Are ‘strong’ corporate cultures a blessing or curse for workplace safety? This study explored the question.
Interestingly, they used machine learning to extract ‘cultural’ cues from CEO earnings calls.
Cultural cues were scored based on the frequency of words relating to innovation, integrity, quality, respect and teamwork.
They then compare company performance to the number of safety violations/fines etc.
Background:
· “The recent survey .. highlights that CEOs view corporate culture as a key component of financial performance”
· “firms with stronger corporate culture have greater operational efficiency and higher firm value, in both normal and exceptional circumstances”
· Stronger corporate cultures could be a mixed blessing – better economic performance at the cost of safety or worker wellbeing
· While strong corporate cultures have been associated with activities conducive to safer working environments, a “strong corporate culture is not necessarily a panacea for workplace safety”
· “Willmott (1993) highlights the dark side of a strong corporate culture and argues that blind adherence to a monolithic set of values and norms might rob employees of their personal autonomy and good judgement. The Deepwater Horizon disaster is a prominent example, where the profit-oriented culture disregarded both employee and environmental safety”
Results:
· “firms with stronger corporate culture allocate more resources to workplace safety”
· “stronger collaborative and creative cultures are associated with better workplace safety”
· “firms with stronger corporate culture have lower injury and illness rates, as well as fewer days away, restricted, or transferred due to illnesses and injuries”
· “firms with higher numerical values of Culture are associated with fewer employee-related fines”
· “In economic magnitude, the coefficient on Culture in Column (3) implies that a one standard deviation increase is associated with a 12.6 percentage point decrease in number of fines”
· “firms with stronger corporate culture are less likely to be penalized, incur lower regulatory fines, and have a reduced number of violations”
· “Besides employees and shareholders benefiting from safer workplaces, we also stress that there is a positive effect of stronger corporate culture for the families involved as well as the local community and society at large”
· They also divided the data into ‘People Culture’ (integrity, respect, teamwork) and ‘Technology Culture’ (innovation, quality), finding “the likelihood of getting fined is lower for firms with a strong cultural emphasis on technology adoption”
· “strong technology-oriented culture is associated with better workplace safety”
Ref: Haga, J., Huhtamäki, F., Sundvik, D., & Thor, T. (2024). Nothing to fear: strong corporate culture and workplace safety. Review of Quantitative Finance and Accounting, 63(2), 519-550.
Study link: https://link.springer.com/article/10.1007/s11156-024-01264-6
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