Read the working paper
INSEAD Working Paper 2014/67/STR/EFE revised version of 2014/40/STR/EFE
Firms are increasingly launching initiatives with explicit societal mandates. Often the business case for these initiatives is justified through one critical aspect of talent management: employee retention. Although prior empirical studies have demonstrated a link between corporate social initiatives and intermediate employee-related outcomes like motivation and identification with the firm, the ultimate relationship between employee participation in these initiatives and actual retention outcomes has not been empirically investigated. Our study fills this gap. While the related theoretical literature has focused on potential treatment effects from employee participation in corporate social initiatives, we also take into account the possibility of sorting effects based on heterogeneity in employee preferences for making a positive social impact. Using individual-level project participation and employee retention data for about 10,000 employees from a global management consulting firm, we present empirical evidence in support of a retention effect associated with participation in an initiative involving projects with an explicit social impact goal. In addition, we offer arguments for moderating conditions that might weaken this relationship, and present evidence consistent with these suggestions. Although we cannot conclusively establish causality, our choice of research context, stringent matching criteria and additional analysis of survey and interview data are most consistent with the finding being driven by a combination of employee sorting and actual treatment effects from participation.