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Community Religion, Employees, and the Social License to Operate

Author

Listed:
  • Jinhua Cui

    (Korea University)

  • Hoje Jo

    (Santa Clara University)

  • Manuel G. Velasquez

    (Santa Clara University)

Abstract

The World Bank recently noted: “Social license to operate has traditionally referred to the conduct of firms with regard to the impact on local communities and the environment, but the definition has expanded in recent years to include issues related to worker and human rights” (World Bank 2013, http://go.worldbank.org/FZ88VMOM90 ). In this paper, we examine a factor that can influence the kind of work conditions that can facilitate or obstruct a firm’s attempts to achieve the social license to operate (SLO). Specifically, we examine the empirical association between a company’s employee practices and the religiosity of its local community by investigating their fixed and endogenous effects. Using a large and extensive U.S. sample, we find a positive association between the “employee friendly” practices of a firm and the religiosity of the local community after controlling for several firm characteristics. In addition, after mitigating endogeneity with the dynamic panel system generalized method of moment and after employing several other econometric tests, we still find a robust positive association between the religiosity of the local community and employee-friendly practices. Since recent research has shown that the firm’s treatment of its stakeholders is a key to achieving an SLO, and since employees constitute a highly significant stakeholder group, we interpret our results as supporting the view that religion is an important influence on the kinds of employee practices that can increase the likelihood that a firm will acquire the SLO.

Suggested Citation

  • Jinhua Cui & Hoje Jo & Manuel G. Velasquez, 2016. "Community Religion, Employees, and the Social License to Operate," Journal of Business Ethics, Springer, vol. 136(4), pages 775-807, July.
    • Handle: RePEc:kap:jbuset:v:136:y:2016:i:4:d:10.1007_s10551-015-2865-0
    DOI: 10.1007/s10551-015-2865-0
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    References listed on IDEAS

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    Cited by:

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    4. Qamar Farooq & Yunhong Hao & Xuan Liu, 2019. "Understanding corporate social responsibility with cross‐cultural differences: A deeper look at religiosity," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 26(4), pages 965-971, July.
    5. Geert Demuijnck & Björn Fasterling, 2016. "The Social License to Operate," Journal of Business Ethics, Springer, vol. 136(4), pages 675-685, July.
    6. Yaoqin Li, 2021. "Religious founders and employee welfare," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 61(5), pages 6037-6067, December.
    7. Bo Xu & Linlin Ma, 2022. "Religious Values Motivating CSR: An Empirical Study from Corporate Leaders’ Perspective," Journal of Business Ethics, Springer, vol. 176(3), pages 487-505, March.
    8. Shahid, Ahmad Usman & Patel, Chris & Pan, Peipei, 2022. "Corporate social responsibility, intrinsic religiosity, and investment decisions," Journal of Behavioral and Experimental Finance, Elsevier, vol. 34(C).
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    11. Lu, Liping & Wu, Yiping, 2020. "Does religion enhance firm performance? Evidence from private firms in China," China Economic Review, Elsevier, vol. 62(C).

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