Transformations  in
Business & Economics

TRIGGERING HUMAN CAPITAL ASPECTS OF CORPORATE SOCIAL RESPONSIBILITY VIA DOMESTIC AND FOREIGN INSTITUTIONAL INVESTMENTS: NOVEL INSIGHTS FROM WORKPLACE SAFETY INITIATIVES
Chune Young Chung, Thi Thanh Nhan Do, Ondrej Kuba

ABSTRACT: We examine the critical role of domestic and foreign institutional investors on the human capital aspects of corporate social responsibility in workplace safety practices. The importance of this topic lies in its direct impact on employee well-being and organisational effectiveness, particularly in an era where workplace safety is increasingly prioritised. Unlike previous research, our analysis delves deeper into the distinct monitoring mechanisms employed by domestic and foreign institutional investors, shedding light on how proximity and union coverage influence their effectiveness in promoting workplace safety. Using establishment-level work-related injury data spanning 4,025 firms over a period of 10 years in the United States, we observe that the monitoring effect of institutional ownership lowers injury and illness rates. Remarkably, our findings reveal that the monitoring effect is evident for domestic institutional investors only when they are geographically closer to firms or when firms have significant union coverage. Firms with higher domestic institutional ownership have a more employee-friendly corporate culture and invest more in organisational capital and workplace safety than firms with higher foreign institutional ownership. We provide robust evidence of the different monitoring roles of domestic and foreign institutional investors in explaining workplace safety outcome variations.

KEYWORDS:  workplace safety, total case rate, injury and illness rate, geographic proximity, social factors.

JEL classification:  G32, J28, J61, K32