The Influence of Institutional Logics on Corporate Responsibility Toward Employees

Abstract

Focusing on corporate responsibility (CR) toward employees, this article discusses how multilayered institutional logics affect the relationship between the firm and its employee stakeholders. It considers what constitutes CR toward employees and explores the institutional logics that can shape whether employers treat their employees as merely means to a strategic end or as ends in themselves. Specifically, the article examines market-, state-, professional-, and firm-based institutional logics that influence how employers treat their employees. The conclusion suggests that external institutional logics both enable and constrain firms to adopt a more instrumental relationship with their employees. However, some forms of organizational identity may generate firm-based institutional logics that enable firms to resist these pressures. Suggestions for future research focusing on the institutional and organizational drivers behind understanding CR toward employees are offered.

Keywords

employees corporate responsibility institutional logics strategic human resource management organizational identity

Interest in understanding the drivers of corporate responsibility (CR) as expressed toward different stakeholder groups has engaged researchers in many different areas of inquiry, but there has not yet been an article written that attempts to understand the institutional pressures influencing how firms exhibit CR toward a very key stakeholder group: the firm’s employees. As the social contract between employers and employees is undergoing a profound shift, giving many employees less pension protection, health care benefits, and other semblances of traditional CR toward employees (Cavanaugh & Noe, 1999; Griffin, 2000; Hacker, 2006), it is a good time to assess the institutional influences that condition organizational decisions regarding CR toward employees. Although there has been considerable rhetoric about changes in employment practices and whether those work to the benefit or detriment of various employee groups, there is also a need for a systematic analysis of the forces that affect observed behaviors of organizations in this CR domain, using the framework of institutional analysis.

To this end, this article explores how the external institutional logics of social structures, events such as globalization, and the spread of strategic human resource management (SHRM) have affected the employer–employee relationship. After reviewing the literature dealing with the topic of CR and employees, it then analyzes the institutional logics embedded within various layers of the external environment. The findings suggest that these logics can constrain firms from engaging in CR toward employees to a certain degree and enable an instrumental approach toward employees. Nevertheless, some companies seem to be resisting various institutional pressures to take a purely instrumental approach and respond to their employees’ intrinsic worth in their CR activities. As an explanation for why this might be so, the final section turns to the organizational identity literature for an understanding of why some firms may treat employees more responsibly than other firms facing the same external institutional logics. Finally, the article details implications for future research and offers some conclusions.

CR and Employees

Some clarity is emerging within the academic literature about what CR means in the general sense, without reference to specific stakeholders. In an article reviewing the development of the CR concept, Waddock (2008) suggests that CR is fundamentally different from the construct of corporate social responsibility. The crucial distinction is that the “s” in the middle of CSR puts a focus on “companies’ efforts to directly benefit societies (e.g., philanthropy, volunteerism), or the discretionary responsibilities of the firm” (Waddock, 2008, p. 30). CR, instead, focuses on core business activities and stakeholder relationships. Whereas CSR has been referred to by some as an “add on” (Freeman, 1984) to business activities, CR instead addresses “the company’s business model and the impacts of the business model, strategies, and practices on stakeholders, nature, and societies” (Waddock, 2008, p. 30). Simply put, CR forces an evaluation of whether or not a company is meeting its responsibilities to all its stakeholders in all aspects of its business activities, while much of the discourse and critique of CSR has focused on allegations that CSR is ancillary to a company’s core activities. CR thus implicates the core issues of a company’s strategy, how its relations with stakeholders interface with that strategy, and the effects that company actions have on stakeholders.

There is a long line of research on the relationship between the firm and its employees. Within this work, there is much work related to CR and employees (e.g., Greening & Turban, 2000; Orlitzky & Swanson, 2006; Valentine, Godkin, Fleishman, & Kidewell, 2011). The concern for employees is not surprising because employees are the stakeholders who are closest to the firm, and without whose support the firm will ultimately fail. Further, as Greenwood (2007, p. 316) argues, “In addition, employees are greatly affected by the success or failure of the firm. Employees have a continuing investment in the firm; an investment of experience and specialized skills (Maltby & Wilkinson, 1998), accrued resources, and personal relationships.”

Rather than consensus around what CR toward employees means and how this concept would be operationalized by organizations, one instead finds a range from minimalistic definitions of basic human rights related to labor issues (Radin & Werhane, 2003), fair pay (Van Buren, 1995), and safety and privacy (Martin & Freeman, 2003), and finally all the way to incentive benefits that promote employee motivation and performance (Greenwood, 2007; Moir, Kennerley, & Ferguson, 2007). However CR is defined, an important lacuna in the literature is a holistic view of how institutional logics in the United States have worked to change how firms treat their employees. Although institutional analysis of firm–employee relationships has examined such varied issues as how institutions impact the use of contingent workers (Stormer, 2008), work design (Holman, Frenkel, Sorenson, & Wood, 2009), the institutionalization of workplace systems like TQM (Kennedy & Fiss, 2009), and, most closely related to the subject of this article, the influence of state-, religion- and family-based institutional logics on downsizing in post-Franco Spain (Greenwood, Diaz, Li, & Lorente, 2010); there has not been a multilayered analysis of how market-, state- and professional-based institutional logics influence corporate-level treatment of employees. This article undertakes such an analysis.

Before beginning this analysis, CR toward employees must be defined. At a minimum, CR toward employees encompasses more than satisfying legal requirements with regard to the treatment of employees. Engaging responsibly toward employees would seem to connote establishing a workplace where employees are treated as human beings who are implicitly worthy of respect and fundamental dignity, rather than as fungible resource inputs that should be purchased as cheaply as possible. Moreover, although employees’ contributions to the creation of firm value are appreciated and rewarded, in the best of circumstances, this instrumental purpose would not be the sole reason employees are treated well. This article contends that CR toward employees that comes from a normative stance about the intrinsic worth of employees as human beings is fundamentally different from benefits that are directed toward employees because of an instrumental connection between employees and firm performance. This distinction implies that examining the drivers of firm behavior toward its employees is essential. Understanding how institutional logics have pushed firms to adopt a more instrumental approach toward their employees is key to understanding CR toward employees. This instrumental/intrinsic distinction is also important because when firms are subject to the institutional logics detailed below, instrumentally driven benefits are more likely to be withdrawn from employees when these benefits are no longer seen as helping the firm achieve its instrumental goals, whereas CR recognizing the implicit humanity of employees is more likely to be sustained even if there is perceived conflict with instrumental goals.

Instrumental and Intrinsic Relations With Employees

This article proposes that there is a continuum of CR toward employees that is anchored by instrumental and intrinsic relationships toward them. This continuum is not normatively oriented in that one side is considered to be “good” and other “bad.” Rather, the continuum represents how employers might conceptualize the treatment of employees based on two considerations: organizational performance and CR toward employees for its own sake.

Instrumental Approaches to CR Toward Employees

The instrumental approach is principally concerned with how the management of people leads to salutary outcomes for the organization. Here the provision of CR is explicitly and solely linked to increased organizational performance (Berman, Wicks, Kotha, & Jones, 1999). An example is the market-type human resource management (HRM) system described by Delery & Doty (1996), where CR toward employees, such as benefits or training, would be provided only if explicit market forces indicate immediate gains in organizational performance. Employees who are perceived to have less desirable skills would be treated by the instrumental organization as commodity labor that ought to be procured at the lowest possible cost, in compliance with minimum legal standards. Thus, CR toward employees is only provided when firms perceive an immediate financial or strategic reason for this provision. In addition, employees would be seen as a necessary input for accomplishment of strategic goals, but not necessarily included in the strategic decision-making process.

It should be pointed out that instrumental employee CR is neither good nor bad in a normative sense. If organizations do good things for some of their employees, those employees benefit irrespective of organizational motivations. However, it is also likely the case that instrumental employee CR would benefit only some employees—namely, those employees whose market power and perceived skills “force” employers to make extra efforts to employ them. Employee CR provided to low-skill employees would likely be harder to justify if the motivation for this provision is entirely instrumental (please see Appendix A). As discussed below, one of the persistent themes within strategic human resource management (SHRM) research is an exploration of what sorts of employment practices benefit organizations (Lengnick-Hall, Lengnick-Hall, Andrade, & Drake, 2009) and to which employees such practices should be targeted (Guest, 2011). Such an instrumental approach to the provision of CR toward employees may have long-term negative consequences for the organization. For example, Frank (1988) argues that such instrumental postures are difficult to mask over time, because many employees come to understand that the organization is merely “using” them for its own ends. Further, an instrumental posture may reinforce an impression that the new “Golden Rule” within the firm is to serve oneself by maximizing self-interest, which may lead to unethical behavior such as employee theft (Appelbaum, Cottin, Pare, & Shapiro, 2006; Gross-Schaefer, Trigilio, Negus, & Ceng-Si, 2000).

Intrinsic Approaches to CR Toward Employees

Intrinsic CR anchors the other end of the continuum. In this approach an organization would engage in HRM practices for the benefit of employees irrespective of effects on profitability or other measures of performance. Intrinsic CR toward employees is undertaken with a long-term approach, viewing employees as assets to be invested in, rather than costs to be minimized. Further, this approach centers around treating all employees with fundamental human dignity, rather than linking CR to the employee’s skills. This view would also suggest that employees are seen as a fundamental part of the firm’s business model, and included in all decisions regarding the strategic goals of the organization (Berman et al., 1999). The benefits of trust, employee commitment and retention would be at their highest in such organizations (Thomas, Zolin, & Hartman, 2009) because of the reciprocal relationship between employees and the firm.

The instrumental and intrinsic approaches to CR described above are pure types. An organization that adopts a blatantly instrumental approach toward employees would probably lose the benefits of the CR provided, whereas an organization fully engaged in employee CR may be understood as a social welfare organization entirely set up for the benefit of its employees. Neither organization would be likely to procure the resources from other stakeholders needed to sustain the business in the long term. Thus the best possible position for both organizations and employees is a middle point in the continuum where CR toward employees is provided based upon an intrinsic belief in the dignity of the employees, but also recognizes the benefits to the organization of this provision. There is a sense of mutuality in pursuing joint outcomes and shared value creation (Freeman, Harrison, & Wicks, 2007) in this approach. Because of their intrinsic approach toward employees, these organizations would still derive the benefits described above, but would also have an eye on organizational performance. Paradoxically, because of the benefits of trust and commitment to the organization (Thomas et al., 2009), higher levels of organizational performance may be obtained in these organizations than in firms using strictly instrumental approaches to employee CR. In this approach, responsibility to employees is considered within the context of “the company’s business model and the impacts of the business model, strategies, and practices” in Waddock’s words (2008, p. 30).

The next section will explore how in the last five decades various institutional logics have come together to encourage the adoption of a more instrumental view toward employees. The following section reviews these levels of institutional logics. Specifically, it shows how the institutional logics of the market, the state, and the professions all encourage the spread of instrumental treatment of employees.

Institutional Logics Influencing CR Toward Employees

To understand why firms behave as they do toward employees, this article proposes that understanding institutional-level pressures is essential. Institutional theory suggests that cultural scripts guide much organizational behavior. Practices and policies adopted by firms reflect the rules and structures in wider society (Meyer & Rowan, 1977). Meyer and Rowan (1977) suggest that where there is uncertainty over which structural forms and practices will best achieve efficiency and effectiveness, organizations will seek legitimacy by adopting structures and practices that are acceptable to members of the institution’s organizational and professional fields. These practices reflect rationalized myths and serve a symbolic function by externally projecting an image contributing to the organization’s legitimacy within society (Meyer & Rowan, 1977). Organizations seek “power and institutional legitimacy, for social as well as economic fitness” (DiMaggio & Powell, 1983, p. 150). Thus, under neoinstitutional theory, meanings in the minds of organizational participants become reified “social facts” (Meyer & Rowan, 1977; Scott, 2001, p. 42). These “social facts” undergird particular belief systems and structures that dominate an organizational field, or a population of organizations (Scott, 2001).

Firms face myriad institutionalized pressures that constrain their autonomy with regard to employee CR. DiMaggio and Powell (1983) argue that firms will find two important sources of inspiration for their strategies and practices. First, firms will look to imitate successful competitors. Second, firms will look for guidance from trends or fads within an organizational field. For example, firms that are successful and attribute their effectiveness to certain employee practices may engender other firms to imitate the behaviors in hopes of achieving successful outcomes. To this end, a firm that has a good reputation for CR toward employees may be held up as an example for other firms through rankings such as the Fortune 100 Best Places to Work or other such awards. The CR practices of award-winning firms may be perceived as “best practices” for other firms to imitate because such practices are expected to lead to positive outcomes such as a good reputation, successful employee recruitment, and superior financial performance. However, firms that adopt a minimal CR, labor cost-saving approach may also be the most successful competitors within an industry (such as Walmart in the retail industry), thereby depressing the standards for CR such as wages and benefits (e.g., health care) toward employees within the organizational field (Budd & McCall, 2001; Waddoups, 2006).

Where there is a high frequency of firms adopting certain managerial practices toward employees, then other decision makers from other firms may perceive such practices to be legitimate. Firms may adopt the recognized best practices without further evaluation of the actual outcomes. DiMaggio and Powell (1983) state that practices that occur frequently within an organizational field may be taken for granted as effective and legitimate behaviors. Once a practice is perceived as legitimate, many firms may tend to jump on the bandwagon of the new organizational trend to avoid the risk of being labeled out of touch. Eventually, the prevalence of institutional logics creates an environment where a firm may risk losing some legitimacy if it does not adopt similar practices toward its employees. Institutional logics may also cause firms to adopt policies without thinking through the policy’s instrumental or philosophically normative implications, thus imitating the actions of others simply to be consistent with “best practices.” Multiple layers of institutional logics may influence whether and how firms exhibit CR toward employees, as discussed below.

Multilayered Institutional Logics

Many layers of institutional logics can shape the nature of firm CR toward employees. Institutional logics are defined as “symbolic systems, ways of ordering reality, and thereby rendering experience of time and space meaningful” (Friedland & Alford, 1991, p. 243). Further, institutional logics are “principles of organization and action based on cultural discourses and material practices prevalent in different institutional or societal sectors” (Thornton, 2004, p. 2). Thornton notes that “society is comprised of multiple institutional orders or societal sectors, each of which has a central logic—both material practices and symbols that comprise its ongoing principles and that are available to individuals and organizations to elaborate” (Thornton, 2004, p. 2). Thornton has identified six core institutions of society that impact all organizations: “markets, corporations, professions, states, families, and religions” (Thornton, 2004). Each of these institutional layers can have their own logics which would influence firm action, including the choice to act more or less responsibly toward employees. This article first discusses institutional layers external to the firm that are likely to constrain intrinsic corporate responsibility and enable an instrumental approach toward employees: the institutional logics of the market, the state, and the profession of human resource management. Then it turns to the level of the firm itself to discuss how organizational identity can help the firm to withstand these external institutional pressures.

Thornton and Ocasio (2008) suggest that institutional logics can shape firm behavior by guiding managerial attention. Firm action, and the rationales given for that action, can be influenced because institutional logics affect the allocation of attention within the organization. Institutional logics will guide decision makers “to alternative schemas for perceiving, interpreting, evaluating and responding to environmental situations. According to theory of allocation of attention, institutional logics provide individuals and organizations with a set of rules and conventions—for deciding which problems get attended to, which solutions get considered, and which solutions get linked to which situations (March & Olsen, 1976)” (Thornton & Ocasio, 2008, p. 114).

Although the responses of firms to the conflicting institutional logics in their environments are unlikely to be uniform, institutional theory scholars have found patterns of response in organizational practices (Greenwood et al., 2010). A firm responds to the multiple logics of the institutional layers that make up its environment, which may in turn shape its relations with employees. Thus, institutional theory leads to the possibility that firm-level “choices” regarding CR toward any stakeholder group—including employees—may not in fact fully be choices but rather responses to institutionalized expectations.

The final section discusses how firms may be better able to resist the institutional pressures to regard employees instrumentally when they have a strong organizational identity that is oriented toward relational or collective interactions with stakeholders. A relational or collective organizational identity connotes institutional logics that are concerned about reciprocity and mutuality in stakeholder relationships and views employees as members of the organizational family or community (Brickson, 2005, 2007). Such firms are more likely to treat employees as ends in themselves rather than as means to the firm’s goal of profitability. Finally this article suggests how this understanding influences the future research agenda for better understanding CR toward employees.

Market-based institutional logics

This section begins the institutional analysis by discussing how market-based logics caused by globalization and economic forces can pressure relationships between employers and employees. Many scholars have addressed how the rise of globalization has changed the nature of the employment relationship (Baker, 2009; Clarke & Patrickson, 2008; Meuse, Bergmann, & Lester, 2001; Rousseau & Martin, 1994; Rousseau & Shperling, 2003; Rousseau & Shperling, 2004; Singh, 1998). The current era of globalization is marked by the development of global supply chains and the integration of global capital markets. Market liberalization and falling trade costs increase the exit options of capital owners, giving firms more bargaining power vis-à-vis labor (Cavanaugh & Noe, 1999). Capital mobility makes it profitable to relocate production abroad yet still sell in a firm’s home market. For various reasons, globalization has not significantly increased labor mobility; laborers cannot as readily move to where jobs are located (Boulhol, 2009). Increased capital mobility can result in higher unemployment in the home market, along with lower wages and decreased regulation of the labor market. This pressure is most apparent with respect to unskilled labor; in contrast, economists have found that globalization can increase a skilled labor premium (Gaston & Nelson, 2004). All of these changes have had disparate effects on low-skill and high-skill employees (Stone, 2001, 2002). Low-skill employees, whose capacity to exercise influence and voice have declined, have arguably experienced worse outcomes as a result of these changes. In contrast, high-skill employees have often benefitted; for them, models of employment based on individual rights and capacities to exercise voice have not had the negative effects experienced by low-skill workers (Gaston & Nelson, 2004). For a brief empirical example, please see Appendix A.

With the increased competition of globalization, businesses may adopt the logic that they are not in a position to assure further employment to their workforce unless the businesses are “winning in the marketplace” (Tichy & Charan, 1989). Due to these market-based institutional logics, the nature of the expectations on either side of the employment contract is changing. Researchers have identified the “psychological employment contract” as the contributions employees believe they owe their employers and the inducements employees believe they are owed in return (Blickle & Witzki, 2008; Robinson, Kraatz, & Rousseau, 1994). In an earlier era, typical worker inducements in exchange for good performance, loyalty, and commitment to the firm might have consisted of long-term employment with pay and promotions based upon tenure in the firm’s internal labor market, followed by a guaranteed pension (Cavanaugh & Noe, 1999). However, in the recent era of downsizing and restructuring, influenced by globalization and the adoption of market-based institutional logics, a “new psychological employment contract” has been identified, where employees have no expectations of job security, but rather are incentivized to perform and gain job skills and social capital through training and networking opportunities (Hannele & Marjo-Riitta, 2008).

Employees’ efforts are focused on developing their instrumental worth in an external labor market, rather than in an internal labor market. Rather than having a long-term relational contract based on loyalty and recognizing the intrinsic worth of the employee, workers will have a transactional contract in which they can build their own human capital and receive employability security that should ensure future marketability of their labor. Rather than tenure-based pay and promotions on an established career ladder, employees receive market-based pay and incentives, and are responsible for their own career trajectories in the wider labor market (Stone, 2001, 2004, 2008). Thus, according to the market-based institutional logics underlying the prevailing type of transactional employment contracts, employees who want continued employment with a firm become responsible for ensuring that their skills are continually relevant to the strategic mission of the company. Only if employees’ skills are perceived to be of instrumental value to their organization’s strategic mission will such employees have market power or the ability to demand better wages and working conditions, in this line of analysis.

Given these market institutional logics, it would make sense that certain factors would make firms more or less likely to adopt these logics in the treatment of their own employees. An example of such a factor is whether the firm is publicly traded, and therefore subject to the prevailing perception that shareholders are more important than other stakeholders, such as employees (Reberioux, 2007). Privately held firms are not necessarily immune from the pressure to be profitable. However, the distribution of firm resources may not be subject to incessant pressure of the stock market to produce an endless stream of ever-larger profits for shareholders. In addition, privately held firms may be more likely to have the ownership concentrated in a single family (Bertrand & Schoar, 2006). As Mueller and Philippon (2006) argue, such firms are more likely to honor implicit labor contracts than are firms with dispersed ownership. In a sense, these firms are still honoring the “psychological employment contract” of previous years. All this suggests that the structure of firm ownership can impact a firm’s policies toward its employees. Please see Appendix B for some empirical evidence.

Finally, levels of competition within an organizational field can have an impact on market-based institutional logics, as well as the desire and degree of freedom companies have to behave responsibly or irresponsibly (Campbell, 2007; Sethi & Sama, 1998). Campbell suggests that CR can be negatively impacted by intense competition that narrows profit margins and jeopardizes firm survival. In highly competitive contexts, firms will be under such pressure to cut costs that CR practices can be squeezed, potentially resulting in irresponsible treatment of stakeholders such as employees. Campbell (2007) proposes that the other extreme of low competition may also have a negative impact on CR toward workers. Very low levels of competition, such as in a monopoly situation, results in few to no rivals to check opportunistic behavior on the part of firms. In such cases, a reputation for CR is not necessary for a firm to distinguish itself to retain market share.

Under normal competitive conditions, Campbell argues that some firms may attempt to distinguish themselves from rivals by building a reputation for responsible treatment of stakeholders, including employees, suppliers, consumers, and communities. Maintaining a good reputation for CR may become a way of ensuring employee retention and recruitment, and therefore continued business performance over time (Lai, Chiu, Yang, & Pai, 2010; Roberts & Dowling, 2002). However, firms may also distinguish themselves from competitors by becoming the low-cost provider through adopting instrumental approaches to employees and minimalistic or cost-saving approaches to CR. Industry structure and competitive choices can affect market-based institutional logics and therefore choices about CR toward various stakeholder groups. The next section reviews how state-based institutional logics can impact choices about CR toward employees.

State-based institutional logics

The institutional logics arising from the state pertains to the basic orientation of the state in its role of maintaining political and social order (Greenwood et al., 2010). Relevant dimensions of the state-based institutional logics include the extent of tolerance for a plurality of expression and the degree of devolution of authority to other institutional layers of society. The nature of the state-based institutional logics can be discerned from the relevant law and policies enacted by the state, as well as the mechanisms for enforcement. When CR is defined as corporate action that goes beyond the requirements of the law (Griffin & Prakash, 2010), an understanding of the narrowing legal protections for workers in state-based institutional logics is foundational to exploring CR toward employees.

As shown below, focusing primarily on the US context, during the last 60 years state-based institutional logics have adopted a laissez-faire approach to labor markets, and authority over employer–employee relationships has largely been devolved to the level of the firm and the individual. Law (through court cases and regulations at various levels of government) sets a minimum floor for how employers must treat employees. Although CR toward employees was previously constrained by state-based institutional logics in the form of labor laws protecting employees, this constraint has largely fallen away. In the law, the mechanisms governing employer–employee relationships have shifted from improving labor conditions through a collective bargaining approach, to an individual rights approach for adjudicating worker grievances, and finally to a compliance approach with employer self-regulation to voluntary standards (Kochan, 2005; Van Buren & Greenwood, 2008). This falling away of legal protections has only served to reinforce the market-based logics described in the preceding section. This section briefly reviews this transition in state-based institutional logics, noting how labor rights and employment security have weakened over time as the regulatory regime has widened the possibility for market forces and strategic choices to have an impact on the employer–employee relationship.

The foundation of worker legal protections in the US arose from the New Deal legislation after the Great Depression, including the 1935 National Labor Relations Act (NLRA), the 1935 Social Security Act, and the 1938 Fair Labor Standards Act. An underlying premise of the New Deal was that although market mechanisms for organizing the economy were thought to be better than any type of central planning, markets are prone to failure and thus need to be channeled in ways that support the public good (Estlund, 2005). Therefore institutions were established to protect the public interest against market malfunctions. This legislation also established baseline levels of wages, working conditions, and social safety net benefits.

In addition, the NLRA sought to give workers some level of voice as a means of protecting their interests. The mechanism for workers to obtain better-than-minimum wages, conditions, and benefits was through collective bargaining rights exercised within union negotiations. At the zenith of the union movement in the 1950s, nearly one in three employees was a union member (Mayer, 2004). Even for employees who were not members of unions, the credible threat of unionization would often lead to improvements in wages, benefits, and working conditions. However, unions have been losing members as well as public sympathy since that time, to the point that a recent Gallup poll found that a slight majority of Americans believe that unions mostly hurt the U.S. economy while benefiting their own members (Saad, 2009). However, the generalized desire of employees for participation and voice has not disappeared; many workers would like to be a member of a union or to have some other mechanism for voice at work, but are not able to do so because of employer opposition (Freeman, Boxall, & Haynes, 2007).

In a sense, the narrowing of legal protections for labor started in the 1960s when the mechanism of collective labor bargaining began to give way to a more individualistic pursuit of civil rights. Although the gains of the civil rights movement guaranteed fundamental rights to a broader swath of population, the mechanisms for enforcing employment-related rights changed from a collectivist negotiating approach to an individualized right to legal recourse (Estlund, 2005). Socially transformative laws of the 1960s and 1970s laid the groundwork for minimum legal standards for CR to all employees by establishing new corporate regulatory bodies including the Employment Opportunity Commission, the Occupational Safety & Health Administration, and the Pension Benefit Guarantee Corporation. These laws set up a command and control form of employment governance, in that they established minimum mandatory requirements or standards (“command”) for the treatment of individual employees. Enforcement (“control”) lies in a combination of monitoring and sanctions by administrative agencies and judicially enforceable individual rights.

Command and control regulations eclipse the collective bargaining model as there is no union role in enforcement, rather, just individual employee rights to file complaints or raise issues to regulators. In addition, these regulatory regimes require corporations to establish internal grievance procedures, often including policies to hear and settle complaints, programs for reporting illegal behavior and an ombudsperson to process these reports, complaints, and programs. These internal grievance procedures are separate from any union-based grievance procedures and become extremely relevant in the voluntary model of workplace governance that is emerging (Estlund, 2005). The effect of the command and control structure on CR toward employees was to establish a uniform legal floor of the minimal baseline standard for how employees must be treated in terms of issues like health, safety, and pensions. Moreover, these new minimum standards were extended to include some who had been previously excluded from equal opportunity and treatment because of race, gender, or national origin. The downside of the “command and control” approach to CR toward employees was that these laws removed the collective-voice mechanisms that provided a means for employees as a group to negotiate better-than-baseline treatment. With the collective voice replaced with individual legal rights, only those employees whose skills are in demand have the negotiating power to bargain for treatment beyond the legal minimum (Stone, 2001). Thus, the 1950s concept of CR toward employees as a group gives way by the late 1970s to the idea of CR toward individual employees who are valued for instrumental reasons. This individualistic approach and the laissez-faire state-based institutional logics grow only stronger over time, reinforcing the instrumental approach to the provision of employee CR as previously described.

In the late 1970s, a wave of deregulation started that weakened even the minimal protections of the command and control structure; inspections and enforcement by agencies were impaired by procedural constraints and reduced funding (Estlund, 2005). In the 1980s and 1990s, faith in incentives and market solutions increased in the state-based logics as the effectiveness and desirability of government intervention in the workplace was challenged. The 1991 Federal Sentencing Guidelines for Organizations provided incentives for voluntary corporate self-regulation in the form of reduced penalties for wrongdoing if firms’ internal grievance procedures met certain standards (Treviño & Nelson, 1995). For some types of employment issues, the internal grievance procedures become the main venue for relief. For example, the U.S. Supreme Court has stated that employees should avail themselves of internal compliance mechanisms before they bring an employment discrimination lawsuit in court (Burlington Industries, Inc. v. Ellerth, 1998; Faragher v. City of Boca Raton, 1998. It has been argued that this increased self-regulation in an era of globalized labor pools further contributed to the decline of employee voice in organizations (Blackett, 2001). Individual employees are less able to exercise voice and influence on their own than as part of a collective organization such as a labor union, and the lack of credible threats to unionize for many employees allow employers to dictate the terms of exchange in the employment relationship. The decline in labor law protections and the increase of laissez-faire ideologies in state-based institutional logics opens the employer–employee relationship to be more subject to the institutional logics of market forces as discussed above.

Thus the state-based institutional logics influencing CR toward employees changed in the past few decades. The legal standards establishing minimum levels of CR were extended to cover a wider range of issues (equal opportunity, discrimination, health and safety standards) and to be inclusive of employees from all racial, gender, national origin and religious backgrounds. Individual rights were granted for employees to sue for compliance with these minimal standards. However when it comes to CR beyond minimal legal standards, the opportunity for all employees to have a unified voice to bargain collectively has given way to individual negotiations based on the individual employee’s power and capability to contribute in the marketplace. It is somewhat ironic that the successful civil rights and equal rights movements in the United States paved the way not for CR practices that recognize the fundamental human dignity of all employees, but rather for laissez-faire state-based logics that institutionalize an instrumental approach to improving the treatment of individual employees. The next section explores the professionally based institutional logics spreading management theories promoting the instrumental approach to managing workforces and its impact on current manifestations of CR toward employees.

Professionally based institutional logics

The third layer of institutional logics to be discussed is the pressure of professionalism to adopt practices and logics that are prevalent within the community of human resource professionals. The profession of human resource management (HRM) has recently emphasized the adoption of strategic human resource management (SHRM) practices that are more consistent with the institutional logic of market forces, pushing firms to adopt a more instrumental relationship with their employees. Although HRM is not officially a profession in the same way that public accounting is, in the United States there are professional societies such as the Society for Human Resource Management, and a relatively common body of knowledge is needed for HRM professionals. There are similar associations of HRM professionals in other countries (such as the Australian Human Resources Institute), although other countries would have different legal requirements that may impact which and how rapidly SHRM practices are adopted. Much of this common body of knowledge within the United States is driven by legal requirements related to employment. Thus it would be expected that HRM professionals would share at least some common perspectives, skills, and beliefs about the place of HRM in their organizations.

Institutional logics within the profession of HRM have been in flux over the last several decades. HRM professionals have sought to overcome the perception that their work is ancillary to the real work of the organization by arguing that HRM must be a participant in organizational strategy formulation and implementation (Lengnick-Hall et al., 2009). Over time, much of the discourse within HRM scholarship and practice has shifted from a logic based on an employee focus to an instrumental logic in which the management of employees serves the organization’s goals (Greenwood, 2002).

In the past, HRM was conceptualized as a series of necessary organizational functions—selection, training, promotion, diversity management, and payroll—that fulfill an organization’s legal responsibilities to employees and its need to staff all levels of the organization. This micro HRM focuses on managing individuals, small groups, work organization, and employee voice systems (Boxall, Purcell, & Wright, 2007). In the last two decades, the professionally based institutional logic has shifted, as the HRM function has sought a more central role within the organization. Kochan (2007, p. 604) notes that “HR professionals sought to ‘partner’ with line managers and senior executives in developing and delivering human resource policies that supported the firm’s competitive strategies. The dominant effect of this inward shift in perspective was to more closely align HR professionals with the interests and goals of the firm, at least the goals as articulated by the top executives.”

This shift has moved the focus of HRM from the micro to a more macro focus, linking SHRM to organizational performance. In this vein, Lengnick-Hall et al. (2009) offer seven distinct themes within the logic of SHRM theory: explaining how contingency factors and fit with organizational strategy affect HR activities; shifting from managing people to creating strategic contributions through the management of people; elaborating HR system components and structure (including bundles of HR practices); expanding the scope of HRM to include employees outside of the United States and employees of value-chain partners; achieving better HR implementation and execution, measuring outcomes of SHRM, and evaluating methodological issues within SHRM research. All of these questions relate to a fundamental shift in the professional logic: linking specific HRM policies and programs to firm-level performance outcomes with an instrumentally driven perspective.

In the SHRM line of analysis, HRM practices and strategies (Appelbaum, Bailey, Berg, & Kalleberg, 2001) must first be linked to measures of performance that are strategically relevant. Then, empirical research can assess whether there is support for those theorized linkages (see also Guest, 1987 for a more critical perspective on this project). Underscoring the instrumental focus of this shift in HRM institutional logics, some (e.g., Boxall & Purcell, 2008) suggest that focusing on the evaluations of different stakeholders—including, but not limited to, shareholders—might be more useful with regard to assessing the strategic impact of HRM. This perspective suggests employees are merely instruments to achieve success for other stakeholders.

Although SHRM may good for some other stakeholders, such as shareholders, it does not follow that the institutional logics of SHRM are always good for all employees. In many cases, there are trade-offs between what is in the strategic interests of organizations and what is in the interests of employees. This condition is especially the case for employees perceived to be easily replaceable by firms because their skills are not rare and/or sources of sustained competitive advantage. Wilcox and Lowry (2000) argue that reframing HRM as SHRM permits the acceptance (by HRM professionals) of using individuals as economic ends (see also Legge, 1995 on this point). SHRM might be understood from the perspective of two different groups of employees—high skill and low skill—to illustrate this point. The logic of SHRM seeks to measure the impacts of HRM practices on measures of organizational performance. For high-skill employees, SHRM might counsel higher levels of organizational commitment to and investment in them. For low-skill employees, SHRM might be perceived as counseling reduced organizational commitment to and investments in them—often by shifting from long-term employment relationships to short-term, transactional arrangements. On this point Lengnick-Hall et al. (2009, p. 76) note that:

Kaye (1999) raised an important concern about SHRM. Does SHRM research benefit employees as well as their organizations? Virtually all SHRM research takes the managerial/organizational perspective with an emphasis on the consequences for organizational performance. Few, if any, question the impact of SHRM on individuals. Kaye suggests that SHRM may be improving the bottom line of companies, but may be hurting employees—especially when workers are viewed as commodities. Ethical perspectives on SHRM are rare, and the field needs more examination of these issues.

However, a common perception of the institutional logic of SHRM is that it views employees merely as instrumental means to the organization’s ends (Kochan, 2007). When the interests of employees conflict with those of the organization, the organization’s interests win out. Here there is an obvious connection to market-based institutional logics, which further reinforces an instrumental cast to HRM.

This institutional logic leads to an important question: Is a “good” workplace or a workplace that treats its employees responsibly a strategic good? In some cases, the answer may be “yes.” Organizations that need to attract highly skilled employees who are in demand and have other employment options may decide that the logic of SHRM involves acting with CR toward these employees, to make their organization an “employer of choice” (Joo & McLean, 2006). In this case, investments in employee CR could be understood as a strategic investment in organizational-level resources and competencies (Barney, 1991). Although there might be other reasons to engage in employee CR, such as public image, staffing needs may often take precedence in organizations’ strategic calculations about HRM.

Obviously these employees would be treated well, but organizations following this line of argumentation would not need to perceive themselves as “humane,” but merely focused on strategic goals. As discussed below, an individualistic organizational identity that focuses on gaining competitive advantage would be consistent with such SHRM choices. In other cases, where success does not depend on scarce and highly skilled employees, organizations that are highly focused on competitive advantage might conclude that the prevalent SHRM logic requires reducing their commitments to employees and reducing labor costs as the best strategy for managing employment relationships. In this case, a CR stance toward employees would not be perceived to be an advantageous use of organizational resources and therefore not “strategic.” A strategic perspective on HRM thus does not necessarily mean that a corporation will be more or less responsible or responsive to employees. Rather, organizations will take an instrumental view of employee CR as a strategic choice and engage in CR to the extent that doing so is necessary to fulfill the organization’s goals. Thus institutional logics prevalent among HRM professionals lead to the adoption of SHRM as an accepted norm and frame of reference for their activities. This article suggests that organizational based institutional logics may be the one bulwark that permit a firm to resist the pressure described above toward treating employees instrumentally. The following section explores institutional logics at the organizational level.

Organizational-level institutional logics

External institutional logics may not have an equal impact on all organizations within an organizational field (DiMaggio, 1988; Thornton, 2004). As explained below, some firms may be more vulnerable to the pressures for adopting market-based, state-based or professionally based institutional logics and practices that reinforce an instrumental relationship between the firm and its employees. Other firms, however, may not suffer from those internal vulnerabilities, and therefore may be more likely to withstand external institutional pressures (Kim, Shin, Oh, & Jeong, 2007). Previous research has explained differences in organizational response to external institutional pressures due to organizational characteristics such as size (Haveman, 1993), status (Lounsbury, 2002), ownership (Ruef & Scott, 1998), and internal political dynamics (Kim et al., 2007). Moreover, it is not simply levels of vulnerability that can explain differences in responses to external institutional logics. Scholars considering the function of organizational agency within institutional theory also suggest that strong pressures to conform to institutional logics may actually become an instigator for certain organizations to counteract the pressure and stage acts of resistance—to set themselves apart as mavericks (Heugens & Lander, 2009). Thus, a firm with particular attributes may actively rebuff institutional pressures, particularly those pressures that conflict with the firm’s own institutional logics. One such attribute may be inherent to the firm’s organizational identity.

Certain types of organizational identity may help an organization resist institutional logics that foster the instrumental treatment of employees. An organizational identity is defined as attributes by which an organization positively distinguishes itself from others (Albert & Whetten, 1985). It is how members answer the question: “Who are we as an organization?” (Whetten, 2006). Identity has implications for social motivation and behavior toward and relationships with others. An organizational identity can be oriented toward individualistic, relational, or collective interactions with stakeholders (Brickson, 2005). As discussed below, a strong relational or collective identity could provide organizational-level institutional logics that reject the prevailing institutional logics that pressure for instrumentalism discussed above. This type of organizational identity orientation could be the impetus for a firm to resist the aforementioned external market-based, state-based and professionally based institutional logics and act with more CR toward its workforce—by treating its employees with respect and dignity rather than as simply a means to an end.

Organizational identity is made up of members’ shared beliefs regarding attributes that are considered to be the central, enduring, and distinctive features of the organization (Albert & Whetten, 1985; Whetten, 2006). Organizational identity signifies an organization’s self-defining unique social space that sets the organization apart from, and above, other firms. Identity attributes reflect the organization’s highest values, priorities, and deepest commitments. As the organizational identity becomes institutionalized, the collective members develop and identify with the distinct institutional logic that prevails within the social group (Thornton & Ocasio, 2008). Because it involves the members’ collective perception of their own organization, identity is internally defined (Gioia & Thomas, 1996), and therefore distinct from constructs that are wholly externally defined such as reputation (Fombrun & Shanley, 1990) or organizational image (Dutton, Dukerich, & Harquail, 1994). Although the organizational identity may be constructed, enacted, adapted, or reinforced with reference to others in the external environment (Dutton & Dukerich, 1991; Scott & Lane, 2000), the external environment does not predetermine identity orientation, “and organizations still retain considerable freedom to relate to their stakeholders in a wide variety of ways” (Brickson, 2005, p. 600). It is the internal perception and definition of identity that may allow an organization with a strong organizational identity and distinct institutional logics to withstand external institutional pressures, or even reject and rebel against them.

Brickson (2005, 2007) has extended the identity literature to consider how an organizational identity orientation affects stakeholders, including employees, by addressing the question “Who are we as an organization vis-à-vis our stakeholders?” She asserts that there are three types of organizational identity orientations: a firm can have an individualistic orientation, a relational orientation, or a collectivistic orientation (Brickson, 2005, 2007). Each of these organizational identity orientations has different implications regarding the types of relationships the firm has with stakeholders, and particularly with employees.

The individualistic organizational identity is associated with organizational self-interest (Brickson, 2005). A drive to succeed, to gain market share, and to achieve recognition for the firm underlies the individualist approach. Firms with an individualistic organizational orientation would adopt institutional logics that lead the firm to form instrumental, transactional relationships and maintain relations with stakeholders only to the extent that the firm’s own aims (e.g., profitability) were enhanced. Brickson argues that individualistic firms would be most likely to engage in calculative approaches to managing employees such as the SHRM approach discussed above. The interaction between an individually oriented firm and its employees is more likely to be “managed by a psychological contract of at-will . . ., [with] innovation-based socialization, and individually focused HR policies, . . .[in this way] individualistic organizations train members to believe that they are responsible for their own successes and failures” (Brickson, 2007, p. 878). Thus the institutional logics of a firm with an individualistic identity orientation would be consistent with the prevailing market-based and professionally based institutional logics promoting an instrumental approach to CR toward employees.

The organizational identities that may be more likely to resist the institutional logics described above are relational and collective. Firms with relational organizational identities tend more often to establish meaningful dyadic relationships with stakeholders (Brickson, 2007). Firms with relationally oriented identities are concerned with the organization’s success in fulfilling role expectations in the firm’s relationships with others, whether they are customers, suppliers or employees. “As opposed to viewing relationships as a means to an end, relational organizations view them largely as an end in themselves” (Brickson, 2007, p. 870). Relational firms would be more likely to develop organizational level institutional logics that value forming relationships with stakeholders based on trust, mutuality, and reciprocity. With regard to employees, firms that have relational organizational identity orientations are likely to engage in joint relationships with employee stakeholders that involve a humanistic focus on mutual development. Where a strong relational firm identity and logic exists, firms may be more likely to have relationships with employees based on concern and trust rather than on instrumental considerations. Organizational practices may include mentoring-based socialization and regular interactions that encourage stable and caring relationships. This relational identity orientation and logic “leads employees to forge long-term and affectively invested interpersonal bonds with one another” (Brickson, 2007, p. 880). Thus, the relational identity orientation of the firm can be echoed in how employees treat one another as well as other stakeholder groups, eliciting caring, compassion, empathy, altruism and dependability. A firm with a relational identity orientation is more likely to develop institutional logics that are contrary to the prevailing institutional logics supporting the instrumental treatment of employees.

Finally, the collectivistic organizational identity would lead firms to develop stakeholder relationships based on a broader common purpose, such as community-building or sustainability. Examples of collectivistic organizations include an organic beverage firm that supports small-scale family farming, or a bottled water company that incorporates female health and curing breast cancer into its identity (Brickson, 2007). The employer–employee relationship could entail a collaborative effort working together to impact these social issues. “Collectivistic organizations are apt . . . to foster an employment relationship reflecting shared community, rather than independence or a dyadic bond” (Brickson, 2007, p. 871). Teamwork, inclusiveness and group harmony are likely to be important virtues in the collective firm logic. Like the relational firm, a collective organizational identity orientation would lead firms to consider stakeholder relationships not as a means to an end, but rather as an end in themselves. Such firms would be likely to engage in CR toward employees with an eye toward developing caring communities, rather than for strategic reasons. Again, the institutional logics of a firm with a collectively oriented identity would also be contrary to the market-based and professionally based institutional pressures to treat employees instrumentally.

Firms would need to have a strong relational or collective organizational identity to develop institutional logics supporting a philosophically normative approach to CR toward employees valuing their intrinsic worth as human beings. Individualistic firms would only have high levels of CR to employees if it makes sense instrumentally, that is, where the employees are scarce or skilled or contribute specially to the firm value. Otherwise, individualistic/instrumental firms will treat employees like fungible input costs to be cut at the first sign of an economic downturn. Because of all the multiple levels of external institutional logics described above, the pressure to treat employees in an instrumental manner may have been internalized and understood by many firms to be a key to survival. However, firms that may have a strong relational or collective approach are able to buck the trend and succeed while according employees with dignified and humane treatment. Without a strong relational or collective identity and the associated organizational level institutional logics, a firm would be less likely to resist the institutional pressures described above to treat employees in an instrumental fashion.

Future Research

The changing nature of CR toward employees, as discussed in the beginning of this article, points to many avenues of future research. This article seeks to connect the multiple levels of institutional logics pressures that firms face—based on market, state and professional influences— to the kinds of behaviors toward employees that might be termed CR. Further, it suggests that understanding CR toward employees requires taking into account the pressures of these multiple external institutional logics combined with firm-level decisions that are driven by how firms define themselves (organizational identity) and the resulting firm-level institutional logics. Given the theoretical newness of these arguments, there are several avenues for future research. In addition to research that unpacks differences in employee CR within and across industries, discussed below are several areas within the employer–employee relationship that deserve more scrutiny.

The first promising research avenue is the further exploration of the role of organizational identity orientation and organizational-level logics in the treatment of employees. The strength and orientation of organizational identities likely differs based on a variety of factors, such as ownership type (public or private). Other factors at work here might include whether there is a founder who has a particular set of value commitments related to exemplary employee treatment. Because data on private firms are not usually available to researchers, perhaps a content analysis of company websites can be used to systematically study the differences in rhetoric that reflect the distinct identities and logics between public and private firms. As the appendices show, information from the Fortune 100 Best Places to Work list may provide an interesting data set to begin this investigation of the role of organizational identity and logics in CR toward employees. Further, other qualitative research methods might cast light on differences among all organizations in understanding how employees are treated.

In a related vein, better understanding organizational identity formation as it applies to the treatment of employees would a useful area for future research. Almost every organization states that it “values employees,” but some organizations value employees more than others. The rhetoric used by organizations may be similar, but organizational identities and logics could be subtly or drastically different. Understanding the sources, artifacts, and effects of organizational identity, and how organizational logics develop would thus be useful in its own right while also being useful for understanding differences in observed CR as expressed toward employees. Understanding the signifiers of organizations that have employee CR as part of their identities and logics thus would be important. Research in this area would likely require a mixture of qualitative and quantitative methods.

Another way organizational identity may affect employee treatment is how “caring organizations” treat their employees. It would be interesting to study how employees are treated at such organizations. Because “caring” implies emotional affect, it would also be interesting to probe whether organizations that engage in employee CR for strategic reasons exhibit behaviors consistent with the artifacts of caring. As all the research avenues connected to organizational identity suggest, firms with relational and collectivist organizational identities are more likely adopt institutional logics that enable treating employees well from a philosophically normative belief about how employees should be treated rather than for some instrumental goal related to firm performance.

Other areas from this analysis of the pressures of state-based and professionally based institutional logics on organizations represent avenues for future research. Related to state-based logics, legal and public policy scholars have criticized voluntary regulatory approaches with regard to employee issues in light of frequent lack of compliance (Estlund, 2005). Such a critique is buttressed by recent workplace accidents following serious noncompliance with health and safety standards such as the Upper Big Branch Mine disaster in West Virginia which killed 29 miners, or the Deepwater Horizon oil rig explosion in which 11 workers died. Future research in this area could explore alternative regulatory and legal compliance structures that would counter the weaknesses inherent in a voluntary self-regulatory system. This question extends beyond the United States, as international efforts to identify and protect core labor rights as fundamental human rights, such as the UN Global Compact, are necessarily voluntary. As no binding enforcement mechanism exists over labor policies in sovereign nations, and multinational corporations often have more power than host countries in determining labor practices, recent scholarly attention has been drawn to the questions of defining and enforcing the obligations of multinational companies in international labor markets. One disturbing issue posed by an instrumental approach to CR toward employees is that in weak states, firms may not be providing even a legally minimum level of employee treatment.

The prevalence of market-based instrumental logics of employee treatment was brought out most clearly in the discussion of SHRM. The pressure on human resource managers to justify their departments with regard to the contribution to the firm’s bottom line suggests that human resource managers may be identifying more with the goals of the organization rather acting as advocates for employees. A historical analysis of the HR function is called for to understand if such a move has happened, and to understand its impact on how employees are treated as members of an organization (e.g., Greenwood, 2002; Legge, 1995).

Finally, insights can be gained by examining the variability of CR toward employees in low- and high-skill industries. One avenue to understand this variability might be through an analysis of information concerning CR toward employees contained in the Kinder, Lydenburg, & Domini (KLD) ratings. If companies that exhibit low ratings for employee treatment are primarily staffed by low-skilled workers, such a result would provide additional support for the arguments put forth above. Understanding CR toward employees, particularly if such actions are philosophically, normatively, or instrumentally driven, provides a rich vein of questions that need to be answered.

Conclusion

CR toward employees has changed dramatically since the legislation of the New Deal. The move away from the collective bargaining environment in state-based institutional logics since the 1950s and 1960s, market-based institutional logics reflecting increased global competition, and heightened market pressures to produce an endless stream of rising quarterly earnings have coalesced to allow employers more discretion in deciding how to structure the terms of employment and more incentives to reduce labor costs. Some, but not all, organizations have decided to reduce or withdraw benefits once seen as standard perquisites of employment. Another reason for the downscaling of these benefits by some organizations is the external institutional logics that put pressures on firms to see employees as instrumentally related to organizational performance. That is, when organizations perceive that treating employees well is in the organizations’ financial interest, employees are more likely to see better treatment.

One key to resisting the instrumental institutional logics and developing an intrinsic CR toward employees is the strength and nature of the firm’s organizational identity and resulting organizational-level institutional logics. Specifically, firms with strong collectivist or relational identities are more likely to show CR toward their employees with logics providing a philosophically normative motivation about the welfare of the employees. However, more research must be done on the correlation between organizational identity and employer–employee relations.

Employees are a central stakeholder in any firm. Gaining a better understanding of how CR toward employees is evolving is key task for business and society scholars. The role of state-based institutional logics in this relationship also puts it squarely in the sights of those scholars interested in the interactions between business, government, and society. This research represents a step forward in understanding CR toward employees, but there are many steps yet to be taken.

Footnotes

Appendix A

Although these ideas are not empirically tested in a formalized way, it is useful to look at the Fortune 100 Best Places to Work list across several years to consider whether there is some support for this framework, which relies on institutional pressures such as market-based logics to explain differences in CR as expressed toward employees. Rather than using a single example from the Fortune 100 Best Places to Work list, this article instead examines data from the last 5 years to underscore the point about differential treatment given to low- and high-skill workers. The representation of firms from both high- and low-skill industry are examined in the Fortune Best Places to Work lists from 2006 to 2010 (500 observations). Then high- and low-skill industries are identified following the methodology commonly used by economists (e.g., Berman, Bound, & Machin, 1998; Edwards, 2001; Peneder, 2002) by comparing the average wage in an industry, defined by 4 digit SIC code, with the average for the economy as a whole. The benefit of this classification scheme is that half of all industries are defined as low skill and half as high skill. Thus, in the Fortune 100 Best Places to Work lists, if corporations act responsibly toward employees because they are intrinsically valued as human beings, the firms would be distributed fairly evenly in terms of skill level. However, as the arguments in the text would suggest, high-skill workers that can contribute instrumentally to firm goals are much more likely to be treated well as employees. In the sample of 500 observations, 402 are from firms in high-skill industries while only 98 are from firms in low-skill industries. This distribution suggests that high-skill workers are much more likely to benefit from having many workplace benefits, in addition to greater pecuniary rewards. This small piece of evidence adds to the arguments presented above that CR toward employees is driven in part by the skill level of the worker. Thus, the relationship between market-based institutional logics and firms’ treatment of employees is also supported by this evidence.

Appendix B

Turning again to the data from the Fortune Best Places to Work list, private firms are vastly overrepresented in the lists from 2006 to 2010. Privately held companies comprise more than 55% of this sample (277 observations of the total 500 observations). By contrast, privately held companies represent only 8.4% of the Fortune 1000 (Reference USA). The private companies in the sample are also smaller, as measured by number of employees. As might be expected, the public firms in the sample were almost twice as big as the privately held firms (the mean for the publicly traded firms in the sample is 21,625 employees compared with only 10,482 for the privately held firms). Although one might argue that a smaller workforce makes it easier to pay more attention to the employee stakeholder group, it does suggest that private firms may have fewer resources to devote to the exhibitions of CR toward employees that warrant inclusion on Fortune 100 Best Places to Work list. This evidence is hardly conclusive, but this suggests that that the form of ownership needs to be further examined in relation to firms adopting the guidance of market-based institutional logics in their CR toward employees.

Acknowledgements

An earlier version of this article was presented at the 2011 Academy of Management. We would like to thank Jennifer Griffin, Aseem Prakash, and three anonymous reviewers for helpful comments throughout the revision process. We would like to thank Mercy Berman for her editorial assistance.

Declaration of Conflicting Interests

The authors declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

Funding

The authors received no financial support for the research, authorship, and/or publication of this article.

Author Biographies

Michelle Westermann-Behaylo is an assistant professor of corporate citizenship at American University in Washington, DC. She earned her PhD from George Washington University School of Business, and her JD from Vanderbilt Law School. Her specific areas of inquiry include corporate ethical culture, stakeholder management, organizational compassion and the role of business in peace-building. Prior to her academic career, she practiced international business and trade law in both the public and private sectors.

Shawn L. Berman (PhD, Strategic Management, University of Washington) is an associate professor of management at the University of New Mexico’s Anderson School of Management. His three main research interests are: stakeholder theory, especially measurement issues; organizational compassion; and managerial discretion as it pertains to firm–stakeholder relationships. His work has appeared in Academy of Management Journal, Academy of Management Review, Business & Society, and Business Ethics Quarterly as well as other outlets. He has served as division chair for the Social Issues in Management (SIM) Division of the Academy of Management.

Harry J. Van Buren III (PhD, Management, University of Pittsburgh) is an associate professor of business and society at the University of New Mexico’s Anderson School of Management. His main research interests are the ethical implications of contemporary employment practices, social capital theory, bullying within organizations, and the intersection of religious beliefs and business ethics. His research has been published in Academy of Management Review, Business Ethics Quarterly, Human Resource Management Review, Journal of Business Ethics, and Journal of Management Education, among others.

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