How CSR Really Affects Employee Misconduct: Selection-Effect and Moral Licensing

Abstract

Many research papers have shown the efficacy of Corporate Social Responsibility (CSR) as a business instrument to gain customer support and attract more motivated workers who are willing to work for a lower salary. Contentiously, List and Momeni (2017) found there is a dark side to CSR, as CSR increases employee misbehavior on the job due to moral licensing (i.e., doing good licenses to do bad). We conducted a large-scale natural field experiment to study workers’ misbehavior induced by varying levels of CSR engagement by our fictive firms. We separated the selection effect from the moral licensing effect by having half of the subjects self-select into their desired firm while randomizing the other half. We found that moral licensing is at play when randomizing people into firms with different CSR intensities (p = 0.007). However, this effect is outweighed by the selection effect, as morally superior workers (i.e., those who cheat less) choose to work for CSR firms (p = 0.083). This implies that a sudden adoption of CSR can increase misbehavior by current employees, but in the long term, the firm can benefit from CSR because it attracts “morally superior” workers who cheat less and are willing to work for a lower wage. We also found that people of different demographics show different response behavior to CSR (p = 0.004), and demographics affect people’s choice to work for a CSR firm (p = 0.001).