The Impact of Labor Union Influence on Corporate Social Responsibility

This study examines the effects of labor union influence on the corporate social responsibility (CSR) of Korean firms, which is regarded as a pertinent sustainable factor to meet the various demands of the organizations around a firm. Further, this paper implies that labor unions might be part of a group of stakeholders that affect firms’ CSR activity. The empirical results suggest labor union existence as well as the labor unionization ratio is negatively associated with firms’ CSR activity. Additionally, this negative association is more pronounced for non-owner manager firms. Additional robustness tests using quantile regression, two-stage least squares (2SLS) regression, and the Heckman two-step analysis support the above findings. Therefore, we conclude that labor unions might cooperate with non-owner managers to decrease firms’ CSR activity because decreasing CSR expenditure makes for a favorable wage negotiation process that advocates labor unions’ rent seeking behavior and non-owner managers’ agreement with labor unions in terms of business performance during their tenure