Featured faculty: Liao Huiyao
Written by Sally Ho

For decades, a common preconception about working mothers has been that having children may reduce women’s commitment to work. This perception has led to a phenomenon dubbed the “motherhood penalty,” which refers to the documented disadvantages women face after becoming mothers and discrimination in hiring because of their childbearing responsibilities.

The findings also highlight how responsible workplace policies can help challenge stereotypes about working parents. Examples of corporate social responsibility include fair hiring and promotion practices, equal opportunities for career development, and policies that help employees balance work and family responsibilities. Such measures can help organisations build a more inclusive workplace without assuming that parenthood reduces professional commitment.

Parenthood affects both mother and father. However, broader economic research has shown that child rearing has significantly contributed to the gender wage gap, with women experiencing a larger disadvantage.

“Managers often perceive women as having more work-life conflict, and thus, less committed to work when becoming mothers, even when data suggests otherwise, leading to less inclination to reward them with promotions and salary increases,” says Liao Huiyao, Assistant Professor in the Department of Management at the Chinese University of Hong Kong (CUHK) Business School.

However, Professor Liao and his co-authors challenged this assumption, observing that working parents, especially mothers, sometimes show greater work commitment. They suggest this stems from a sense of obligation to perform at their best, using their professional dedication as a positive symbolic influence on their families.

“Confucian philosophy places a strong emphasis on parental responsibility for a child’s character development and education, beyond just providing for material needs,” he adds. “This profound sense of parental obligation naturally extends into the workplace, shaping how working parents interpret the very meaning of their work.”

Professor Liao calls this concept “family-centred symbolic meaning of work,” in which employees view their jobs as a means to set a positive example for their children. His study, Uncovering a motherhood advantage: How parenthood impacts perceptions of the meaning of work and work outcomes, challenges prevalent stereotypes about working parents.

The interesting part is that mothers are more likely to view their work as a means to instil moral values in their kids, which, in turn, motivates them to go the extra mile at work. This finding breaks the stigma associated with working mothers that perpetuates the motherhood penalty.

Mothers view work beyond salary

To illustrate a working mother who embodies a family-centred symbolic meaning of work, Professor Liao points to former US First Lady Michelle Obama. She was a lawyer at a top-tier law firm, where she met and mentored the future US president, and then held senior leadership roles at the University of Chicago before moving to the White House.

“Michelle Obama sees her career as a way to teach her daughters about responsibility,” he says. “This view is a common, yet under-researched motivation.”

Along with Tammy Allen at the University of South Florida, Liu Zhaopeng Liu at Shandong University, Thomas Ptashnik at Providence College, and Wu I-Heng at the University of South Alabama, Professor Liao gathered responses from 867 Chinese and US employees and their supervisors through a series of studies on how employees view their work in relation to their families.

“It is precisely because of their commitment to shaping their children’s character that working parents, especially mothers, are motivated to work harder and engage in more ethical and organisational citizenship behaviours.”

Professor Liao Huiyao

The analyses find that having children reshapes parents’ identity and priorities. Work no longer feels like merely an individual pursuit but part of how someone cares for and nurtures their family through acting as a role model. Becoming a parent is linked to a stronger moral commitment to family.

These positive effects are particularly pronounced among mothers. Researchers call this a “motherhood advantage,” in which a heightened sense of symbolic meaning drives increased work effort and organisational citizenship behaviours.

“Work effort has long been considered a cornerstone of a strong work ethic, while organisational citizenship behaviours, such as being helpful, loyal, and going above and beyond, are seen as pro-social actions,” says Professor Liao. “Individuals with high family-centred symbolic meaning of work are more likely to engage in both to demonstrate the character they wish to instil in their children.”

Parenthood reshapes work purpose

While the study does not find that parenthood automatically improves job performance, it names psychological mechanisms that can explain how parenthood affects the family-centred symbolic meaning of work.

Professor Liao highlights that while parenthood reshapes work purposes for both genders, the effect is particularly pronounced for women for two reasons. First, the physical experience of pregnancy is a transformative life stage that often fosters a more interdependent self-concept in women, making them more likely to integrate their family extensively into their sense of identity, including their work identity.

These findings are also relevant when employers use automated tools to support recruitment and performance evaluations. Algorithmic discrimination can occur when an algorithm produces unfair outcomes for certain groups, including women or working mothers. Although this study does not examine automated decision-making, its findings reinforce the importance of reviewing workplace decisions for bias rather than relying on assumptions about employees’ family responsibilities.

Additionally, despite evolving social norms, women are still associated with caregiving responsibilities in many societies, reshaping their identity more profoundly. As a result, mothers may imbue their work with deeper personal significance to fulfil their maternal responsibilities.

“For fathers, it remains more socially acceptable to compartmentalise work and family, and view careers as personal pursuits rather than as a medium for teaching moral values for their children,” he says.

However, the key is not simply having children, but how parenthood reinterprets professionalism. This psychological process is not confined to a single society but reflects a broader pattern across cultures.

Moving beyond the motherhood penalty

The motherhood advantage does not deny the existence of structural barriers that women face in the workplace, but rather highlights a personal motivation that emerges with parenthood. Far from diminishing professional drive, motherhood may intensify the sense that work matters more than just for money.

“It is precisely because of their commitment to shaping their children’s character that working parents, especially mothers, are motivated to work harder and engage in more ethical and organisational citizenship behaviours,” says Professor Liao.

Supporting parents rather than sidelining them may allow organisations to benefit from employees’ stronger sense of purpose. Fair hiring, transparent promotion criteria, and family-supportive policies are practical corporate social responsibility examples that can help employers recognise employees’ contributions without penalising them for caregiving responsibilities.

“These insights hopefully lead managers to re-evaluate their assumptions during hiring and promotion decisions, and to stop penalising working mothers based on unfounded biases,” Professor Liao adds.

“Companies should move away from the outdated idea that the best employees are those who work long hours without family responsibilities. Instead, they should recognise and value that working parents, particularly mothers, can be highly committed and productive because their family inspires them to be role models.”

The post How motherhood boosts work effort and initiatives first appeared on China Business Knowledge.

Featured faculty: Zhou Xiaolu
Written by Putro Harnowo

Corporate social responsibility, or CSR, is an integral part of modern business strategy. Traditional CSR practices have revolved around charity, philanthropy, and volunteering, but the growing demand for sustainable business practices has expanded CSR beyond simply giving back to society. These developments have made corporate sustainability strategies an important consideration for businesses seeking to balance social and environmental responsibilities with their available resources.

While regulators worldwide have now imposed mandatory CSR and sustainability reporting, a genuine desire to contribute to society may motivate corporate good deeds. However, the late American economist Milton Friedman famously argued that “there’s no such thing as a free lunch.” For businesses, CSR can improve brand perception and build public trust, but it comes at a cost.

Zhou Xiaolu, Assistant Professor of Accounting at the Chinese University of Hong Kong (CUHK) Business School, notes that CSR activities can be seen from two viewpoints: either firms genuinely care about the social and environmental impacts over profits, or they seek to enhance brand value and ultimately boost profits. An extensive body of literature shows the latter is more prevalent.

“CSR investment mostly depends on stakeholders’ demand and what the firm can offer cost-effectively,” says Professor Zhou. “Firms are constrained by limited resources, so they need to balance the various aspects of CSR when implementing their corporate sustainability strategies.”

As companies face growing pressure to act responsibly on several fronts, navigating all dimensions of social responsibility becomes more challenging. Her latest study, Substitution between corporate social responsibility activities: Evidence from hiring and mistreating unauthorised workers and pollution, sheds light on the practicality of CSR initiatives and reveals that increasing one facet of social responsibility may lead to a reduction of another domain.

“When a regulation mandates one aspect of CSR to improve, managers may prioritise compliance and reduce investment in other CSR activities. Those with the highest marginal cost or the lowest return are most likely to be curtailed, resulting in a substitution among CSR initiatives,” she adds.

Evidence from the fields

In the study, Professor Zhou collaborates with Huang Ying and Li Ningzhong of the University of Texas at Dallas, and looks into a US government policy called E-Verify that allows companies to verify with the federal data whether their employees are eligible to take the job.

Nine states require universal E-Verify, compelling all employers to verify the work authorisation of employees. Meanwhile, 13 states enforce public E-Verify, which only orders public employers and contractors to verify all of their employee data. The researchers find that this policy profoundly influences CSR activities.

The Pew Research Centre’s report shows that the US had around 8.3 million undocumented workers in 2022, or almost five per cent of the workforce, who often took low-paying jobs in manufacturing, metal mining, electric power generation, and waste treatment. Fear of deportation left them vulnerable to workplace abuses, such as underpayment and unsafe working conditions.

“Firms are constrained by limited resources to keep their reputation and meet regulatory requirements, so managers need to balance the various aspects of CSR.”

Professor Zhou Xiaolu

The researchers analyse the Occupational Safety and Health Administration data from 2000 to 2018 and discover that the adoption of a universal E-Verify mandate reduces the likelihood of labour violations due to hazardous chemicals by 1.4 per cent and the likelihood of being fined for labour violations by 5.9 per cent.

Progress in one CSR area can undermine another

The researchers then compare the E-Verify data from 2000 to 2018 with the pollution data of 39,063 plants from the Toxic Release Inventory Programme that details the release of toxic chemicals to the air, water, and ground. Around eight per cent of observations in the sample are in states with universal E-Verify mandates, and 14 per cent are in states mandating public E-Verify.

The analyses suggest that when states adopt the universal E-Verify, pollution increases by 10 to 11 per cent with the effect becoming stronger over time. The public E-Verify mandate leads to a four to five per cent increase in pollution.

In states with a higher fraction of undocumented workers, toxic releases increase by 17 to 22 per cent after the universal E-Verify mandate and 13 to 15 per cent after the public E-Verify mandates.

Further analyses find that E-Verify mandates do not lead to financial constraints, and the increased pollution is mainly attributed to reduced emission efficiency. This means that companies substitute between different types of CSR activities as a trade-off when one area demands more attention.

“CSR substitution is a rational business decision to reallocate resources. Therefore, stakeholders may need to evaluate CSR holistically rather than in isolated aspects,” says Professor Zhou. “A company’s true commitment to sustainability can be understood by looking at the full picture and the trade-offs the company makes.”

Keeping accountability on responsibility

As many countries increasingly enforce certain aspects of CSR, such as Germany’s compulsory seats in supervisory boards for worker representatives, Australia’s mandatory environmental rehabilitation funds, and the like, the study shows that such policies may reduce other CSR activities. The substitution may occur gradually, making the hidden trade-offs harder to detect.

“When crafting policy, legislators should consider safeguards to prevent backsliding in other CSR domains. However, the optimal design will depend on many factors, such as regulatory context, industry characteristics, and resource constraints,” says Professor Zhou.

Furthermore, she notes that although substitution can theoretically apply to all CSR activities, the study does not imply that substitution should exist or should only exist for pollution.

“Cost and benefit trade-offs vary by firm and context, so it is difficult to have a one-size-fits-all prescription for CSR substitution,” she adds. “While our results show substitution between labour standards and pollution control, not all CSR activities are interchangeable, and some trade-offs are just impractical.”

Future studies could explore substitutions among other CSR activities and, if possible, develop a more robust framework for empirically identifying the most substituted activity.

The post Are companies just shifting CSR problems? first appeared on China Business Knowledge.

Featured faculty: Choi Sungwoo
Written by Pan Jingyi

It’s no longer shocking to see robots working in restaurants and hotels. To create more inclusive opportunities, some businesses employ people with disabilities to control these service robots. The operator’s face appears on the robot’s screen, maintaining a human touch while promoting inclusion.

These telepresence robots, also known as avatar robots, allow individuals with mobility disabilities to navigate around physical barriers and engage in work interactions remotely. “Robotic technology has significant potential to enable hospitality and tourism companies to hire people with disabilities despite their mobility restrictions, creating a meaningful social impact,” says Choi Sungwoo, Assistant Professor of the School of Hotel and Tourism Management at the Chinese University of Hong Kong (CUHK) Business School.

“Consumers generally prefer in-person interactions, either when employees use advanced technologies like wearable robots or traditional aids such as wheelchairs, compared to employees working through telepresence robots.”

Professor Choi Sungwoo

In addition to telepresence robots, wearable robotic technologies, such as exoskeletons and bionic arms, have also made it possible for people with physical disabilities to stand, walk and perform daily tasks that may be impossible with traditional prosthetics and mobility aids. While not widely adopted in workplaces, these technologies promise to further empower individuals with disabilities to participate in the job market.

Many companies and universities are now developing technologies to help individuals with limited mobility. However, little is known about how consumers actually feel, especially when different kinds of robotic technology are now available. To address this gap, Professor Choi, together with Sara Kim of the University of Hong Kong, recently conducted a study titled Consumer perception of employees with disabilities using robots.

“We found that not all technologies are perceived equally,” says Professor Choi. “Consumers generally prefer in-person interactions, either when employees use advanced technologies like wearable robots or traditional aids such as wheelchairs, compared to employees working through telepresence robots.”

The findings suggest that companies should feel confident about hiring individuals with disability, as consumers usually react positively as long as they can provide in-person service. As employing people with disabilities onsite not only promotes diversity and fairness but also enhances the overall consumer experience, companies aiming to create an inclusive environment may find assistive technology a worthy investment.

Mixed reactions to telepresence

In their first experiment, Professor Choi and his collaborator recruited around 200 participants from an online data platform, Prolific, and examined consumer reactions towards services provided by employees with disabilities in different scenarios.

Participants were asked to imagine visiting an art museum and rate their likelihood of choosing a guide from three options: an in-person using a wheelchair, a guide operating remotely via telepresence robot, and an in-person guide without disability.

The result shows that participants are less likely to choose the guide using a telepresence robot than either of the in-person guides. Furthermore, the guide in a wheelchair is chosen even more often than the guide with no disability. A second experiment conducted at a public university with 85 participants in a real-world setting confirmed the same findings.

Psychological and social disconnection

Why are telepresence robots less accepted? The researchers attribute it to a psychological phenomenon where people subconsciously perceive them as lacking warmth and emotions. This happens because consumers struggle to look past the machine’s physical form to connect with the human operator, effectively overlooking the employee’s feelings and personal qualities.

When consumers speak with employees through a screen, they may feel as if they’re engaging with machines rather than a real person, due to the physical separation and the robotic nature of the interaction, explains Professor Choi.

“Service employees with disabilities working through telepresence robots may inadvertently create a sense of psychological distance from consumers, resulting in feelings of social disconnection,” he adds.

Physical presence is key in hospitality

To explore how to ease potential concerns towards employees with disabilities who provide service via telepresence robots, the researchers conducted a third experiment, recruiting nearly 200 people from Prolific.

This time, participants were presented with scenarios involving a restaurant server. Similar to the previous experiments, the server was either working remotely through a robot, working onsite using a bionic arm, or working onsite without disabilities. “We found that consumer perceptions of telepresence interactions were generally less positive,” Professor Choi says.

Across three experiments, consumers were less receptive to frontline staff working remotely. Professor Choi notes that the findings suggest physical presence is paramount in frontline service roles. No matter whether the staff is using a traditional wheelchair or a cutting-edge wearable robot, consumers’ responses are as positive as they are towards employees without disabilities.

Using technology more thoughtfully

In the wake of the pandemic and rising sustainability consciousness, hospitality and tourism companies face labour shortages and growing pressure to demonstrate social responsibility, making the hiring of people with disabilities both an ethical and strategic imperative. While employing remote-controlled robots sounds like a win-win solution, companies must recognise that some technologies foster acceptance and inclusion, whereas others may backfire.

Given consumers’ reactions to telepresence robots, Professor Choi recommends that companies committed to social inclusion prioritise assistive technologies like mobility aids or wearable robotics for frontline employees. He also encourages governments and NGOs to provide financial assistance to individuals and businesses that cannot afford these technologies.

Nevertheless, telepresence robots can still play a role. “They can offer valuable opportunities for individuals with disabilities to engage in the workforce, especially in behind-the-scenes roles like accounting and admin support, or when in-person work isn’t possible, such as during natural disasters, severe weather conditions, or personal injury,” says Professor Choi. In these cases, he emphasises the need for additional efforts to maintain personal connection through warmth and empathy, bridging  the psychological gap that technology may create.

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Finally, it is crucial to take the perspective of people with disabilities into prime consideration. Professor Choi notes that many people with disabilities are hesitant to enter the workforce, often due to a lack of confidence rather than employer reluctance. Based on the current research, he plans to explore how robotic technologies influence employees’ job performance and identity perceptions in his future studies.

“With the advancement of robotic technologies, we hope more people with disabilities can access these tools, navigate around physical barriers, and become more active in the workplace and society at large,” Professor Choi says.

The post How assistive robots can boost an inclusive workforce first appeared on China Business Knowledge.

By Lisa Kennedy

From the M+ museum in West Kowloon to the statue of the Goddess of Mercy on the quiet hill of Tai Po District, striking monuments to corporate philanthropy span Hong Kong. The 76-metre statue in particular was financed by the city’s richest tycoon, Li Ka Shing, who has founded a charitable organisation that has reportedly provided billions of dollars to top universities around the world.

Hong Kong’s public universities also provide abundant evidence of corporate giving by its business leaders, of which education has been a major beneficiary. Campus building names provide a roll-call of Hong Kong magnates, with major donors including Li Ka Shing, KK Leung, Lee Shau Kee and Run Run Shaw, to name but a few.

Funding major projects that advance cultural heritage, education or other causes rewards business leaders with prestige and recognition of their achievements, as well as the simple knowledge that by giving back to society they are helping to relieve social and environmental issues or improving life for future generations.

From an economic standpoint, some might ask: Does corporate philanthropy also help corporations to prosper and grow through the acquisition of other companies that may boost a firm’s wealth, size, market reach or diversification? A new study investigated this question in the context of corporate giving by manufacturing firms in mainland China.

The study entitled Looking good in the eyes of stakeholders: Corporate giving and corporate acquisitions was conducted by Yang Haibin, a Professor in the Department of Management at the Chinese University of Hong Kong (CUHK) Business School, in collaboration with Professor Gao Yongqiang and Zhang Miaohan of Huazhong University of Science and Technology in Wuhan.

The research builds on the growing interest in corporate social responsibility (CSR) and its relationship to companies’ wider strategic goals, such as acquisitions. As companies need to consider various stakeholders in their decision-making processes, philanthropy helps firms cultivate goodwill and trust among regulators, target firms, and communities.

Winning over stakeholders

In the study, Professor Yang and his collaborators examined the effect of a specific activity of CSR, corporate giving or donations, on corporate acquisitions. Since corporate giving helps firms obtain support from various stakeholders, firms may deliberately use it to facilitate major strategic behaviours such as acquisitions.

“Acquisitions would not be successful without support from key stakeholders such as regulators, target firms and communities, and benevolent gestures towards charitable causes enhance a firm’s reputation in the acquisition market,” says Professor Yang. “Therefore, firms planning to undertake acquisitions have more incentive to engage in philanthropy.”

“Business executives could recognise the strategic or instrumental value of corporate giving and integrate their firms’ non-market strategy with market strategies such as acquisitions, which are highly risky and can lead to losses, if they are not planned well.”

Professor Yang Haibin

The researchers argue that winning over stakeholders is critical to success in corporate acquisitions, because they are a risky investment and stakeholder resistance often leads to failure. Three types of stakeholders are important in China. Firstly, those in the target firm: its owners, directors, employees and suppliers; secondly, institutional stakeholders, especially the government, and thirdly, investors and stock analysts.

The researchers also theorise that there will be a stronger positive relationship between corporate giving and subsequent acquisitions for firms that face negative media coverage or those that operate in controversial industries, such as tobacco, gambling or oil and gas.

A wide evidence base

The theory was tested on a sample of 995 manufacturing companies across nine industrial sectors that were listed on the Shanghai and Shenzhen stock exchanges between 2004 and 2015. The sample includes six controversial industries.

The researchers examined the impact of the companies’ corporate giving on both the number and value of the acquisitions that they made per year; and measured the extent to which this varied for firms facing negative media coverage and those in controversial industries.

Data on the number of negative media reports about the firms per year was taken from the Financial News Database of Chinese Listed Companies. The study was subject to an elaborate set of controls and statistical analyses.

The results showed that corporate giving is positively associated with both the number and value of subsequent acquisitions; and that this positive relationship is stronger both for firms that have faced negative media coverage and for those in controversial industrial sectors. All the researchers’ hypotheses were thus confirmed.

“China provides an ideal context for this research because the Chinese often use a firm’s philanthropic giving to judge its social consciousness,” says Professor Yang.

Further analysis of the figures showed that corporate giving also increased the proportion of acquisitions that were completed successfully and the return on sales by subsidiary firms after the acquisition. Moreover, firms that faced negative media coverage before making a philanthropic donation were subject to fewer negative media reports afterwards.

Implications for managers

“This study has rich implications for managers,” says Professor Yang. “Business executives could recognise the strategic or instrumental value of corporate giving and integrate their firms’ non-market strategy with market strategies such as acquisitions, which are highly risky and can lead to losses, if they are not planned well.”

Furthermore, Professor Yang highlights that the study shows that both society and companies could benefit from corporate giving. This win-win situation not only offers confidence to executives to engage in philanthropy, but also provides an ethical basis for such behaviour, at least from a utilitarian perspective.

“Firms are not all set to benefit equally from philanthropy in their market strategies,” he explains. “Companies that have had more negative media coverage and firms belonging to controversial industries are in greater need of corporate giving. So, this study provides a solution for stigmatised firms to advance their acquisition behaviours through philanthropic donations.”

However, the researchers also warn that there is a risk that companies could “unethically manipulate” stakeholders’ expectations by engaging in corporate giving to whitewash their reputations and alleviate wrongdoing in controversial industries.

“For this reason, we maintain that it is critical to develop evaluative analyses of corporate giving and reflect on these donations and companies’ wider behaviour to arrive at a normative assessment of corporate philanthropy,” Professor Yang adds.

The post Giving back to society can be good for business too first appeared on China Business Knowledge.

By Pan Jingyi, Principal Writer, China Business Knowledge @ CUHK

Entrepreneurship provides ordinary people an opportunity for success, yet not everyone has equal access to achieve it. The glass ceilings are thicker for women entrepreneurs, as they have to face numerous obstacles on their journey such as gender biases, social pressure to balance work and personal life, and limited access to financial capital, among others.

Much literature has indicated that women entrepreneurs face heightened challenges in securing funding in male-dominated fields. In a 2023 report titled The funding gap, UBS disclosed that female founders tend to raise significantly less funding with a median of US$50 million compared to their male counterparts with US$226 million.

However, opinions differ on how to close the gender gap. Some suggest that increasing the number of female investors could alleviate gender bias and provide greater support, while others hold the opposite. This posits a burning question: Does adding female investors to decision-making groups of venture capital firms improve gender equality in funding opportunities?

“Contrary to our intuition, we found that decision-making groups with higher female representation are less likely to fund women-led businesses in the male-dominated venture capital industry.”

Professor Jiang Han

“Contrary to our intuition, we found that decision-making groups with higher female representation are less likely to fund women-led businesses in the male-dominated venture capital industry,” says Jiang Han, Associate Professor of the School of Management and Economics of the Chinese University of Hong Kong (CUHK), Shenzhen.

Men have been dominating venture capital firms, including the firms’ decision-making group. Professor Jiang argues that the rise of women may be perceived as a threat to such privilege, leading men to favour individuals of the same gender and offer less support to women-led businesses. The increasing number of women in the decision-making group doesn’t seem to be able to change this.

The study titled Breaking barriers or maintaining status quo? Female representation in decision-making group of venture capital firms and the funding of women-led businesses was conducted by Professor Jiang, in collaboration with Professor Xu Lei of the University of Missouri-St Louis, Professor Amy Ou of Hong Kong Polytechnic University and Professor Park Haemin of the University of Texas at Dallas.

Negative link persists

To better understand the impact of female representation in decision-making groups on funding for women-led businesses, the researchers collected data from 151 US-based venture capital companies. They also conducted 20 semi-structured interviews using a qualitative approach to complement and enrich their quantitative findings.

After the analyses, surprisingly, researchers found that female representation is negatively associated with the funding of women-led businesses. More specifically, adding one additional female senior venture capitalist leads to an approximately 0.46 per cent decrease in the proportion of women-led businesses.

This negative relationship persists regardless of whether women constitute the majority within the decision-making group or not. When women are in the minority, men may leverage their dominance to assert their preferences during decision-making processes, while women defer to their male counterparts by adopting men’s preferences during investment decision-making.

“Such a tendency is driven by their desire to be perceived as valued and accepted group members,” Professor Jiang explains.

While some may argue that the increasing number of female members in the decision-making group could solve the problem, the findings paint a rather bleak picture. Professor Jiang attributes this to female senior members’ attempts to establish “external legitimacy”.

The gender composition of a predominantly women-led decision-making group becomes a notable characteristic that could capture attention. Consequently, when women constitute the majority in such groups, they may develop heightened concerns about their organisations’ legitimacy within the male-dominated investor community.

“To establish external legitimacy, female senior venture capitalists in these groups may opt to conform to, or even internalise, the prevailing norms and practices that favour men,” says Professor Jiang.

Neutrality and shared values work best

While the larger presence of female investors in venture capital firms’ decision-making groups may not yield optimal outcomes, the study proposed two solutions. Firstly, the increasing number of politically neutral senior venture capitalists—those who adopt unbiased or inactive political stances or identities—can weaken the negative effects.

Political ideology, regarded as a manifestation of beliefs and values, is recognised as a distinct form of identity. Politically neutral group members are often regarded as “thorough, rigorous, fair, and frank” because they avoid favouring a single viewpoint and embrace diverse perspectives. They play a crucial role in building connections among group members, fostering mutual appreciation, reducing prejudice and perceived threats between subgroups, and facilitating team unity.

“When a greater number of group members share a neutral identity, they are better equipped to facilitate meaningful conversations within the group and forge connections among diverse group members, resulting in a denser network structure,” Professor Jiang says.

Secondly, prior affiliation also plays a role in this competitive field. Professor Jiang notes that when decision-making groups include more members sharing more prior employment affiliations, the adverse impact of female representation in a decision-making group can be mitigated.

“Individuals, both men and women, who have worked for the same employer have typically undergone similar socialisation or training programmes, utilised the same professional jargons, shared employer-specific anecdotes, and, as a result, developed similar professional values and perspectives,” he says, adding that such shared experience can foster smooth and effective communications.

Fostering inclusive ecosystems

The increasing presence of female venture capitalists nowadays is expected to foster a more gender-equal ecosystem for entrepreneurship. This perspective may require further refinement as enhancing women’s involvement in a singular domain may inadvertently trigger undesirable consequences of less funding to women-led businesses.

However, Professor Jiang emphasises that the study should not be interpreted as a call to halt efforts to add more female investors in male-dominated industries. “We recommend that the drive to increase female representation in venture capital firms should persist until women attain equal status with men at the broader entrepreneurial ecosystem level,” he says.

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Furthermore, the study offers insights for policymakers aiming to foster an inclusive entrepreneurial culture. This can be done through promoting specialised academic programmes and seminars geared towards encouraging and educating women aspiring to be venture capitalists, to name a few.

“By offering greater recognition and resources to support women in these roles, policymakers can foster the development of a gender-inclusive culture within the entrepreneurial ecosystems, empowering women to bring more communal values and stakeholder orientation to their investment decisions,” Professor Jiang adds.

Finally, as the study was conducted in the US companies setting, he notes that the findings may not apply to other industries or contexts where women dominate, but offer a nuanced perspective on how to address gender-based funding disparities. “Policymakers should embrace a holistic approach, duly considering the wider implications of their policies.”

The post More female investors don’t always spell allyship first appeared on China Business Knowledge.

By Putro Harnowo, Senior Content Manager, China Business Knowledge @ CUHK

Along with the increase in awareness of sustainable and responsible practices, the world has experienced a significant surge in environmental, social, and governance (ESG) investments. PwC’s Asset and Wealth Management Revolution 2022 report estimated that ESG-related assets under management globally will reach US$34 trillion by 2026, up from US$18.4 trillion in 2021.

One noteworthy aspect of the ESG landscape is the rapid growth of social enterprises in recent years. Driven by a mission to address social challenges, the impact of these purposeful companies is not limited to economic growth, as they are actively addressing pressing societal issues such as poverty alleviation, healthcare and education access, and ecological conservation, among others.

Not to be confused with non-profits, social enterprises generate revenue through the sale of products or services by integrating sustainable business models and optimising market-based strategies. It is the dual emphasis on social value creation and economic benefit that sets social enterprises apart and significantly influences their establishment.

“Due to this unique nature, social entrepreneurs often face conflicting pressures that originate from the business and social worlds,” says Kevin Au, Associate Professor of the Department of Management at The Chinese University of Hong Kong (CUHK) Business School.

“There are inherent tensions between the demands of market competition and the expectation of making an impact, and it is believed that the founder’s knowledge and experience have a bearing on the organisation’s performance.”

In a new study titled Founder commercial imprint interacts with strategic orientations in affecting social enterprise performance, Professor Au, along with Professor Xiao Yingzhao and Professor Tang Jiansheng at Tianjin University, Professor Liu Zhen at Shandong University, and Professor Zhang Yuli at Nankai University, looked into these matters.

The researchers specifically explored how the founder’s prior experience influences the performance of social enterprises. They found that founders with a strong commercial imprint are most likely to have a better understanding of business practices and are more focused on revenue, but may be less committed to the social mission. However, the study also found how to moderate this relationship.

Synchronising commercial imprints

Social entrepreneurs have different approaches to embracing business-first principles or staying committed to a social mission mindset. The research focuses on the founder’s commercial imprint, as it is believed that the founder’s previous work experience can influence their perceptions of the enterprise’s performance. Commercial imprint refers to prior experience in the commercial sector, including education, work experience, and entrepreneurial background.

Having conducted a comprehensive survey of 230 social enterprises in China, the researchers collected data on the founding conditions of the social enterprises, including the founder’s prior work experience and education, as well as the strategic orientation of the organisation. The survey also collected data on the organisational actions and performance of the social enterprises.

“There are inherent tensions between the demands of market competition and the expectation of making an impact, and it is believed that the founder’s knowledge and experience have a bearing on the organisation’s performance.”

Professor Kevin Au

The empirical findings of the study indicated that the commercial imprint has a significant impact on how the founder perceives the performance of the organisation. The influence of this commercial imprint on commercial and social performance is more pronounced for social enterprises that prioritise competition but less noticeable for those with a focus on social impact.

The study suggests that the relevance of a founder’s previous work experience depends on the specific environment in which a social entrepreneur operates. The alignment between the founder’s recent work experience and the external environment plays a crucial role in the performance of the social enterprise, especially when the founder can effectively utilise and apply their prior work experience in the new environment.

“If the founder’s most recent work experience before starting a social enterprise is not a good match with the focal enterprise’s current strategic orientation, the start-up’s commercial and social performance would suffer,” Professor Au adds.

Two sides of a coin

The research also suggests that social enterprises can adopt different strategic orientations to enhance their performance, such as competitor orientation and social orientation.

Competitor orientation refers to closely monitoring and analysing the strengths, weaknesses, capabilities, and strategies of current and potential competitors. This approach directs a company’s focus towards the actions and behaviours of its rivals in the market to enable quick responses that will give the company a competitive edge.

Social entrepreneurs who have previous experience in the business world were found to be more likely to utilise this strategic orientation effectively. Since entrepreneurs with a business background may be less familiar with the social aspects of their ventures, a competitor orientation helps them gain the necessary industry and market knowledge.

On the other hand, social orientation focuses on impact creation and meeting the needs of beneficiaries. In social enterprises that strongly prioritise this value, founders will actively pursue social impacts rather than focusing on competitive issues such as market dominance. In this case, the knowledge and skills acquired by social entrepreneurs during their for-profit employment may be undervalued. Consequently, social enterprises that prioritise a social orientation may fail to recognise the significance of the beliefs and values derived from the founders’ commercial experience.

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“When a social enterprise prioritises a social orientation and its founders’ most recent work experience was in the for-profit sector, the positive relationship between the founders’ commercial background and the venture’s subjective commercial performance will likely be weakened,” says Professor Au. “This is because the organisation will have limited awareness of industry and market-specific knowledge that are essential for success.”

Previous experiences are seen as entrepreneurial incubators, shaping individuals’ skillsets and mindsets. When individuals transition to new roles, such as social entrepreneurship, they bring along not only their skills and knowledge but also a cultural imprint from their previous experience. This imprint can have far-reaching effects, crossing organisational boundaries, and founders often draw from their past knowledge to navigate the uncertainties of their new venture.

“Social entrepreneurs need to take into account the potential compatibility between the founding imprint and strategic orientations and then decide whether and how to undertake actions that can leverage the best of both,” says Professor Au.

The post Leveraging personal past to shape social enterprise first appeared on China Business Knowledge.

By Putro Harnowo, Senior Content Manager, China Business Knowledge @ CUHK

Competitive workplaces and demanding tasks can stir up pesky emotions. Meanwhile, the rollercoaster of family issues can leave individuals trapped in a whirlwind of feelings. Many adults feel anxious about balancing a multitude of these responsibilities or everything in between. In fact, according to recruitment agency Randstad’s Reimagine Work White Paper 2022, two-thirds of Hong Kong employees experienced excessive overtime that has resulted in a work-life conflict.

Any adult can relate to this issue. However, not so many are aware that work and family experiences can affect each other and as time goes by, change someone’s personality. A new study titled Getting Under the Skin? Influences of Work–Family Experiences on Personality Trait Adaptation and Reciprocal Relationships found that positive work-family experiences were associated with positive personality development among adults, and vice versa.

“Work-family conflicts are important for employee performance and well-being, and they reflect the work-family interface that may affect our behaviours, thoughts, and feelings, and then personality development.”

Prof. Li Wendong

“Work-family conflicts are important for employee performance and well-being, and they reflect the work-family interface that may affect our behaviours, thoughts, and feelings, and then personality development,” says Li Wendong, Associate Professor in the Department of Management at The Chinese University of Hong Kong (CUHK) Business School, who led the study.

Personality traits can evolve throughout the lifespan, but it is widely believed that they are more likely to develop during adolescence to young adulthood. Research on personality development in middle-aged and older adults is quite limited, and this knowledge gap is significant because experiences that impact work and family can lead to changes in behaviours, thoughts, and emotions that may have implications for various aspects of individuals’ lives.

While previous studies have examined how individual experiences in work, family, and other domains can shape personalities, most of them focused on a single domain and the findings are not always consistent across different studies. Consequently, there is still a lack of understanding about how work and family dynamics interact to influence personality development.

Caught Between Ambition and Affection

Work-family experiences refer to various encounters individuals face when juggling their work and family obligations. These encounters can manifest in different ways, such as work-family conflict, work-family enrichment, and work-family facilitation.

Work-family conflict arises when the demands of work and family clash, leading to stress and strain. Conversely, work-family facilitation, on the other hand, entails experiences in one domain that make it easier to fulfil responsibilities in the other domain.

In the study, Prof. Li and the team looked into the “Big Five” personality traits, which describe five broad categories that can help understand someone’s character. Extraversion refers to a person’s sociability and outgoing nature. Agreeableness indicates friendliness and cooperativeness. Conscientiousness reflects organisational skills and responsibility. Neuroticism is associated with emotional stability or susceptibility to worry. Lastly, openness signifies open-mindedness and creativity.

Prof. Li and the team then conducted two longitudinal studies. The first study utilised three-wave longitudinal data from the Midlife in the United States project, which comprises a sample of more than 7,000 American nationals. The second study utilised data from the Health and Retirement Study, a nationally representative sample of adults aged 50 and older in the U.S. Both studies used latent change score analysis to examine the reciprocal relationships between work-family experiences and personality trait adaptation over time.

The age spans that the research covered were from early 40s to early 60s for the first study and late 50s and middle 60s in the second study. The researchers previously observed that personality trait development generally occurs in earlier stages of life (e.g., before age 30) or after age 70. However, the study still saw evidence of personality trait development in the middle and late life stages.

The team found that work-family experiences had significant impacts on extraversion and neuroticism but had limited influences on conscientiousness and agreeableness. Neuroticism plays a role in precipitating a vicious cycle with work-family experiences, while extraversion can lead to a virtuous cycle.

Negative work-family experiences were associated with increases in neuroticism and decreases in extraversion over time. In contrast, positive work-family experiences were associated with decreases in neuroticism and increases in extraversion over time.

The findings also suggest that extroverts seek and receive greater social support, enabling them to effectively facilitate multiple life roles over time. Meanwhile, Neurotic employees are characterised as being emotionally unstable, which may be associated with more conflict between work and family.

The above dynamics interact over time, regardless of age or gender, and there were no significant differences in education and occupations. However, the researchers warn that these results should be interpreted with caution, as the sample was limited to those who provided information by self-report and did not focus on specific occupations.

“Our study participants were from national representative samples from the U.S. and we did not examine difference among occupations, so we do not know which occupations might be more susceptible,” says Prof. Li. “I would suspect those industries with high levels of work-family conflict may be more impacted by work-family dynamics on personality traits. For example, in Hong Kong, these include finance, banking, and real estate, but the impact may vary across regions.”

Weaving the Threads

The findings suggest that companies and individuals should pay more attention to the potential impact of work-family experiences on personality traits and consider more ways to reduce work-family conflict and increase work-family enrichment. Interventions aimed at reducing work-family conflict and increasing work-family enrichment may have positive effects on employees’ personality traits over time.

For example, companies could provide family-friendly work arrangements, such as telecommuting or flexible schedules, to help employees better manage their work and family responsibilities. Employees could also engage more in activities that promote work-family enrichment, such as spending quality time with family or pursuing hobbies and interests outside of work. By reducing work-family conflict and increasing work-family enrichment, individuals may be better able to adapt to work-family experiences and maintain positive personality traits over time, which may have far-reaching implications for their careers and health.

“Understanding how work-family conflict may change employee personality is important,” says Prof. Li. “Employee personality traits can impact their performance, well-being, health, and overall longevity. Personality traits also have broader implications for society as they can contribute to health costs, considering their influence on physical health and psychological well-being.”

Many previous studies have shown that certain personality traits, such as neuroticism, are associated with increased risk for various health problems, including cardiovascular disease, diabetes, and mental health disorders. These health problems can lead to increased healthcare costs for individuals and society as a whole.

“Therefore, if organisations do not care, then the whole society has to bear the consequences. That is why I believe governments should have more legislation on this issue,” Prof. Li adds.

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Furthermore, companies and society have the power to make a positive impact by implementing family-friendly policies that prioritise work-life balance. These policies, such as flexible work hours and increased support in the workplace, not only benefit employees but also contribute to a more inclusive and supportive environment.

In Hong Kong, for instance, the government has developed a measure called Family-Friendly Employment Policies and Practices that encompass various initiatives, including parental leave, childcare arrangements, and other forms of support. By promoting these policies, the government is creating an enabling environment that supports the well-being and productivity of individuals and families alike.

The post Balancing Work and Family Can Change Your Personality first appeared on China Business Knowledge.

By Lisa Kennedy

When Larry Fink, founder and CEO of BlackRock, the world’s largest asset manager, announced that the company would place environmental sustainability at the centre of its investment strategy, it sent shockwaves through corporate America. Radical measures pledged in his annual letter to CEOs included exiting from investments in coal production and requiring all client companies to publish reports on their environmental sustainability standards by the end of the year.

In a subsequent interview, Fink said: “It is the hardest letter I have ever written. And I do believe I became more emotional as I wrote about what we need to do – and more importantly the reflection on my 40-odd years of being in finance.”

CEOs are key players in the adoption of corporate social responsibility (CSR) measures by companies large and small. The decision-making processes that spur them to launch CSR initiatives have been analysed by business schools for many years.

“When CEOs make decisions for CSR, they need to be aware of the fact that their emotions may play a role in their decisions.”

Prof. Lin Ya

To date, such studies have largely focused on the rational, deliberative aspects of making decisions, but many leading psychologists today favour a dual-process approach to decision-making, which involves both emotional and deliberative mechanisms operating in parallel.

For this reason, a group of researchers at The Chinese University of Hong Kong (CUHK) and partner institutions set out to investigate the impact of CEOs’ emotional characteristics on their companies’ readiness to engage in CSR. Could it be that CEOs who are emotionally engaged in a positive way are more likely to launch CSR initiatives than those with more negative moods and emotions?

The study, Does CEO Emotion Matter? CEO Affectivity And Corporate Social Responsibility, was conducted by Lin Ya, Assistant Professor at CUHK Business School’s Department of Management, and Professor Yang Haibin, of the same department, along with Profs. Zhao Huazhong of City University of Hong Kong, Wang Linlin of Nankai University, and Jiang Wan of Tianjin University.

The researchers defined CEO affectivity as CEOs’ relatively stable and underlying tendency to experience positive and negative emotions, and categorised it into two opposite dimensions: positive affectivity and negative affectivity.

“Our study shows that CEOs with positive affectivity are more likely to engage in CSR, while CEOs with negative affectivity are less likely to do so,” says Prof. Lin.

“When CEOs make decisions for CSR, they need to be aware of the fact that their emotions may play a role in their decisions,” she adds. “In other words, they may minimise the subjective influence of their emotions on their firms’ CSR decisions, and rather take a more objective view towards CSR.”

Transformative Power of Positive Emotions

The study draws on the broaden-and-build theory that was developed in the late 1990s by psychologist Barbara Fredrickson. The theory, which forms part of the positive psychology oeuvre, posits that positive affectivity expands attention to increase receptivity and openness and thereby fuels more flexible problem-solving actions, while negative affectivity narrows and constricts attention.

“Our study is one of the first to unearth the intriguing relationship between CEO affectivity and corporate social responsibility,” says Prof. Lin. “It is also among the first to draw on the ‘broaden-and-build theory’ to examine company performance, thereby contributing to the micro-foundations of CSR research.”

CEOs with high positive affectivity are more interested in observing the behaviour of others. This equips them with a clearer perception of the existence and demands of the multiple stakeholders in their environment and allows them to cater to the needs of such stakeholders.

“They also tend to embrace more inclusive social categories and use a more expansive definition of in-group members, so they are likely to implement more CSR because they include more stakeholders in their social circles,” she adds.

By contrast, the broaden-and-build theory proposes that negative affectivity will narrow people’s thought-action repertoire. The researchers predict that high negative affectivity CEOs are more likely to withdraw into a self-protective stance, care only about the organisation’s private goals, and attend less to the interests of stakeholders. They therefore posit a negative relationship between negative affectivity and the firm’s CSR engagement.

The study examined CSR data from S&P 500 firms from 2001 to 2013 and compared it with indicators of CEO affectivity from a range of executive, corporate and financial databases, including Mergent Online, ExecuComp and BoardEx. The final sample comprised 2,934 CEO-year observations.

CEOs’ positive and negative affectivities were measured through analysis of letters to shareholders, written annually by CEOs and typically included in companies’ annual reports. The letters were analysed using Linguistic Inquiry and Word Count software to determine the percentage of positive and negative words that each one contained.

The researchers also used data from an investment research and management firm Kinder, Lydenberg, Domini & Co, or KLD, on firms’ CSR activities in six dimensions, including community, diversity, employee relations, environment, human rights, and product quality ratings. Each of the dimensions has different categories of CSR strengths and concerns (weaknesses).

“Since we are focusing on firms’ CSR contributions, we created a weighted measure of CSR based on the ‘strengths’ category,” says Prof. Lin. “For each firm-year, we divided the score of strengths across all six CSR dimensions by the sum of the maximum possible strengths score across these six dimensions. We then summed the scaled strengths to obtain CSR engagement.”

The study found that CEO positive affectivity was positively associated with CSR, and CEO negative affectivity was negatively associated with CSR. At a practical level, going from a low level of CEO positive affectivity to a high level would result in a 7.4 percent increase in the amount of CSR taking place. Conversely, going from a low level of CEO negative affectivity to a high level, would reduce CSR activity by 7.8 percent.

Impact of Social Capital

The study also investigated whether the amount of social capital that CEOs possess has an impact on the relationship between their affectivity and the amount of CSR that their companies undertake, either strengthening or weakening it. Social capital was defined as the number of social connections gained in areas such as education, employment, professional associations and social clubs that a CEO has, as obtained through the BoardEx, which holds in-depth profiles of more than one million of the world’s business leaders.

“We propose that CEO social capital can provide critical social resources that sustain an upward spiral of the broadening effect that is elicited by CEO positive affectivity and that they help to direct expansive CEO social capital towards diverse stakeholder needs,” says Prof. Lin. “In a similar vein, we also propose that CEO social capital countervails the narrowed attention arising from CEO negative affectivity towards stakeholder needs.”

CEO social capital was found to moderate the impact of CEO affectivity on CSR. There was a strong positive relationship between CEO positive affectivity and CSR when social capital was high, but a negligible effect when social capital was low. Conversely, the effect of CEO negative affectivity on CSR was negligible when social capital was high, but there was a strong negative relationship between negative affectivity and CSR when social capital was low.

The results were shown to be robust against a battery of experimental control measures.

“In addition, our findings show that CEO social capital can boost the impact of CEO positive affectivity on CSR, as well as weakening the impact of negative affectivity,” she adds. “In this way, it has uncovered important boundary conditions for understanding how broaden-and-build theory operates in relation to CEO affectivity and CSR.”

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Prof. Lin says the study has important practical implications for CEOs. Further, if stakeholders or the board emphasise the importance of CSR, they may look for CEOs with more positive affectivity as these CEOs are more inclined to conduct such activities. Also, CEOs with better social connections are able to reach out to different stakeholders and address the needs of their stakeholders via CSR.

“To summarise, CEOs with positive affectivity, coupled with strong social capital, are better prepared for CSR activities.”

The post How Feeling Good Can Lead to Doing Good first appeared on China Business Knowledge.

By Pan Jingyi, Principal Writer, China Business Knowledge@CUHK

Which would you choose: a bag produced by a firm known for its equal treatment of all staff or a bag produced by a company currently embroiled in a discrimination scandal? Conscious consumers, who prioritise ethical, social, and environmentally friendly products when making purchasing decisions, would likely choose the former.

A report indicates that 79 percent of respondents believe sustainability is either “somewhat important” or “very important” when making purchasing decisions. Additionally, 68 percent express a willingness to pay more for environmentally sustainable and socially responsible products.

“Our research delves deeper than merely looking at diversity and equality at the executive level. It gauges workplace equality practices for the broader workforce.”

Prof. Cen Ling

Given the rise of conscious consumers in recent years, companies should look beyond product quality and consider ESG (Environmental, Social, and Governance) or CSR (Corporate Social Responsibility) factors. While previous research has shown that strong ESG or CSR practices can decrease a firm’s risk exposure, the direct cash flow implications of such practices are still unclear.

Researchers from The Chinese University of Hong Kong (CUHK) recently aimed to understand how the purchasing decisions of conscious consumers who value ESG and CSR can directly impact a company’s cash flow.

The study, The Rise of Conscious Consumers: The Impact of Corporate Workplace Equality on Household Spending, was conducted by Cen Ling, Associate Professor of Finance, and Wu Jing, Associate Professor of Decisions, Operations, and Technology, both at CUHK Business School. They were joined by Prof. Han Yanru from Stevens Institute of Technology, and Liu Chang, a PhD candidate from City University of Hong Kong.

“The market harshly punishes discrepancies between a firm’s declared commitment to and actual practices of workplace equality.”

Prof. Wu Jing

“There’s a significant uptrend in ESG investment. Do investors like firms with good ESG practices purely based on their preferences? Or, a company’s ESG strategy truly benefit investors in generating higher returns? If so, does ESG contribute to higher returns by affecting the risk component or the cash-flow component, or both?” asks Prof. Cen. He expressed interest in exploring potential long-term economic incentives for companies to adopt ESG strategies.

Existing studies offer varied insights on the influence of ESG strategy on corporate operating performance. This research hones in on corporate workplace equality to gauge its effect on consumers’ buying habits. “This approach demystifies how specific ESG strategies can impact a company’s bottom line. Cash flow is a direct barometer of a company’s financial health,” notes Prof. Wu.

Measures to Evaluate Workplace Equality

To address these inquiries, the researchers developed a measure of corporate workplace equality, known as the EEO Score. This metric is based on the textual analysis of Equal Employment Opportunity statements found in millions of U.S. online job listings.

“Our EEO Score delves deeper than merely looking at diversity and equality at the executive level. It gauges workplace equality practices for the broader workforce,” Prof. Cen states, emphasising the public’s greater concern for the rights of everyday employees over board members.

Prof. Wu adds, “Our EEO Score zeroes in on workplace equality for the average worker, filling a gap left by prior studies that centered on upper-tier corporate roles.”

The researchers highlight that their algorithm assigns higher EEO Scores to companies that make detailed, genuine, and enthusiastic EEO pledges in their job listings. While skeptics might dismiss online job listings as mere corporate rhetoric, the researchers have undertaken multiple validation steps to alleviate such concerns.

They underscored the EEO Score’s accuracy by demonstrating its foresight in predicting future discrimination-related litigation and headlines. They also pointed out the inherent costs that discourage companies with low equality standings from merely parroting those with higher commitments.

“The market harshly punishes discrepancies between a firm’s declared commitment to and actual practices of workplace equality,” Prof. Wu observes, emphasising the gravity of making an EEO commitment.

Consumers Favour Companies that Champion Equality

The next phase involved correlating household buying decisions with the EEO Scores of product manufacturers. They tapped into Nielsen Consumer Panel data that capture consumer behaviour of individual household.

“Instead of crafting a simulated consumer behaviour test in laboratories, we turned to genuine data, revealing the authentic spending habits of Americans,” Prof. Cen explains.

Findings were consistent with their hypothesis: U.S. households tend to spend more on products from companies that score high on workplace equality. However, Professor Cen highlights the presence of potential confounding factors in the positive correlation between household purchase decisions and EEO Scores, such as product quality. In other words, consumers might choose products from companies with high EEO scores solely because firms with better workplace equality practices also offer better product quality.

He adds, “To mitigate the endogeneity in this positive correlation between corporate workplace equality and household consumption, we looked at whether minority consumers displayed a heightened sensitivity in their spending patterns toward producers that championed workplace equality.”

As hypothesised, the pro-equality spending trend was more pronounced among racial or gender minority consumers.

Prof. Wu posits, “If product attributes unrelated to workplace equality were driving the correlation between spending and EEO Scores, it’d be challenging to explain the heightened sensitivity exhibited by minority consumers.”

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To further solidify their findings, the researchers employed two methods based on exogenous social events. First, they observed a spending boost on products from California-based firms post the 2018 enactment of the California Gender Board Diversity Law. Next, they noticed that the linkage between household expenditure and a producer’s EEO Score generally strengthened post-societal events that heightened equality awareness, like the #MeToo movement in 2017 and the Black Lives Matter movement in 2020.

In summary, the research underscores the tangible cash flow benefits of corporate workplace equality. Prof. Cen admits that the current buying surge, led by racial and gender minority consumers, doesn’t ensure a direct short-term boost in spending as a result of improved workplace equality. However, he believes that as consumer consciousness around equality becomes more widespread, firms will invariably see the financial advantages of ESG strategy adoption.

The post Why Is Workplace Equality Good for Business? first appeared on China Business Knowledge.

By Guy Haydon

The devastating health, economic and social impacts of the deadly COVID-19 pandemic, which has led to more than 6.5 million fatalities around the world, has created a “new normal” and inspired many people to re-evaluate their lives. Widespread selfless acts of kindness and philanthropic donations have struck a chord with millions of people, who want to embrace a kinder, more altruistic work-life balance. A study found that corporate donations in 2020 accounted for 44 per cent – or US$9.4 billion – of the total US$20.2 billion global philanthropic response to the coronavirus disease from businesses, charities, foundations and wealthy individuals.

“We found robust evidence showing that changes in philanthropic giving can make an economically sizable difference to employee turnover.”

Prof. Anthony Rice

In September 2022, Yvon Chouinard, the American billionaire founder of the high-end outdoor fashion brand Patagonia, gave away his company to a charitable trust. “Earth is now our only shareholder,” said the rock climbing fanatic Chouinard, 83, who is worth an estimated US$1.2 billion, at the time. Any profits not reinvested in running his business, known for its sustainable practices, will go to fighting climate change.

So it’s appropriate that timely new research by academics, including Anthony Rice, Assistant Professor at The Chinese University of Hong Kong (CUHK) Business School’s Department of Finance, has revealed that companies which increase corporate philanthropy commitments are more likely to retain their highly-skilled staff.

Competitiveness Crucial In ‘War For Talent’

“It is crucial that businesses stay competitive in the ‘war for talent’ by being able to attract, motivate and retain outstanding staff,” says Prof. Rice, who carried out the research with Prof. Christoph Schiller, at Arizona State University. “They increasingly recognise the importance of social values – the positive benefits that businesses create for the economy, communities and society – for attracting and managing talent.”

He says human capital – the economic value of a person’s skills and experience – has become an increasingly important driver of business performance. The direct costs of replacing an employee are substantial – some estimates suggest up to 175 per cent of a worker’s annual pay – but the indirect costs can be many times higher, particularly for staff such as inventors with critical human capital and organisational abilities, he says.

“Our research is important because it highlights the need for businesses to ensure that there is overlap of social values with their employees – something known as value congruence – to help them boost the commitment of their expert staff,” he says.

Shared Social Values Can Motivate Staff

Despite growing interest in this field among companies and managers, previous studies have been focused only on the broad definitions and staff benefits of corporate social responsibility (CSR) – the concept that corporate activities should, at the very least, avoid disruption to the wider society and preferably generate positive effects. There has been little research done to find how social values can help to motivate and retain highly-skilled staff, he says.

However, the new research – carried out in two studies and published in a paper titled When Values Align: Corporate Philanthropy and Employee Turnover – has addressed this by examining the role of value congruence on highly-skilled staff – in particular inventors, Prof. Rice says. They chose to focus on corporate philanthropy, which provides no direct benefits to a company’s employees. “In both studies, we found robust evidence showing that changes in philanthropic giving can make an economically sizable difference to employee turnover,” Prof. Rice says.

The first study saw them analyse data from different U.S. corporate, charitable and business databases which highlighted the career paths of over half a million highly innovative inventors – including their patents – working at 2,200 companies with average assets of US$17 billion from 1992 to 2015.

Prof. Rice says they chose to focus on inventors because these employees are important drivers of company performance, economic growth and productivity, and all have critical human capital, making them highly coveted and costly to hire and replace.

Only about a quarter of the companies included in the research were found to have made philanthropic contributions, but a number of these donated between US$50 million and US$150 million during some years. Most of the philanthropic companies worked in industries such as car manufacturing, utilities and food retail.

The post When Corporate Philanthropy Keeps Staff Happy first appeared on China Business Knowledge.