Read the working paper
INSEAD Working Paper 2015/34/STR/EFE
revised version of 2014/67/STR/EFE
Firms are increasingly launching initiatives with explicit social mandates. Often the business case for these initiatives is justified through one critical aspect of human capital management: employee retention. Although prior empirical studies have demonstrated a link between such corporate social initiatives and intermediate employee-related outcomes like motivation and identification with the firm, the relationship between employee participation in these initiatives and retention outcomes has not been investigated. Our study fills this gap. Using individual-level project participation and retention data for approximately 10,000 employees in a global management consulting firm, we present empirical evidence in support of a positive retention effect associated with participation in an initiative with social impact goals. In addition, we offer arguments for moderating conditions that might weaken this relationship, and present evidence consistent with these arguments. Further econometric analysis based on a stringent matching approach as well as additional analyses based on survey and interview data also point towards there being a retention effect. Overall, by demonstrating a positive association between corporate social engagement and employee retention, this study calls attention to the need for further research into the mechanisms through which social engagement can serve as a tool for strategic human capital management.