate practices can contribute to problems such as the deterioration
of quality of life, environmental degradation and pollution, giving corporations an important role
in addressing these problems (Dunphy and Benveniste, 2000). In line with this, organizations have
become increasingly interested in the notion of sustainability (Carroll and Shabana, 2010; Dunphy
and Griffiths, 1998) with it being recognised that businesses need to consider the social and envi-ronmental impacts of their practices, in addition to profitability (Diesendorf, 2000; Gilding, 2000;
Olson and Toyne, 2000). Furthermore, it is being recognised that organizations cannot exist alone
and as such have a vested interest in meeting individual and social needs. Organizations need
employees to have the power to operate and need consumers, purchasing goods and services, to
have a reason to exist (Benveniste, 2000).
A number of arguments exist, both for and against CSR and although the initial focus on CSR
tended to be on the benefits of CSR for society, over time a focus on the benefits that CSR could
bring to business was established (Carroll and Shabana, 2010; Mintzberg, 1983). In line with this,
there are two main perspectives on why organizations may want to invest in CSR, the normative
case and the business case. The normative case proposes that organizations should invest in CSRregardless of the impact on the bottom line, as CSR investment is the right thing to do (Bhattacharya
and Sen, 2004; Smith, 2003). The business case on the other hand is concerned with what busi-
nesses can gain from CSR, from a primarily economic perspective (Carroll and Shabana, 2010).
Organizations can be resistant to invest in CSR unless it is associated with concrete business ben-
efits (Maignan and Ferrell, 2001) making the aim to determine a business case for CSR increas-
ingly popular. CSR has been shown to benefit the bottom line in a number of ways, including
reduced risk, reduced production costs, increased financial investment, product differentiation and
improvements in a range of stakeholder outcomes (Carroll and Shabana, 2010; Diesendorf, 2000;
Smith and Langford, 2009). Carroll and Shabana (2010) provide a good review of the business
case for CSR, outlining concepts, research and practice that characterise the business case. It isimportant to note that the normative case and the business case are not mutually exclusive per-
spectives (Bhattacharya and Sen, 2004; Smith, 2003), with it being argued that engaging in corpo-
rate citizenship is both the right thing to do and a more effective way of doing business (Dunphy
and Benveniste, 2000).
While recognising the range of arguments supporting investment in CSR, this paper examines
an element of the business case, specifically the impact that CSR has on the outcome of employee
engagement (EE). CSR has been linked to improvements for a range of stakeholder groups (e.g.
consumers, investors), one of which is employees (Smith and Langford, in submission). Examining
the impact of CSR on employees is useful as employees are an important means of long-term com-
petitive advantage (Bassi and McMurrer, 2007), with employee satisfaction and commitmentimportant for increasing productivity and profits (Gollan, 2000). It has been argued that corporate
capital today is less about financial resources, raw materials, or physical assets and more about
knowledge and professional skills, making the recruitment, training and professional development
of staff essential for long-term corporate success (Dunphy and Griffiths, 1998). Determining sup-
port for a specific relationship between CSR and EE would be of importance, due to the positive
relationship EE has with a number of organizational outcomes. A meta-analysis by Harter, Schmidt
and Hayes (2002) examined the relationship between EE and a number of business outcomes. EE
showed generalisability across companies in its correlation with customer satisfaction, profitabil-
ity, productivity, employee turnover, and safety outcomes. Similarly, reporting results from over
13,000 employees from over 1200 organizations, Langford (2009) showed that EE correlated sig-nificantly with employee turnover and absenteeism, as well as manager reports of productivity,
safety, organizational goal attainment, customer satisfaction, and profitability.
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Smith and Langford 427
While CSR has been proposed as an important contributor to EE, many organizations are faced
with an uncertain decision around whether to support large investments in CSR in their attempts to
improve EE. Building on the range of theoretical and empirical evidence supporting the link between
CSR and employee outcomes, and with regards to the specific outcome of EE, this study examines
whether investing in CSR is a responsible business decision, or whether the decision to engage inCSR may be redundant. EE is defined in this study as the aggregate of organizational commitment,
job satisfaction, and intention to stay (Langford, 2009, 2010). CSR can be conceptualised by assign-
ing CSR activities to different CSR categories (Carroll and Shabana, 2010) and is defined in this
manner using Carrolls (1979) CSR model. Carrolls (1979) model is popular in empirical research
and easily operationalised, with the multi-dimensional nature of the model allowing for a more pre-
cise examination of CSR (Carroll and Shabana, 2010; Wood and Jones, 1995). Carrolls model defines
CSR as consisting of four-parts: economic, legal, ethicalandphilanthropic components.Economic
CSR includes maximising profitability and maintaining a strong competitive position. Legal CSR
encompasses legal compliance.Ethical CSR includes actions that reflect societal standards, expecta-
tions and norms that have not been specifically legislated. Finally,philanthropic CSR encompassesactions that demonstrate a business is a good corporate citizen (Carroll, 1991). Economic CSR and
legal CSR are seen as required, ethical CSR as expected and philanthropic CSR as desired (Carroll
1979, 1991; Carroll and Shabana, 2010). The recognition of economic responsibility as a consider-
ation in CSR is important in examining the business case as it reinforces that the economic perfor-
mance of a firm is important for both the firm and for society (Carroll and Shabana, 2010). In addition
to Carrolls model, this study measures CSR using two other scales social responsibility and envi-
ronmental responsibility. Social responsibility and environmental responsibility indicate actions that,
depending on their nature, can be captured within one of Carrolls four CSR dimensions.
This study begins with an examination of the relative relationships of Carrolls (1979) four CSR
dimensions with EE. Second, the study assesses the relationship between EE and the two remain-ing CSR measures (social responsibility and environmental responsibility). Thirdly, and perhaps
most importantly, the current study adds to previous literature by assessing the extent to which
CSR explains additional variance in EE beyond that explained by traditional human resource (HR)
practices. Much of the research demonstrating a relationship between CSR and employee out-
comes focuses on the impact of CSR independent of other variables that are known to impact
employees (e.g. HR practices such as training or rewards). Consequently, it is difficult to determine
the extent to which CSR practices have a greater impact on employee outcomes than do HR prac-
tices, or indeed the extent to which CSR leads to additional benefits beyond the impact of HR. If
organizations are to invest in CSR, the benefits of CSR investments should be demonstrated to
either be greater than the benefits from alternative investment options (e.g. HR investments), orcontribute additional benefits beyond those benefits gained from the practices in which an organi-
zation is already performing. Consequently, the current study examines firstly, the relative impact
that CSR and HR have on EE, and secondly, the extent to which CSR explains additional variance
in EE beyond the variance explained by HR practices alone.
2. The impact of corporate social responsibility on employees: Where
do we stand?
Early research attempts to link CSR to business benefits tended to focus on establishing a link
between a firms overall performance on social issues and its financial success. However, it hassince been argued that researchers should define a specific stakeholder group when assessing the
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428 Australian Journal of Management 36(3)
relationship between social performance and corporate benefits (Wood and Jones, 1995). The
nature of a CSR program depends on the needs and characteristics of the targeted stakeholders
(Rodrigo and Arenas, 2008) and, consequently, the outcome measures that are used to assess the
link between CSR and business benefits need to take into account which stakeholder group is the
focus of the CSR program (Wood and Jones, 1995). For example, CSR programs that focus onfamily-friendly employment may be best measured in terms of employee outcomes. The current
study assesses the relationship between CSR and EE.
Two theoretical arguments that can explain why CSR may lead to positive employee outcomes
are signalling theory and social identity theory. Signalling theory can be used to explain the manner
in which individuals allocate characteristics to organizations, despite having incomplete informa-
tion about an organization. Signalling theory suggests that individuals will use the organizational
attributes which they know about to draw inferences about what it would be like to work for an
organization (Greening and Turban, 2000). A firms CSR policies have a positive impact on
employees as they serve as positive indicators of what it is like to work for a firm (Albinger and
Freeman, 2000; Backhaus et al., 2002; Greening and Turban, 2000; Turban and Greening, 1996).For example, the organizational practice of treating consumers fairly may indicate that an organi-
zation will treat employees fairly. Social identity theory states that people group themselves into
social categories that influence their self-concept (Albinger and Freeman, 2000; Ashforth and
Mael, 1989; Greening and Turban, 2000; Peterson, 2004). Individuals want their work to not only
meet their own needs, but also the needs of the community and society (Benveniste, 2000) and
organizational membership can become an important dimension of an individuals identity as
employees respond to organizational achievements as reflective of their own personal achieve-
ments (Turker, 2009). According to social identity theory, employees obtain a positive sense of
identity when associated with a firm that has a positive reputation (e.g. perhaps from investing in
CSR), and association with an organization that has a negative CSR reputation may have a detri-mental impact on an individuals self-concept (Peterson, 2004). Consequently, social identity the-
ory suggests that firms who invest in CSR may be more attractive as employers, because employees
could expect enhanced self-concept through associations with such firms (Albinger and Freeman,
2000; Greening and Turban, 2000; Peterson, 2004; Turban and Greening, 1996).
In support of the theoretical propositions linking CSR to employee outcomes, empirical evi-
dence has identified a number of positive employee outcomes resulting from CSR. Benefits have
been suggested for both job-seekers and incumbent employees. For example, job-seekers have
been shown to rate CSR as important for organizational attractiveness (Albinger and Freeman,
2000; Backhaus et al., 2002) and CSR has been found to increase the likelihood of reader response
to recruitment advertisements (Belt and Paolillo, 1982). In terms of incumbent employees, CSRhas been linked to organizational commitment (Brammer et al., 2007; Cullen et al., 2003; Peterson,
2004), job satisfaction (Gavin and Maynard, 1975; Pettijohn et al., 2008; Vitell and Davis, 1990)
and reduced turnover intentions (Pettijohn et al., 2008). Finally, CSR has been linked to
performance-related outcomes such as voluntary turnover, rates of absenteeism, manager ratings
of productivity, manager ratings of health and safety (Langford, 2009) and individual commitment
to quality, which has a significant influence on individual performance (Weeks et al., 2004).
3. Comparisons between Carrolls four dimensions of corporate social
responsibilityThe use of a multi-dimensional model, such as Carrolls (1979), to measure the relationship between
CSR and EE is important as CSR practices have been found to differ in their impact on employee
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Smith and Langford 429
outcomes (e.g. Albinger and Freeman, 2000; Backhaus et al., 2002; Greening and Turban, 2000).
Understanding the manner in which employees differ in their responses to CSR dimensions allows
organizations to invest in the CSR actions that are most effective. Regarding Carrolls (1979) four
CSR dimensions, it is proposed here that the ethical dimension will have the strongest relationship
with EE, with the ethical standards of an organization having been found to notably influence work-place attitudes (Koh and Boo, 2001; Peterson, 2004; Vitell and Davis, 1990).
Applying signalling theory and social identity theory, it is proposed that ethical CSR will have
a stronger relationship with EE than will economic, legal or philanthropic CSR, because employ-
ees will value the reputational and self-identity benefits that are associated with ethical CSRs
perceived contribution to social wellbeing. As defined by Carroll (1979, 1991), ethical CSR incor-
porates actions that reflect progressive social expectations, and what consumers, employees, share-
holders and the community consider fair. In contrast, economic CSR refers to practices concerned
with profit generation and maintaining a competitive position. Economic CSR recognises that
organizations have a primary responsibility to produce goods and services and sell them at a profit
(Carroll, 1979, 1991). Consequently, the benefits of economic CSR are directed towards a rela-tively focused set of stakeholders, rather than social wellbeing, and hence have limited value for
employees social reputation and identity. Similarly, legal CSR refers to practices mainly con-
cerned with legal compliance. Whilst legal CSR interacts with ethical CSR, such that values and
actions in the ethical CSR domain often precede the establishment of law (Carroll, 1979, 1991),
companies engage in legal CSR primarily in an attempt to meet minimum legal requirements,
rather than to contribute to social wellbeing. Meeting minimum legal expectations is unlikely to
enhance an employees social reputation and identity. Finally, philanthropic CSR is defined as
practices that are voluntary and not expected in a moral or ethical sense. A company is not consid-
ered unethical if it is not philanthropic. For this reason Carroll (1991: 42) described philanthropic
CSR as less important than the other three categories of social responsibility. Consequently,although philanthropic CSR can still contribute to the community, it is proposed here that ethical
CSR will be seen to have a great impact upon social wellbeing and hence employees will see ethi-
cal CSR as having the greater value for social reputation and identity.
In support of the theoretical proposition that ethical CSR will have the strongest relationship with
EE, Peterson (2004) examined the manner in which business professionals in the USA perceived
Carrolls four CSR domains and found that the ethical component was a significantly better predic-
tor of organizational commitment, in comparison to the remaining three dimensions. Peterson (2004)
suggests that future research should examine how CSR influences other employee-related measures
(e.g. job satisfaction, turnover and productivity), across various regions of the USA. Expanding on
the measure of organizational commitment, to include job satisfaction and intention to stay, thispaper examines the impact of CSR on EE, using a predominantly Australian sample. As outlined,
based on theoretical propositions and empirical findings the following hypothesis is proposed:
Hypothesis 1: The ethical component of CSR will be more highly correlated with EE, and explain the
greatest unique variance in EE, when compared against the remaining three CSR components (i.e.
economic, legal, and philanthropic CSR).
4. Comparisons between social and environmental corporate social
responsibilityIn order to further understand the manner in which employees differ in their responses to CSR
dimensions, this paper examined the relationship between two discernible CSR domains (social
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Smith and Langford 431
to the relative strength of their relationships with EE. Although empirical evidence has identified a
number of positive employee outcomes resulting from CSR (e.g. Backhaus et al., 2002; Brammer
et al., 2007; Gavin and Maynard, 1975; Hunt et al., 1989; Pettijohn et al., 2008; Turban and
Greening, 1996; Valentine and Barnett, 2003; Vitell and Davis, 1990), much of the research dem-
onstrating a relationship between CSR and employee outcomes focuses on the impact of CSRindependent of the impact of HR practices that affect employees (e.g. training, salary). Consequently,
the extent to which CSR and HR practices interact in their impact on employee outcomes, and the
extent to which CSR has a significant additional impact on employee outcomes beyond the impact
of HR practices, is not clear from the current literature.
Smith and Langford (in submission) reviewed the empirical and theoretical literature investigat-
ing the impact of CSR on employees, broadly proposing that organizations should engage in both
CSR- and HR-related practices to an acceptable standard, before attempting to pursue excellent
performance in either area. They propose that performing to an acceptable standard (i.e. avoiding
negative practices) in regards to both CSR and HR may be a more effective way of impacting
employee outcomes, than performing particularly well in some practices and poorly in other prac-tices. However, Smith and Langford also note that this suggestion fails to account for the possibil-
ity that employees may attribute different levels of importance to CSR and HR practices. Given the
lack of research examining the impact of CSR on employee outcomes, relative to the impact of HR
practices, the comparativeimportance of CSR and HR practices for employee outcomes is cur-
rently unclear. The current study hopes to clarify the relative importance of CSR practices and HR
practices for the outcome of EE by examining the impact of CSR on EE, relative to the impact of
HR practices.
Understanding the impact that CSR practices have on employee outcomes, relative to the impact
of HR practices is useful as the importance of HR practices for employee recruitment and retention
is well documented. An increasing number of organizations are finding that investing in peoplemakes sense in business terms (Dunphy and Benveniste, 2000) and that they must encourage con-
tinuous knowledge and skill development to attract and retain outstanding people (Dunphy and
Griffiths, 1998).In line with this, a range of corporate practices have been found to have a signifi-
cant impact on EE. For example, training can increase engagement by renewing interest in a job,
or opening up new opportunities (Aggarwal et al., 2007). In other research, EE was highly corre-
lated with corporate practices such as the management of change and degree of innovation, the
successful achievement of organizational objectives, and the provision of career opportunities
(Parkes and Langford, 2008). The current study incorporates a range of HR practices in order to
realistically assess the extent to which CSR practices relate to EE. Using a variation of an existing
employee opinion survey (the Voice Climate Survey; Langford, 2009) and Carrolls (1979) CSRmodel, the relationship that six CSR practices have with EE are examined relative to the relation-
ship that 24 traditional HR practices have with EE.
Based on the limited amount of research that has examined the relative impact of CSR and HR
on employees, there is reason to assume that at least some HR practices will have a stronger rela-
tionship with EE, than will CSR practices. Research by Albinger and Freeman (2000) found that
the impact of CSR on employees is influenced by their level of job choice. Respondents were
allocated to a high-, medium-, or low-choice group based on factors such as education and work
experience, which were assumed to impact their number of prospective job choices. Whilst a sig-
nificant relationship existed between an organizations CSR ratings and attractiveness ratings for
high- and medium-choice groups, a significant relationship did not exist for the low-choice group.One explanation for this is that the job-seekers are responding to different needs. For example, the
low-choice job-seekers may be focusing on the need to receive a pay cheque, and thus are not
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432 Australian Journal of Management 36(3)
considering CSR in assessing employer attractiveness (Albinger and Freeman, 2000). Albinger and
Freemans (2000) study suggests, not surprisingly, that employees may focus first on base needs
and consider CSR practices only when base needs are being met. Consequently, employee out-
comes may be more impacted by many HR activities that impact upon base needs, rather than by
CSR activities that have a less personal and immediate impact upon employees. In line with thissuggestion, a review of research examining the impact of CSR on consumers highlighted that when
CSR is employed at a cost to traditional product attributes (e.g. quality, cost) CSR initiatives can
lead to a negative consumer response (Smith and Langford, 2009). Given the suggestion that job-
seekers may focus first on more personal needs, before considering CSR action, the following
hypothesis is proposed:
Hypothesis 3: EE will correlate more highly with traditional HR practices than with CSR practices.
In addition to examining the relative importance of CSR and HR for employee outcomes, this
paper aimed to examine whether CSR explained unique variance in EE in addition to that explainedby traditional HR practices. Whilst this study has hypothesised that EE will correlate more highly
with HR practices than with CSR practices, CSR may nevertheless play an important role in
explaining further unique variance in EE. It is proposed here that it is likely that CSR will have an
impact on EE, beyond the impact of HR practices, for a number of reasons. Firstly, as mentioned
above, an array of empirical evidence suggests that CSR is associated with a number of positive
employee outcomes, suggesting that CSR does have an impact on employees. Secondly, it is likely
that employees feel that there is a minimum level of acceptable CSR practice. Research has found
that consumers feel that superior product quality does not compensate for unethical practice (Folkes
and Kamins, 1999), suggesting that consumers feel that there is a minimum level of acceptable
CSR practice. Translating this finding to the workplace, it could be suggested that superior HRpractices may not compensate for unethical practices. Finally, another reason why CSR is likely to
explain unique variance in employee outcomes is the theoretical argument that employees want to
identify with firms that show concern for society in general. As mentioned above, organizational
membership can become an important dimension of an individuals identity (Turker, 2009) and
according to social identity theory, employees obtain a positive sense of identity when associated
with a firm that invests in CSR (Peterson, 2004). Consequently, whilst employees want to be
treated well in regards to HR practices, it is also likely that they want to work for organizations that
act ethically in their treatment of society and implement CSR practices. In order to examine the
proposition that CSR will have a relationship with EE, independent of the relationship of HR prac-
tices, the following hypothesis is proposed:
Hypothesis 4: CSR practices will explain additional variance in EE beyond that explained by traditional
HR practices.
6. Method
6.1 Participants
Data was collected in 2008 from 3147 employees, representing 316 organizations. These employ-
ees were predominantly employed in Australia (approximately 10% came from other countries
including China and the USA). The large, predominantly Australian nature of this sample is part of
what makes this study an important contributor to the literature examining the implementation and
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Smith and Langford 433
management of CSR. There is very little research examining the impact of CSR on Australian
employees, and the large nature of this sample allowed for an examination of individuals employed
in a variety of occupations, across a range of demographics.
Data were collected over a period of five weeks, as part of an undergraduate research project at
Macquarie University. Students were required to approach an organization and request that 10employees from a business unit within that organization complete the survey. A standardised sur-
vey form, containing instructions for the completion and return of the survey, was used to ensure
consistency in data collection. Students were also required to follow a specific process for approach-
ing organizations, obtaining consent, and collecting data (e.g. completed surveys were to be handed
directly back to students, rather than a manager). Finally, students submitted the data into an online
template, which was checked for errors. In return for participation, the business units received a
report benchmarking their scores against other participating business units.
The data collected in this study were analysed at the level of the individual, and as such no claim
is made that the sample of employees from any single organization was representative of that
organization. The most commonly reported occupational category of participating employees wasthat ofclerical or service worker(15% responding), followed by manager or administratorand
professional sales and marketing(12% responding to each). Approximately half the respon-
dents were female (54%), with the 2029 age bracket the most commonly cited (44% responding).
The most commonly cited category for annual salary was AUD$40,00069,999 (32% responding),
with 61% of respondents rating their level of seniority as in the lower third of the hierarchy of their
organization. Finally, the majority of respondents were employed in a full-time permanentrole
(59% responding), and had most commonly been with the organization for less than two years
(44% responding).
Whilst the data were not analysed at the business unit level, the manager of each business unit
was given the opportunity to provide information about their organization. Data were provided by268 of the 316 organizations. The majority of organizations employed less than 100 people (56%
responding), with 25% of organizations employing between 100 and 1000 people, and 19% of
organizations employing more than 1000 people. The majority of organizations were private sec-
tor/commercial organizations (80% responding), followed by the public/government sector
(12%) and the non-government/non-profit sector (8%). Finally, the most commonly reported
industry was that of retail trade (19% responding), followed by accommodation, hospitality,
tourism, cafs and restaurants(14% responding) and finance and insurance(7% responding).
6.2 Measure
The survey content comprised the Voice Climate Survey (Langford, 2009) and several additional
items measuring the six CSR constructs. The Voice Climate Survey is an employee opinion survey
that was designed to measure work practices and outcomes. The current study included several
additional items to measure CSR constructs as the Voice Climate Survey had not previously been
used to measure CSR at the level of detail assessed in the current study. The Voice Climate Survey
presented in this paper is copyrighted by Macquarie University.1
The survey contained 114 questions and all answers were provided on a 5-point rating scale
ranging from 1 = Strongly Disagree to 5 = Strongly Agree, with an additional option of Dont
Know/Not Applicable (responses to which were treated as missing). Employee responses to the
survey contained only 2.1% of responses that were either unanswered or were answered Dont Know/
Not Applicable. Given the small percentage of missing responses, and that they appeared essen-
tially random, all missing responses were replaced using a standard regression-based expectation
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434 Australian Journal of Management 36(3)
maximisation algorithm. This method has been used in other research involving organizational
climate measures (e.g. Langford, 2009; Patterson et al., 2005).
The 114 items represented three major groups of questions: EE, HR practices and CSR prac-
tices. The outcome measure of EE and measures of HR practices were both examined using items
drawn from the Voice Climate Survey. EE was measured using 10 items, broken down into threescales (organizational commitment, job satisfaction and intention to stay). HR practices were
measured using 79 items, grouped into 24 scales. Psychometric support for these measures has
been provided elsewhere (Langford, 2009). In regards to the current study, scale means, standard
deviations, reliability estimates, example items and the number of items in each scale, are included
in Table 1.
The CSR practices were measured using 25 items developed specifically for this study, grouped
into six scales. Four of these scales measured the four components of Carrolls (1979) CSR model
(economic CSR, legal CSR, ethical CSR and philanthropic CSR). EconomicCSR measured the
extent to which an organization maximised profitability, maintained a strong competitive position,
reached goals and objectives and had a positive future.Legal CSR measured the extent to which anorganization complied with laws and regulations, respected the privacy of employees, provided
employment meeting legal requirements and performed in a manner consistent with governmental
expectations.Ethical CSR measured the extent to which an organization performed in a manner
beyond the mere generation of profits and consistent with unlegislated societal standards and
norms. Finally,philanthropic CSR measured the extent to which an organization was charitable,
promoted human welfare, contributed resources to the community and went beyond ethical expec-
tations. The remaining two CSR scales measured environmental responsibility andsocial respon-
sibility.Environmental responsibility referred to an organization showing concern for the impact it
had on the environment, and having a positive impact on the environment. Social responsibility
referred to an organization showing concern for the impact it had on the community, having a posi-tive impact on the community, making transparent decisions and being positively evaluated when
exposed to public scrutiny. Scale means, standard deviations, reliability estimates, example items
and the number of items in each scale, are included in Table 1.
In addition to the scale reliability estimates indicating that the EE, HR and CSR scales exhibited
discriminant validity, a confirmatory factor analysis (CFA) was conducted on the measure, using
AMOS, in order to demonstrate discriminant validity and provide support for the independence of
the EE, HR and CSR scales. The assumptions of CFA (e.g. multi-collinearity, sample size) were
met. Due to the large sample size the chi-square statistic was considered inappropriate for model
assessment (Bentler and Bonett, 1980; Floyd and Widaman, 1995; Patterson et al., 2005) and, not
surprisingly, was found to be significant (chi-square = 22634, df = 5799,p
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Smith and Langford 435
7. Results
Prior to testing the main hypotheses, it was established that significant correlations existed between
the outcome of EE and a number of the demographic options. All practically important correlations
between EE and the demographic options (r .10) are outlined in Table 3. These demographic
options were controlled in further analyses. No practically important correlations were found
between EE and the remaining demographic questions about: gender; two employment status
options (part-time permanent, contract/fixed term); two marriage status options (single with depen-
dent children, married without dependent children); employee unionism; a number of occupational
categories; years until retirement; and country of employment.
In order to test the hypotheses in this study, partial correlations (controlling for relevant
demographic variables) between EE, HR and CSR were examined (see Table 1). A hierarchical
multiple regression was also conducted to test the hypotheses. The demographic options known
to correlate with EE were entered at the first step in the hierarchical regression. At the second
step, the 24 traditional HR practices included in the survey were entered. At the third step of the
hierarchical regression the six CSR scales were entered. Table 1 presents the standardised betas
for the CSR and HR practices when explaining EE, taken from the final step of the hierarchical
regression. Finally, the correlations among all the variables in the study were examined to pro-
vide further guidance around the manner in which respondents distinguished between the vari-
ables. As shown in Table 2, moderate-to-strong correlations exist between most of the variables
in the study.
The first hypothesis proposed that the ethical component of CSR would be more highly corre-
lated with EE, and would explain the greatest unique variance in EE, when compared against the
remaining three CSR components (i.e. economic, legal, and philanthropic CSR). As shown in
Table 1, the partial correlations and standardised betas only partly support hypothesis 1. The four
CSR components had correlations with EE of very similar strength. Ethical CSR, economic CSR
and philanthropic CSR also demonstrated similar regression weights in the hierarchical regression.
In sum, the results in Table 1 suggest that, of Carrolls four components, only legal CSR had a
weaker relationship with EE than ethical CSR.
Hypothesis 2 proposed thatsocial responsibility would have a stronger correlation with EE, and
would explain greater unique variance in EE, than would environmental responsibility. As shown
in Table 1, hypothesis 2 was partially supported by the finding that social responsibility had a
higher correlation with EE than did environmental responsibility. However, neither social respon-
sibility nor environmental responsibility significantly explained unique variance in EE in the
regression analysis. One possibility for why social and environmental responsibility did not sig-
nificantly explain EE in the regression analysis is that employees did not distinguish these discern-
ible constructs from Carrolls (1979) CSR components. As shown in Table 2, this possibility is
supported by the presence of moderate-to-strong correlations (r= .34.63) between social respon-
sibility, environmental responsibility and Carrolls (1979) components.
Hypothesis 3 proposed that a stronger correlation would exist between HR practices and EE
than between CSR practices and EE. As mentioned, Table 1 shows the partial correlations for the
HR practices and CSR practices with EE. Hypothesis 3 was partially supported in that the HR
practices of mission and values, rewards and recognition and career opportunities had the strongest
correlations with EE. However, all six CSR practices had higher correlations with EE than the HR
practices of facilities, role clarity, talent, diversity, work-life balance, safety and teamwork. These
results provide partial support for hypothesis 3 as they suggest that many, but not all, HR practices
correlate more highly with EE than do CSR practices.
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436 Australian Journal of Management 36(3)
Table
1.
Asummaryofthenumber(#)
ofitemsineachscale,alphas,me
ans(M),standarddeviations(SD),partialcorrelations(r)andstand
ardisedbetas
()whenexplainingemployeeengageme
nt.
Measur
e
Example
Items
#ofItems
Alpha
M
SD
r
Employ
eeEngagement
Ifeelem
otionallyattachedtothisorganization
10
.80
3.73
0.90
-
-
HRPractices
Mission
&Values
Ibelieve
intheoverallpurposeofthisorg
anization
3
.88
3.99
0.84
.52c
.18c
Career
Opportunities
Enoughtimeandeffortisspentoncareer
planning
3
.88
3.31
1.01
.50c
.14c
Reward
s&Recognition
TherewardsandrecognitionIreceivefro
mthisjobarefair
4
.87
3.66
0.91
.50c
.12c
Wellness
Iamgive
nenoughtimetodomyjobwell
4
.86
3.91
0.80
.43c
.09c
Involvement
Iamcon
sultedbeforedecisionsthataffectmearemade
3
.82
3.45
0.96
.45c
.06b
Leadership
Ihaveco
nfidenceintheabilityofseniorm
anagement
4
.91
3.85
0.93
.48c
.05b
Resour
ces
Ihaveaccesstotherightequipmentandresourcestodomyjobwell
3
.83
3.84
0.87
.41c
.04a
Results
Focus
Highstandardsofperformanceareexpected
3
.79
4.16
0.77
.40c
.04a
Motivation&Initiative
Myco-w
orkersputinextraeffortwhenevernecessary
3
.85
3.73
0.85
.38c
.04a
Facilitie
s
Thebuildings,groundsandfacilitiesIuseareingoodcondition
3
.88
3.62
0.96
.30c
.0
4a
Recruitment&Selection
Thisorganizationisgoodatselectingtherightpeoplefortherightjobs
3
.88
3.74
0.91
.47c
.03
Perform
anceAppraisal
Theway
myperformanceisevaluatedisfair
3
.89
3.50
0.97
.44c
.03
RoleClarity
Duringm
yday-to-daydutiesIunderstand
howwellIamdoing
3
.78
4.22
0.74
.33c
.03
Talent
Ihaveco
nfidenceintheabilityofmyco-w
orkers
3
.90
3.90
0.80
.33c
-.03
Supervision
MymanagerlistenstowhatIhavetosay
4
.92
4.10
0.87
.42c
.02
OrganizationDirection
Iamawa
reofthevaluesofthisorganization
3
.84
3.74
0.86
.39c
-.02
Processes
Therear
eclearpoliciesandproceduresforhowworkistobedone
3
.82
3.72
0.85
.39c
-.02
Diversity
Sexualharassmentispreventedanddiscouraged
4
.85
4.32
0.78
.32c
-.02
Work/LifeBalance
Imaintainagoodbalancebetweenworkandotheraspectsofmylife
4
.88
4.15
0.79
.26c
.02
Learnin
gandDevelopment
Thereis
acommitmenttoongoingtrainin
ganddevelopmentofstaff
3
.84
3.70
0.93
.44c
.01
Techno
logy
Theorganizationmakesgooduseoftechnology
3
.84
3.62
0.90
.37c
.01
Safety
Wearegivenallnecessarysafetyequipme
ntandtraining
4
.88
4.01
0.82
.33c
-.01
Teamwork
Myco-w
orkersgivemehelpandsupport
3
.88
4.18
0.74
.32c
.01
Cross-UnitCooperation
Thereis
goodcommunicationacrossallsectionsofthisorganization
3
.88
3.47
0.92
.42c
.00
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Smith and Langford 437
Measur
e
Example
Items
#ofItems
Alpha
M
SD
r
CSRPractices
Ethical
CSR
Thisorganizationperformsinamannerthatgoesaboveandbeyond
legalrequirements
2
.84
3.91
0.89
.41c
.05a
Econom
icCSR
Thisorganizationisconsistentlyprofitable
5
.91
4.03
0.78
.41c
.05b
PhilanthropicCSR
Thisorganizationvoluntarilyperformsinacharitablemanner
4
.91
3.73
0.93
.39c
.04a
LegalC
SR
Thisorganizationprovidesemploymentthatmeetsminimumlegal
requirem
ents
5
.88
4.15
0.71
.40c
.01
SocialResponsibility
Decision
sinthisorganizationaretransparent
6
.89
3.97
0.76
.47c
.01
Environ
mentalResponsibility
Thisorganizationisenvironmentallyresponsible
3
.92
3.67
0.91
.35c
.00
1.ap
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438 Australian Journal of Management 36(3)
Table 2. A summary of correlations among the variables in the study.
Measure 1 2 3 4 5 6 7 8 9 10
1. Employee Engagement
2. Mission & Values .553. Career Opportunities .51 .42
4. Rewards & Recognition .50 .45 .49
5. Wellness .39 .34 .35 .43
6. Involvement .48 .41 .54 .51 .35
7. Leadership .48 .48 .51 .54 .38 .54
8. Resources .40 .39 .40 .45 .42 .39 .42
9. Results Focus .40 .48 .38 .36 .30 .38 .45 .37
10. Motivation & Initiative .39 .37 .45 .40 .35 .36 .37 .34 .34
11. Facilities .30 .33 .37 .40 .25 .35 .38 .39 .30 .33
12. Recruitment & Selection .46 .46 .49 .53 .42 .49 .59 .43 .45 .45
13. Performance Appraisal .45 .38 .54 .57 .34 .49 .48 .39 .39 .39
14. Role Clarity .36 .40 .26 .29 .36 .35 .30 .37 .39 .25
15. Talent .32 .34 .35 .35 .36 .31 .35 .31 .33 .68
16. Supervision .43 .42 .46 .47 .38 .49 .56 .36 .37 .38
17. Organization Direction .43 .52 .44 .41 .29 .44 .50 .35 .47 .31
18. Processes .38 .39 .40 .42 .41 .40 .47 .52 .44 .33
19. Diversity .32 .37 .31 .34 .30 .32 .39 .36 .39 .31
20. Work/Life Balance .22 .21 .18 .25 .48 .16 .18 .28 .22 .25
21. Learning and Development .43 .40 .52 .49 .40 .50 .51 .47 .43 .39
22. Technology .36 .37 .39 .42 .32 .37 .39 .52 .35 .35
23. Safety .34 .34 .36 .36 .33 .33 .39 .42 .35 .30
24. Teamwork .30 .33 .27 .29 .41 .26 .30 .29 .32 .53
25. Cross-Unit Cooperation .39 .38 .45 .48 .39 .50 .58 .45 .39 .40
26. Ethical CSR .44 .46 .39 .40 .29 .35 .40 .33 .30 .34
27. Economic CSR .39 .38 .38 .36 .36 .30 .42 .34 .42 .33
28. Philanthropic CSR .42 .42 .42 .39 .26 .35 .37 .30 .29 .3229. Legal CSR .41 .46 .34 .41 .36 .33 .42 .39 .38 .37
30. Social Responsibility .47 .54 .45 .47 .42 .42 .54 .41 .42 .40
31. Environmental Responsibility .36 .37 .38 .34 .30 .33 .37 .32 .30 .32
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440 Australian Journal of Management 36(3)
The fourth hypothesis suggested that CSR practices would explain additional variance in EE
beyond that explained by traditional HR practices. The hierarchical multiple regression was used
to test this hypothesis. As explained previously, the demographic options known to correlate with
EE (see Table 3) were entered at the first step in the hierarchical regression, and accounted for 14%
(p
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Smith and Langford 441
8. Discussion
Applying Carrolls (1979) model of CSR, this paper assessed the relationship that four CSR com-
ponents had with EE. As hypothesised, ethical CSR had a stronger relationship with EE than did
legal CSR. However, ethical CSR, economic CSR and philanthropic CSR uniquely explained EE
to a similar magnitude. These findings allow for a better understanding of the way in which com-
panies should invest in CSR to influence employees. Namely, they suggest that companies are only
likely to gain benefits in EE by responding to ethically based societal expectations such as not
exploiting vulnerable or disadvantaged consumers (ethical CSR), by being financially successful
(economic CSR), and by being good corporate citizens through engaging in charitable practices
(philanthropic CSR). These results suggest that emphasising that an organization is legally compli-
ant (legal CSR) is not likely to improve EE. The reason why the four CSR components relate to EE
in this manner is not clear from the current results. One explanation could be that ethical CSR,
economic CSR and philanthropic CSR are all seen by employees as proactive attempts by an orga-
nization to contribute to society, whereas legal CSR may be seen as reactive compliance to rules
and avoidance of punishment.
Another explanation for why legal CSR did not significantly explain EE could be that most
organizations perform at a reasonable level in regards to legal CSR, resulting in employees taking
the legal compliance of employers for granted. However, employees may not assume employers
will always perform at a reasonable level on the remaining three components (i.e. economic, ethi-
cal and philanthropic CSR). This possibility is supported by the finding that legal CSR was the
highest rated in terms of organizational performance. The legal component (M= 4.15) was rated
significantly higher than the economic component (M= 4.03, t(3146)
= 8.44,p
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442 Australian Journal of Management 36(3)
will yield greater returns for organizations in terms of EE. The prominence of social over
environmental responsibility also supports the suggestion that employees respond to CSR in areas
that affect them most directly (Albinger and Freeman, 2000). Employees are more likely to directly
and immediately benefit from socially responsible action, which is likely to result in more person-
ally relevant outcomes, than they are from environmentally responsible action, which tends to havelong-term benefits.
Interestingly, the regression analysis found that neither social responsibility nor environmental
responsibility significantly explained unique variance in EE. One reason for this finding could be
that the two domains were not action-oriented enough for employees to distinguish social and
environmental responsibility from Carrolls (1979) components, and thus increase the surveys
ability to measure the relationship between CSR and EE. As mentioned, the suggestion that
employees did not fully distinguish social and environmental responsibility from Carrolls (1979)
components is supported by the presence of moderate-to-strong correlations among these con-
structs. As can be seen in Table 2, significant and practically important positive correlations were
observed between social responsibility, environmental responsibility and Carrolls (1979) fourCSR components. It will be important for future research to explore the discriminant validity and
interrelationship of various measures of CSR.
Finally, this paper also assessed the relationship between EE, traditional HR practices, and CSR
practices. Whilst the results from the first three hypotheses support a partial business case for CSR,
finding that CSR practices both correlate with and explain unique variance in EE, the results from
hypothesis four suggest that allocating resources to CSR may not be as advantageous as investing
in the improvement of core HR practices when attempting to increase EE. CSR was found to
explain little additional variance in engagement beyond HR practices (R2 =.01), questioning the
use of CSR to improve EE. The lack of additional variance explained by CSR suggests that orga-
nizations employing CSR alongside HR practices may not attain a greater level of EE than organi-zations that focus on HR practices alone. This finding highlights the importance of investigating
the impact of CSR on employee outcomes, in relation to the impact of HR practices. Investigating
the impact of CSR on employee outcomes, without considering the impact of HR, runs the risk of
suggesting that CSR may be beneficial to organizations in terms of these outcomes, when the gain
from CSR when also investing in HR practices, may be marginal.
The reason why CSR explains little additional variance in EE needs further investigation. One
of the reasons it was hypothesised that CSR would be associated with additional benefits in EE was
that employees may feel that there is a minimum level of acceptable CSR practices and that supe-
rior HR practices may not compensate for unethical practices. The lack of a significant interaction
between CSR practices and HR practices, in terms of their impact on EE, suggests that the level atwhich organizations perform in regards to HR practices does not influence the extent to which CSR
practices impact EE. This is an important finding as it highlights that the reason that CSR did not
explain much additional variance in EE, beyond HR practices, was not because employees were
not satisfied with the level of organizational performance in regards to HR practices.
An alternative explanation for why CSR explains little additional variance in EE could be due
to the manner in which employees perceive CSR. From the employee viewpoint CSR may be a
higher-order construct, encompassing many of the HR practices measured in this survey, such as
rewarding employees fairly, providing development opportunities, and supporting employee well-
being while at work. In other words, CSR and HR may not be separate activities in which a com-
pany can invest, but rather HR practices may be one of the primary ways in which an employer canbe socially responsible in the eyes of employees. If so, then it is not surprising that separate, and
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Smith and Langford 443
more general, measures of CSR did not explain additional variance beyond specific measures of
HR practices. The possibility that employees view CSR as being closely related to HR practices
was supported by correlations between ratings of HR practices and CSR practices. As mentioned,
significant and practically important positive correlations were observed between the CSR prac-
tices and the HR practices that explained EE (see Table 2). Future research should explore theextent to which improvements in HR practices increase employee perceptions that organizations
are being socially responsible.
9. Limitations
This study is subject to some possible limitations. Firstly, employee perceptions of CSR, HR and
EE were obtained from a single source, increasing the risk of the results being subject to common
method variance (CMV). Consequently, the strength of relationship between CSR and EE, or
between HR and EE, may have been inflated as the variables may have shared a common source
of bias. Importantly, Spector (2006) claims that the suggestion that CMV will always influencevariables that have been assessed with a single measure is inaccurate, and suggests that rather than
assuming that systematic variance is produced by the use of a particular method, specific biases
should be considered. Due to the self-report nature of the current study, the specific bias that needs
to be considered is the potential for halo effects. Halo effects refer to the effect in which a general
view or rating of a person (or in this case, an organization) is based on a single characteristic
(Robbins and Mukerji, 1990).Halo effects may have occurred if a respondents ratings of the cor-
porate practices were biased by their opinion of the organization as a whole (e.g. I like my employer,
therefore the HR systems and CSR practices of my employer must be good). Due to halo effects
the strength of relationship between CSR and EE, or between HR and EE, may have been inaccu-
rate as respondents may have given inflated (or deflated) ratings of the corporate practices mea-sured in the study. Whilst it is possible that respondents may have given inaccurate ratings of the
corporate practices measured in the study, it is important to note that the crux of this paper focused
on the relative relationships between CSR, HR and EE. Consequently, halo effects would not
account for the finding that investing in the improvement of core HR practices is likely to be more
effective in increasing EE, than would investing in CSR.
It should also be noted that despite the potential for bias, it was determined that self-report was
still the best form of measurement for the current study. This study was interested in the extent to
which employeeperceptions of CSR and HR impacted their engagement levels, not in the extent
to which actual corporate practices influenced EE. Regardless of whether or not the employees
perceptions are accurate, employee attitudes, and their resultant level of engagement, is based ontheir perceptions, not on the actual practices of their organization. The extent to which employees
have accurate perceptions of corporate practices, and the manner in which organizations can ensure
that employees are aware of corporate practices, is a topic for other research.
A second possible limitation of this study is that the provision of a benchmarking report to partici-
pating organizations may have encouraged respondents to give higher than accurate ratings of
organizational practices, compromising the data collected. However, once again, whilst inflated
ratings may have influenced the strength of the relationship between CSR and EE or between HR
and EE, if respondents were giving inflated ratings it is likely they did so to all organizational prac-
tices. Hence, it is unlikely that higher than accurate ratings of organizational practices account for
the finding that HR practices are likely to be more effective in increasing EE than are CSRpractices.
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444 Australian Journal of Management 36(3)
10. Conclusion and future directions
This study investigates one aspect of the business case for CSR, namely the impact of CSR on the
outcome of EE. Carroll and Shabana (2010) discuss why a number of stakeholder groups may
care whether CSR impacts the bottom line. For example, corporate boards, CEOs, CFOs or share-
holders are likely to care given their interest in the firms financial welfare. Social activists may
care about the impact of CSR on the bottom line as it is in their long-term interests if companies
can sustain social initiatives and finally consumers may care as they want to pass on a better
world to their children. Regarding the aspect of the business case examined in this study, namely
the impact of CSR on EE, although ethical, economic and philanthropic CSR were all found to
uniquely explain EE, the argument to use CSR initiatives to increase EE was not strongly sup-
ported. When considered against traditional HR practices, CSR was found to explain little addi-
tional variance in EE.
These results have important implications for policy, practice and future research in terms of
implementing CSR in order to increase EE. These results suggest that investing in CSR alongside
HR practices may not lead to a greater return in EE, than would result from investing in HR prac-
tices alone. If an organization were to invest in CSR initiatives to increase EE, this paper suggests
investment in the ethical, economic and philanthropic CSR components of Carrolls (1979) model,
with a particular focus upon socially oriented activities, with less attention being given to environ-
mentally responsible actions. Importantly, further research is needed to examine why CSR explains
little additional variance in EE. Research needs to examine the manner in which employees per-
ceive CSR, specifically examining whether employees view CSR as encompassing traditional HR
practices. Further examining the way in which employees perceive CSR should also improve
understanding regarding the means by which the four components of Carrolls (1979) CSR model
relate to employee outcomes. It is also important that future research continues to examine the
impact of CSR on employee outcomes, relative to the impact of HR practices, as although CSR
was found to have limited impact on EE in this instance, the practices that impact employee out-
comes can vary over time (Bassi and McMurrer, 2007).
As well as providing useful information around the practical implementation of CSR (and HR)
practices in order to increase EE, the results of this study have useful implications for a range of
management and stakeholder groups (e.g. consumers, shareholders). EE and related HR outcomes
have been linked to a number of performance-related measures, making this a construct of interest
to a number of stakeholder groups. As mentioned earlier, EE has been linked to customer satisfac-
tion, profitability, productivity, employee turnover, and safety outcomes as well as well as manager
reports of organizational goal attainment (Harter et al., 2002; Langford, 2009). Bassi and McMurrer
(2007)highlight how the effective management of employees and investments in human capital
management (e.g. leadership development, job design and knowledge sharing) relate to perfor-
mance on measures such as sales revenue, factory safety, stock market returns and even student
scores on standardised tests. It has also been suggested that investors are increasingly opting for
organizations that are socially responsible (Olson and Toyne, 2000) and Royal and ODonnell
(2008) discuss how analysing the sustainability of human capital practices, including recruitment,
training, career planning and performance management, can allow for a more accurate analysis of
the potential future financial performance of a firm. In sum, in highlighting the HR and CSR prac-
tices that organizations can use to increase EE, this paper can have implications for performance
on a range of measures that are likely to be impacted by EE. This paper suggests that of the prac-
tices measured in this survey, the following are likely to lead to the greatest increases in EE: ensur-
ing employees believe in the organizations purpose, values and work; ensuring that enough
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Smith and Langford 445
opportunities exists for career progression and that enough time and effort is spent on career
planning and developing skills for career progression; and ensuring that the rewards and recogni-
tion that employees receive are fair, that employees perceive the organization to be fulfilling its
responsibilities to them and that employees are satisfied with the income and benefits they receive.
Finally, although this paper examines the impact of CSR on EE, it is important to note thatincreasing EE is not the only reason to implement CSR. There are a number of aspects to the busi-
ness case, with CSR being linked to improvements in other stakeholder outcomes, as well as ben-
efits beyond stakeholder groups (e.g. long-term corporate sustainability). A number of normative
arguments also support organizational investment in CSR. Consequently, whilst the results from
this paper suggest that engaging in CSR in order to increase EE may be a redundant choice, a broad
range of corporate outcomes and other arguments associated with CSR need to be fully examined
before it is decided whether investing in CSR is, on the whole, a responsible or redundant business
decision.
Funding
This research received no specific grant from any funding agency in the public, commercial, or not-for-profit
sectors.
Notes
1. University researchers involved in non-profit research can use the Voice Climate Survey without cost, and
the data from the current study are available to staff at other institutions.
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Date of acceptance of final transcript: 9 September 2011.
Accepted by Associate Editor, Rose Trevelyan (Organizational Behavior).