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Corporate social responsibility and organizational attractiveness: implications for talent management

August 2016
Social Responsibility Journal 12(3):484-505

DOI:10.1108/SRJ-07-2015-0095

Authors:

Joana Story

Getúlio Vargas Foundation

Filipa Castanheira

Nova School of Business and Economics

Purpose Talent management is a twenty-first-century concern. Attracting talented individuals to organizations is an important source for firm competitive advantage. Building on signaling theory, this paper proposes that corporate social responsibility (CSR) can be an important tool for talent recruitment. Design/methodology/approach Across two studies, this paper found support for this hypothesized relationship. In Study 1, a job advertisement was manipulated to include information about CSR and tested it in two groups of 120 master’s degree students who would be in the job market within the year. It was found that CSR was an important factor that increased organizational attractiveness. In Study 2, with 532 external talented stakeholders of 16 organizations, our findings were replicated and advanced by testing whether perceptions of CSR practices (internal and external) influenced perceptions of organizational attractiveness and if this relationship was mediated by organizational reputation. Findings This study found that perceptions of internal CSR practices were directly related to both organizational attractiveness and firm reputation. However, perceptions of external CSR practices were related only to organizational attractiveness through organizational reputation. Research limitations/implications The article’s one of the main limitations has to do with generalizability of the results and the potential common method variance bias. Practical implications The findings demonstrate that CSR can play an effective role in attracting potential employees, through enhancement of organizational reputation and organizational attractiveness. If organizations are willing to implement practices that protect and develop their employees, along with practices that improve the quality of the natural environment and the well-being of the society, they can become an employer-of-choice. Originality/value This study expands on previous studies by including an experimental design, including two types of CSR practices and a mediating variable in this field study.

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Corporate social responsibility and

organizational attractiveness: implications

for talent management

Joana Story, Filipa Castanheira and Silvia Hartig

Joana Story is Assistant

Professor at the Nova

School of Business and

Economics, Lisbon,

Portugal.

Filipa Castanheira is

Assistant Professor at the

Faculty of Economics,

Nova School of Business

and Economics, Lisbon,

Portugal. Silvia Hartig is

based at the Faculty of

Economics, Nova School

of Business and

Economics, Lisbon,

Portugal.

Abstract

Purpose –Talent management is a twenty-ﬁrst-century concern. Attracting talented individuals to

organizations is an important source for ﬁrm competitive advantage. Building on signaling theory, this

paper proposes that corporate social responsibility (CSR) can be an important tool for talent

recruitment.

Design/methodology/approach –Across two studies, this paper found support for this hypothesized

relationship. In Study 1, a job advertisement was manipulated to include information about CSR and

tested it in two groups of 120 master’s degree students who would be in the job market within the year.

It was found that CSR was an important factor that increased organizational attractiveness. In Study 2,

with 532 external talented stakeholders of 16 organizations, our ﬁndings were replicated and advanced

by testing whether perceptions of CSR practices (internal and external) inﬂuenced perceptions of

organizational attractiveness and if this relationship was mediated by organizational reputation.

Findings –This study found that perceptions of internal CSR practices were directly related to both

organizational attractiveness and ﬁrm reputation. However, perceptions of external CSR practices were

related only to organizational attractiveness through organizational reputation.

Research limitations/implications –The article’s one of the main limitations has to do with

generalizability of the results and the potential common method variance bias.

Practical implications –The ﬁndings demonstrate that CSR can play an effective role in attracting

potential employees, through enhancement of organizational reputation and organizational

attractiveness. If organizations are willing to implement practices that protect and develop their

employees, along with practices that improve the quality of the natural environment and the well-being

of the society, they can become an employer-of-choice.

Originality/value –This study expands on previous studies by including an experimental design,

including two types of CSR practices and a mediating variable in this ﬁeld study.

Keywords Human resource management, Organizational reputation, Corporate social responsibility,

Organizational attractiveness

Paper type Research paper

Introduction

A recent report by McKinsey has once again brought to light one of the key challenges

of human resource managers and business executives of the twenty-ﬁrst century: talent

management. According to McKinsey Global Institute (2012), there will be a shortage

of highly skilled workers and an increase in demand for these workers and that will even

be more crucial in the next couple of years (KPMG, 2014); in 2020, these shortages are

expected to continue. This talent management challenge is so important that the

competitive advantage of organizations depends on their capacity to recruit and

motivate highly skilled people, who are able to respond to and shape the challenges of

the future (Greening and Turban, 2000). However, many organizations are not adept at

dealing with this new paradigm. Indeed, many business leaders are just starting to

recognize that today individuals take a more active role in choosing their future

employers. Skilled individuals tend to choose jobs on the basis of how well their values

Received 15 July 2015

Revised 18 November 2015

Accepted 20 November 2015

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and aspirations mesh with those of their organization. In fact, job seekers appear to

prefer organizations with socially valued characteristics (Albinger and Freeman, 2000;

Backhaus et al., 2002;Greening and Turban, 2000;Dawkins et al., 2014). As argued by

Rousseau et al. (2006), people are increasingly expecting more from their work than

ﬁnancial rewards and promotions. More than ever before, organizations have to make

clear what their function in society is and what societal issues and problems mean to

them to attract the right type of talent.

Over the past decade, corporate social responsibility (CSR) has been at the center of many

studies in management (Mason and Simmons, 2011). So much so that CSR is no longer

seen as a strategic advantage but as a real strategic necessity (Falkenberg and Brunsael,

2011). Studies have consistently associated CSR with valuable ﬁrm-level outcomes such as

ﬁrm performance (Cochran and Wood, 1984), ﬁrm reputation (Brammer and Pavelin, 2006)

and corporate image (Arendt and Brettel, 2010). Other studies have looked into CSR

practices of organizations and their impact on various stakeholders: most commonly,

consumers (Groza et al., 2011), employees (Kim et al., 2010;Wang et al., 2013), managers

(Du et al., 2012) and investors (Petersen and Vredenburg, 2009). Findings generally

indicate that CSR pays off for organizations.

CSR can also be used as an effective strategy to attract talented individuals to their

organizations. Jamali et al. (2014) stated that human resource management (HRM) can

support CSR implementation, and we argue in favor of their CSR–HRM co-created model,

in which CSR can also aid their HRM, speciﬁcally when it comes to recruiting. In fact, this

link has already been made in the literature (Turban and Greening, 1997;Albinger and

Freeman, 2000;Greening and Turban, 2000;Backhaus et al., 2002;Luce et al., 2001;Lis,

2012;Jones et al. 2014). Thus, to further explain these ﬁndings in the literature, we test the

link between CSR and organizational attractiveness by using two different methodologies:

an experimental study and a ﬁeld study. The experimental study takes away biases

regarding organizational image. For example, Luce et al. (2001) included ﬁrm familiarity as

a mediating mechanism that explains how CSR in ﬁrms leads to organizational

attractiveness. By manipulating a study, we can see that CSR matters, and not other

organizational image criteria. In our ﬁeld study (Figure 1), we address concerns regarding

perceptions of CSR practices by the individuals versus a corporate social performance

(CSP) ranking. We believe this to be an important research strategy, as Gilbert and Malone

(1995) argued, stakeholders might care less about what the ﬁrms are actually doing than

about why they are doing it. Also, Glavas and Godwin (2013) agreed that the perception of

a company’s socially responsible behavior might be more important than the actual

behavior itself. Thus, having participants rate their perceptions may be a valuable way to

measure CSR.

In addition, in our ﬁeld study, we also looked into two different CSR practices – internal CSR

and external CSR – to better understand which CSR characteristics are more important to

Figure 1 The hypothesized model

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individuals when rating organization attractiveness. Finally, we also empirically examined a

mechanism in which CSR can be linked to organizational attractiveness. Speciﬁcally, we

tested whether stakeholders’ rankings of ﬁrm reputation mediated the relationship between

internal CSR and external CSR with organizational attractiveness. Furthermore, following

Lis’s (2012) recommendations, this study investigated if the perception of the CSR

dimensions varied through individual personal characteristics, namely, gender and age.

Thus, our studies expand on the previous studies by including:

!an experimental design which takes away biases regarding organizational image and

allows us to imply causality;

!with our ﬁeld study, we can generalize our ﬁndings to the working population;

!with the two types of CSR practices tested, it allows for more meaningful interpretation

and practical recommendations; and

!with our mediating variable, we add to ﬁndings reported by Jones et al. (2014) that calls

for more research on the mechanisms that explain how CSR practices affect individual

perceptions and attitudes.

Corporate social responsibility

The discussion about the responsibility of business is not a recent one. However, over the

past 20 years, the importance of CSR has been illustrated not only in the mainstream media

but also in academia. Carroll (1999) states that the ﬁrst deﬁnition of CSR as we know it was

advanced by Bowen in 1953, and refers to CSR as an obligation of executives to make

decisions that are desired by the society. Although the general idea maintains, scholars

and practitioners alike agree that CSR involves business practices that support economic,

ethical and legal behavior of a ﬁrm while respecting or paying attention to stakeholders’

concerns (Jha, 2010;Carroll, 1991). CSR can then be described as a variety of corporate

behaviors that go beyond economic interests of the ﬁrm that affect positively organizational

stakeholders (Turker, 2009).

These CSR practices are aimed at different stakeholders. According to Freeman (1984),

stakeholders are those individuals who can affect or are affected by the organization’s

objectives. Verdeyen et al. (2004) classiﬁed these stakeholders as internal and external.

Examples of internal ﬁrm stakeholders are the employees, managers and shareholders.

Examples of external stakeholders are the environment, consumers, community and

suppliers.

Internal CSR represents those activities related to the betterment of working conditions of

the internal stakeholders of a ﬁrm. Speciﬁcally, career opportunities, family-friendly

policies, training and development and diversity management can be forms of internal CSR

practices (Turker, 2009). However, this is not limited to only the psychological working

environment but also to the betterment of the physical work environment (for example,

eco-friendlier buildings). External CSR, on the other hand, refers to those activities aimed

at the protection of the environment, community development, sustainability and

philanthropic activities (Turker, 2009). These practices primarily target at the external

environment of the ﬁrm; however, they may also, in turn, positively inﬂuence the internal

environment (e.g. sustainable practices).

CSR practices have proven to be a worthwhile effort to executives. Studies have long found

that CSR has a positive impact on company reputation, corporate image and even

performance (Burke and Logsdon, 1996;Hur et al. 2014;Johnson, 2003;Porter and

Kramer, 2002;Stanwick and Stanwick, 1998). In fact, CSR has been positively associated

with various desirable ﬁrm outcomes (Bruch and Walter, 2005), and have also yielded

positive internal ﬁrm outcomes. For example, employee– company identiﬁcation (Kim et al.,

2010;McShane and Cunningham, 2012), organizational commitment (Brammer et al.,

2007;Turker, 2009;Wang et al., 2013), organizational citizenship behaviors (Hansen et al.,

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2011;Lin et al., 2010), general satisfaction (Valentine and Fleischman, 2008), job applicant

perceptions of companies (Turban and Greening, 1997), turnover intention (Hansen et al.,

2011), team performance (Lin et al. 2012), job satisfaction (Brammer et al., 2007),

employee connections (McShane and Cunningham, 2012), organization identiﬁcation (De

Roeck and Delobbe, 2012) and individual performance (Story and Neves, 2015) have also

been related to CSR. Thus, CSR can be a positive source of competitive advantage for

ﬁrms, as it can be a way to create a win–win situation (Carroll, 1999;O’Brien, 2001). While

creating signiﬁcant beneﬁts for society, companies may also gain new markets, motivate

their employees and attract new talent.

Organizational attractiveness

Creating organization attractiveness is considered crucial to successfully attract and retain

highly qualiﬁed employees. We deﬁne organizational attractiveness as applicants’

willingness to pursue jobs and to accept job offers in an organization. The issue of

attracting and retaining talent has received considerable attention in both practitioner and

academic settings since a group of McKinsey consultants coined the phrase the “War for

Talent” in 1997 (Axelrod et al., 2002;Michaels et al., 2001). Indeed, the scarcity of highly

skilled and motivated employees is one of the main current HRM issues.

Given the discussion above, it is clear that attracting talent today is an important source of

ﬁrm competitiveness, and CSR strategies may be an effective way to achieve that. Indeed,

in a seminal work Turban and Greening (1997) looked into the impact that CSP may have

on organizational attractiveness to prospective student employees. They found that CSP

was positively related to organizational attractiveness. More recently and replicating the

studies of Turban and Greening (1997),Albinger and Freeman (2000) looked into

organizations’ CSP and its relationship with employer attractiveness. Their ﬁndings indicate

that when individuals had a high chance of getting a job, CSP mattered. But, when they had

fewer options, CSP had no impact on organizational attractiveness. The research

population was a job-seeking population and not a student sample, which contributed

further to the literature.

Using an experiment design manipulating CSP, Greening and Turban (2000) found that

prospective job applicants (students) were more likely to pursue jobs in socially

responsible ﬁrms. Backhaus et al. (2002) investigated student’s perceptions of the

importance of different dimensions of CSP and found that environment, community

relations and diversity have a large effect on employers’ attractiveness ratings. Luce et al.

(2001) tested whether ﬁrm familiarity mediated the relationship between CSP and

organizational attractiveness as rated by students. Results supported their hypotheses.

More recently, Lis (2012) looked into four CSR dimensions: product, diversity, environment

and employee relations and their impact on perceived organizational attractiveness of a

student population. Findings indicated that diversity and employee perceptions’ of CSR

had a positive impact on perceived organizational attractiveness, but product and

environmental perceptions of CSR had little impact on ratings of employer attractiveness.

Finally, Jones et al. (2014) tested and found in both experimental studies and ﬁeld study

that CSP connected to both the community and the pro-environmental practices predicted

job attractiveness as mediated by the anticipated pride of belonging to an organization, the

perceived value ﬁt with the organization and the expectations of how the organization treats

its employees.

All of the above studies report a positive link between CSR and employer attractiveness.

Theoretically, this link can be explained by signaling theory (Spence, 1973,1974). The

signaling theory argues that people tend to interpret information they receive about

organizations as “signals” about the working conditions, proﬁle of organization and clues to

indicate what it would be like to be a part of that organization. This means that there is

enough information about an organization out there. This information can help people form

their opinions about organizations and the general feelings they may have about them.

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Indeed, the signaling theory focuses on the deliberate communication of positive

information as a way to signal positive organizational attributes such as CSR (Connelly

et al., 2011). According to Kirmani and Rao (2000), high-quality ﬁrms are motivated to

signal. Quality refers to the unobservable ability of the signaler to fulﬁll the demands or the

needs of the outsider observing the signal (Connelly et al., 2011). That is, a ﬁrm may signal

through CSR that they are concerned about employees; thus, prospective applicants may

interpret that signal as if the ﬁrm is a good place to work. Another example is that through

CSR, a ﬁrm signals that it cares about the environment; individuals therefore may interpret

this signal as if the organization has socially valued characteristics such as environmental

concerns.

This is important because, now more than ever before, individuals seek jobs that in addition

to ﬁnancial rewards and promotions (Rousseau et al., 2006) will provide fulﬁllment of core

personal values (Judge and Bretz 1992), meaning and purpose (Wrzesniewski et al., 2003),

self-expression (Kahn, 1990;Shamir, 1991) and opportunities to “do good” (Grant and

Parker, 2009). Societies today encourage individuals to engage in a wide range of activities

and interests. Many members of Generations X and Y were raised to believe that “you can

be anything you want to be” (Twenge, 2006, p. 72), and individuals are not just looking for

a job; they are pursuing a calling (Bellah et al., 1985;Heslin, 2005;Wrzesniewski et al.,

2003). CSR gives information about the social norms and values of the company to

prospective employees, and this can serve as a relevant source of differentiation through

socially valued characteristics (Albinger and Freeman, 2000;Backhaus et al., 2002;

Greening and Turban, 2000). Thus, CSR activities can potentially imbue jobs with personal

and social meaning. These jobs (and the organizations offering them) are then perceived

as intrinsically enjoyable and as making valuable contributions to society:

H1. CSR positively impact ratings of organizational attractiveness.

Internal CSR practices are those that indicate how organizations potentially treat

employees and what it would be like to be an employee in that organization. External CSR

practices indicate what the organization may value, and consequently, people may be able

to “judge” if the organization’s values are relevant to them. We predict that these CSR

efforts will have an impact on organizational attractiveness:

H1a. Perceptions of internal CSR are positively related to ratings of organizational

attractiveness.

H1b. Perceptions of external CSR are positively related to ratings of organizational

attractiveness.

Organizational reputation

Organizational reputation can be considered as a stakeholder’s perceptions and attitudes

toward a ﬁrm, and these assessments about the ﬁrm are generally made by stakeholders

outside the organization (Highhouse et al., 2009;Schwaiger, 2004;Wartick, 2002).

Reputation is considered an intangible valuable asset of the ﬁrm (Fombrun and Riel, 1997).

When individuals do not have sufﬁcient information about a product or even organizational

initiatives, they rely on a ﬁrm’s reputation to judge its products or intentions (Schnietz and

Epstein, 2005). In other words, they view reputation of a ﬁrm as a signal of quality or

intentions.

This awareness of and people’s associations directed toward corporate activities (in this

case, CSR) have been regarded as critical elements in the development of what people

believe about an organization (Brown et al., 2006). That is why the perception of a

company’s socially responsible behavior may be more important than the actual behavior

itself (Glavas and Godwin, 2013). In fact, CSR has been positively connected to a ﬁrm’s

reputation (Brammer and Pavelin, 2006;Melo and Garrido-Morgado, 2012). Thus, CSR can

be an effective signal of a ﬁrm’s reputation. Indeed, reputation is also related to the notion

of quality from the signaling theory (Kreps and Wilson, 1982). That is, a high-quality ﬁrm

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may also be considered to be a reputable ﬁrm that may signal this quality through their CSR

practices.

This is key because a ﬁrm’s reputation has also been used as a source of competitive

advantage for the ﬁrm, as it can be a magnet to attract and retain talent (Melo and

Garrido-Morgado, 2012). Organizations known to have a good reputation as an employer

can actively improve their ability to recruit (Schnietz and Epstein, 2005). CSR initiatives lead

to the perceptions that the ﬁrm is reliable and honest, thus building on enhancing a ﬁrm’s

reputation. We believe that reputation serves as a mediator for the relationship between

CSR and organizational attractiveness.

Another way to explain this mediating relationship is by social identity theory (Tajfel and

Turner, 1986). In this case, individuals may positively judge a ﬁrm’s reputation and are likely

be attracted to the ﬁrm because it reinforces their value system, or their self-identity as

positive. An employer may be an important source of identity for individuals. So, individuals

may believe an organization identity to be linked to their behaviors. In this case, if a ﬁrm

invests in internal CSR practices, individuals may see it as a signal that this organization

cares deeply for employees. If they perceive that ﬁrms invest in external CSR practices,

they may perceive that this organization has a positive responsible role in society, and

therefore judge this ﬁrm to be reputable. Because individuals wish to reinforce their positive

self-image, they will likely want to work for a ﬁrm with an excellent reputation, thus being

more attracted to this option versus another – a low-quality ﬁrm that does not signal concern

for either employee or society. Earlier studies have relied on this mediation linkage, but it

has never been measured. In this study, we go one step further to inspect the mediating

role of organizational reputation in the relationship between perceived CSR practices and

organizational attractiveness:

H2a. The positive relationship between perceptions of internal CSR and ratings of

organizational attractiveness is mediated by ratings of ﬁrm reputation.

H2b. The positive relationship between perceptions of external CSR and ratings of

organizational attractiveness is mediated by ratings of ﬁrm reputation.

Overview

We conducted two studies to test whether CSR inﬂuences organizational attractiveness. In

Study 1, we manipulated CSR in a job advertisement for an organization and tested whether

it inﬂuenced participants’ perceptions of organizational attractiveness (H1). In Study 2, we

replicated these ﬁndings using ﬁeld data and we also addressed limitations from Study 1

by including the two types of CSR practices (H1a and H1b), while also adding a mediating

mechanism that can explain how CSR inﬂuences organizational attractiveness (H2a and

H2b).

Study 1

Methods

Sample and procedures. We recruited 240 master’s degree students from a top business

school in Portugal who would be in the job market within a year to participate in our study.

A student population sample has been used to analyze job choice intentions (Dawkins

et al., 2014) and perceptions of CSR (Alonso-Almeida et al., 2015) in the past, and it

appears to be an effective strategy for this type of study. Students were asked to answer

the survey either online or in the classroom. Two surveys were created. The control group’s

survey contained a job advertisement for a ﬁctitious company without providing any

information about CSR. The treatment group included the same job advertisement with

additional information about the company’s CSR efforts (both internal and external). The

advertisement was carefully designed to include information about the company,

company’s products and company’s industry. We also included a variety of different

locations and positions that management students would ﬁnd attractive. We also included

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in the job advertisement what the company seeks and what it offers. In the middle of this

advertisement, there was a CSR paragraph. Two experts in the ﬁeld (Professors of

Marketing and CSR courses) analyzed the content of the job advertisement to look for

ambiguity and ensure content validity. The only thing that differentiated one survey from the

other was a short paragraph about the company’s internal and external CSR efforts

(Appendix 1).

In total, 120 students were assigned to the control group and the same to the treatment

group. Of the control group, the mean age was 23 years and 53 per cent were female. Of

the treatment group, the mean age was also 23 years and 49 per cent were female.

Measure

Students from both groups had to rate the extent of the attractiveness (organizational

attractiveness) to the job in ﬁve questions, measured on a ﬁve-point Likert-type scale by

Turban and Keon (1993). Sample question: “I would be interested in applying for a job with

this company”. Reliability analysis for this scale was

!0.87 for the control group and

!0.86 for the treatment group (see Appendix 2 for all measures).

Results and discussion

An independent sample t-test was conducted to compare job attractiveness for the job

advertisement without CSR information and with CSR information conditions. There was

a signiﬁcant difference in the scores of job attractiveness to the job advertisement

without CSR information (M!3.33, SD !0.86) and to the job advertisement with CSR

information (M!3.63, SD !0.76) groups; t(232) !"2.85, p!0.005. The magnitude

of the mean difference was small (eta-squared !0.03). These results suggest that CSR

does have an effect on job attractiveness. Speciﬁcally, our results suggest that having

CSR information in a job advertisement increases the job attractiveness, supporting H1.

This result indicates that CSR appears to have an impact on whether an organization is

more attractive or not. This is an important ﬁnding because it is one of the few studies that

has actually manipulated CSR to avoid organizational bias. Most of the studies that looked

in to the effects of CSR on organizational attractiveness used real organization that may

have signaled many different things to the prospective employee. Based on the signaling

theory, a quality signal from an organization can be demonstrated by a variety of criteria.

For example, one may be interested in applying for a job in an organization because of:

extensive job beneﬁts, compensation packages, perceived job security, lay-off practices,

training, image of the organization and organizational reputation (Gomes and Neves,

2011). However, in our study, because it was done experimentally with an organization that

the only signal they sent was the job advertisement, we could determine that CSR really has

an impact on job attractiveness that goes beyond all other “noise” added by the many

signals organizations send. The only study that has done so experimentally showed that

perceived value ﬁt, employee prestige and expected employee treatment explained why

CSR practices (community and environmental practices) were important for organizational

attractiveness (Jones et al., 2014).

The fact that we used master’s degree students who are about to graduate may call the

generalizability of our results into question. However, we believe that this population was a

good ﬁt for the study as many recruitment activities target young individuals. Furthermore,

the fact that they were business majors may also have inﬂuenced these results as Arlow

(1991) found that non-business students are more cynical about CSR than business

students. Another limitation of this study that needs to be addressed in a future study is that

we combine both internal and external CSR practices in a job advertisement. To

understand what job seekers may value most, we need to differentiate these distinct CSR

practices.

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Study 2

In Study 1, we tested the combined aspects of CSR (internal and external) in a job

advertisement. In Study 2, however, we asked participants with at least an undergraduate

education from various ﬁelds to rate their perceptions of the different CSR practices from

real organizations in which they are stakeholders. This ﬁeld study was designed to address

the limitations of Study 1 by having a broader population and having participants rate both

internal and external CSR practices.

Methods

Sample and procedures. We identiﬁed 16 organizations with a strong commitment toward

CSR that was displayed on their website or was recently communicated by the media.

Researchers sampled participants from their personal network and through snowball

sampling strategy (Kolb, 2008). This strategy allows researchers to reach populations that

match the proﬁle needed for the research: participants were selected if they were external

stakeholders (e.g. customers) of one of our pre-selected organizations and they were

pre-screened by two questions: awareness of CSR and academic degree. Only the

participants who met these criteria were surveyed. We also only surveyed those

participants who had at minimum an undergraduate degree. Furthermore, a snowball

recruiting strategy is used in marketing research when researchers may not have

knowledge of the relevant participants (Kolb, 2008). Thus, 640 participants were identiﬁed

and surveyed about their perceptions of an organization’s CSR, reputation and

attractiveness. We had to exclude 108 participants because they did not complete the

survey. Our ﬁnal sample consisted of 532 individuals, yielding an 83 per cent response

rate. This high response rate was expected as surveys were handed out personally and

participants had agreed to participate.

The 16 sampled organizations were from a variety of industries including: ﬁnance (14 per

cent of participants), energy (13 per cent of participants), retail (35 per cent of

participants), manufacturing (21 per cent of participants) and communication (16 per cent

of participants). Of the participant sample, 46 per cent were male with mean age of 35

years, ranging from 18 to 84 years. About two-thirds of the customer sample had at least

an undergraduate degree with 33 per cent also having a master’s degree.

Measures

External CSR was rated by six questions, ﬁve-point Likert-type scale of Turker’s (2009)

subscale CSR to social and non-social stakeholders. Sample question: “This organization

appears to participate in activities which aim to protect and improve the quality of the

natural environment”. Reliability analysis for this scale was

!0.80.

Internal CSR was rated by six questions, ﬁve-point Likert-type scale of Turker’s (2009)

subscale CSR to employees. Sample question: “This organization appears to encourage

employees to participate in voluntary activities”. Reliability analysis for this scale was

0.73.

Organizational reputation was rated by 12 questions, ﬁve-point Likert-type adapted from

the scale of Hochwarter et al. (2007) that measured organizational reputation (perception).

Sample question: “It appears that this organization has a high performance reputation”.

Reliability for the 12 questions was

!0.87 for this sample.

Organizational attractiveness was rated by ﬁve questions, measured on a ﬁve-point

Likert-type scale by Turban and Keon (1993). Sample question: “I would be interested in

applying for a job with this company”. Reliability analysis for this scale was

!0.89 for this

sample.

Control variables. Age and gender of participants were controlled for possible confounding

effects. Accordingly, age was coded in years and gender as a dummy variable (Cohen

et al., 2003), 0 if the respondent was female and 1 if male. Finally, to control for possible

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confounding effects of context, an analysis of variance (ANOVA) was performed to examine

possible main effects of context in research variables. Results demonstrated that there

were signiﬁcant effects of organizations on organizational reputation [F(14, 517) !10.93,

p#0.001)], on organizational attractiveness [F(14, 517) !3.12, p#0.001], on external

CSR [F(14, 517) !7.03, p#0.001] and on internal CSR [F(14, 517) !3.61, p#0.001)].

Inspection of post hoc tests demonstrated that these differences were consistently

attributed to one speciﬁc organization (Organization C). This organization belongs to an

industry that has been surrounded by recent scandals involving environmental accidents.

Hence, the organizations variable were coded into a dummy variable: Organization C

coded 1 if Organization !C and 0 if Organization $C.

Statistical analysis

We followed recommendations by Anderson and Gerbing (1988) and conducted a

two-step approach and structural equation modeling (SEM) to test the measurement model

and to compare various competing structural models. Analyses were computed with AMOS

17.0 software package (Arbuckle, 2008), and the maximum likelihood estimation method

and the covariance matrix were used. The two-step approach recommends a pre-test of

the measurement model to establish discriminant validity and inspect the risk associated

with common method variance (Podsakoff et al., 2003).

Regarding measurement models, the full measurement model was initially tested

(Anderson and Gerbing, 1988). This model (four-factor model) included all observed items’

loading on their respective latent variables (organizational reputation, organizational

attractiveness, external CSR and internal CSR). The latent variables were allowed to

correlate with each other. We then performed a Harman’s single-factor test (Podsakoff

et al., 2003). This test involves a CFA in which all variables are allowed to load onto one

general factor (one-factor model).

Concerning the test of hypotheses, several structural models were computed. Testing

mediation analysis with CFA has some similarities with the Baron and Kenny (1986)

approach but provides several advantages (James et al., 2004). As a conﬁrmatory

approach, SEM simultaneously tests the relationships among an initial variable, a mediator

and an outcome variable. In addition, SEM analyses derive from nested model

comparisons, allowing us to hone in on the speciﬁc parameters of interest and to contrast

a given pattern of effects against viable alternatives. To test mediation relationships, the

methodology proposed by Mathieu and Taylor (2006) was followed. Finally, age, gender

and Organization C were introduced in the models as observed variables to control for

potential confounding effects.

Following established recommendations (Hu and Bentler, 1999), the evaluation of the

overall goodness of ﬁt of the models was based on the combination of several ﬁt indices.

Models were compared based on chi-square difference tests, and on other ﬁt indices: the

standardized root mean square (SRMR), the incremental ﬁt index (IFI), the Bentler

comparative ﬁt index (CFI) and the root mean square error of approximation (RMSEA). IFI

and CFI values greater than 0.90 represent a good model ﬁt, and SRMR and RMSEA values

less than 0.07 indicate a good model ﬁt (Hu and Bentler, 1999).

Results

Measurement models and descriptive analysis

As expected, the one-factor model showed a poor ﬁt to the data [

(371) !2,491.40, p#

0.001; SRMR !0.09; IFI !0.69; CFI !0.69; RMSEA !0.09], and the four-factor model

obtained a good ﬁt [

(365) !1,029.35, p#0.001; SRMR !0.06; IFI !0.90; CFI !0.90;

RMSEA !0.06], and all standardized regression coefﬁcients were signiﬁcant at the 0.001

level. Furthermore, the four-factor model ﬁtted the data signiﬁcantly better than did the

one-factor model [%

(6) !1,462.05, p#0.001]. These analyses showed that the factor

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structures of the research variables were consistent with the conceptual model and also

that the manifest variables loaded on the latent variables as intended.

Table I present the means, standard deviations and intercorrelations of the researched

variables.

Structural models

To test the hypothesized relationships, several structural models were computed.

First, a full mediation model with paths from both internal and external CSR to organizational

reputation, and from organizational reputation to organizational attractiveness showed an

adequate ﬁt to the data [

(444) !1,189.90, p#0.001; SRMR !0.06; IFI !0.90; CFI !

0.89, RMSEA !0.06]. We then tested an alternative partial mediation model. In this partial

mediation model, two additional paths from both internal and external CSR to organizational

attractiveness were included. This partial mediation model showed a good ﬁt to the data

[

(442) !1,175.16, p#0.001; SRMR !0.06; IFI !0.90; CFI !0.90, RMSEA !0.06],

signiﬁcantly better than the full mediation model (%

(2) !14.74, p#0.001). Therefore, we

continued with the partial mediation model to inspect the path coefﬁcients (Figure 2).

As for the relationships between both internal and external CSR and organizational

attractiveness, we established that internal CSR was positively associated with

organizational attractiveness (

!0.28; p#0.01), but, contrary to our expectations,

external CSR was not (

!0.01; p!0.29). Therefore, results supported H1a, but not

H1b.

As expected, both internal and external CSR were positively related to organizational

reputation (

!0.15; p#0.05; and

!0.62; p#0.001, respectively), which in turn was

positively associated with organizational attractiveness (

!0.20; p#0.05). This hints at

Table I Means, standard deviations, scale reliabilities and intercorrelations (N!532)

Variables M SD 1 2 3 4 5 6

1. Age 33.59 13.84

2. Gender "0.14***

3. Organization C "0.01 0.01

4. CSR external 3.41 0.74 0.03 0.14** "0.25***

5. CSR internal 3.29 0.47 0.04 "0.01 "0.21*** 0.62***

6. Organizational reputation 3.70 0.54 0.06 "0.03 "0.36*** 0.61*** 0.58***

7. Organizational attractiveness 3.27 1.03 "0.03 0.01 "0.12** 0.34*** 0.36*** 0.39***

Notes: ***p#0.001; **p#0.01

Figure 2 Summary of ﬁndings for the hypothesized model

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the relationship between CSR and organizational attractiveness being mediated by

organizational reputation.

The results demonstrate that organizational reputation fully mediated the relationship

between external CSR and organizational attractiveness (indirect effect !0.13; 95 per cent

CI from 0.01 to 0.25) and that organizational reputation partially mediated the relationship

between internal CSR and organizational attractiveness (indirect effect !0.03; 95 per cent

CI from 0.01 to 0.10). Results support H2a and H2b.

The control variables contributed to explaining variance. Gender was positively related to

external CSR (

!0.16, p#0.001), so that female customers were more aware of the

external CSR program. Organizational reputation was associated with customers’ gender

(

!"0.08, p#0.05), indicating that men tended to rate organizational reputation more

favorably. Finally, Organization C tended to be rated less favorably in terms of external CSR

(

!"0.31, p#0.001), internal CSR (

!"0.19, p#0.001) and organizational reputation

(

!"0.20, p#0.001).

The model explained 65 per cent of the variance in organizational reputation and 20 per

cent of the variance in organizational attractiveness.

Discussion

Study 2 examined the effects of perceptions of internal and external CSR activities on

organizational attractiveness. It also tested the mediating role of organizational reputation

on the aforementioned relationship. The results of this study suggest that stakeholders’

perceptions of internal and external CSR practices are relevant for their ratings of

organizational reputation, but only perceptions of internal CSR practices had a direct

impact on organizational attractiveness. Perceptions of external CSR practices inﬂuenced

ratings of organizational attractiveness only when mediated by reputation. These results

lead to important theoretical and practical applications for organizations and human

resources managers.

Internal CSR practices such as those that represent concern for the employees in both their

physical space and their psychological needs were positively related to organizational

attractiveness. This result is in accordance with earlier studies that highlighted the

importance of genuine practices that demonstrate the ﬁrm’s concern for the welfare of

employees. In fact, if a company does not assume a high level of responsibility to its own

staff, it is unlikely to do so for its customers or to the social and natural environment in which

it works (Johnston, 2001). Thus, CSR activities to employees are featured in mainstream

deﬁnitions and criteria concerning CSR (Gray et al., 1995). Our results argue in favor of the

signaling theory by demonstrating that people rely on organizational practices as signaling

messages, indicating what it would be like to work for that ﬁrm. Indeed, perceiving that a

ﬁrm invests in practices that demonstrate a concern for the welfare of employees leads

customers to perceive that organization as a desirable place to work. Jamali et al. (2014)

explored the role of human resource management on CSR and introduced a co-created

model. Based on the results of this study, internal CSR practices can serve as an effective

strategy for recruiting, proving further support for their model.

Furthermore, results suggest that both perceived internal and external CSR activities lead

to a favorable reputation of the ﬁrm. Indeed, as the signaling theory explains, stakeholders

interpreted these CSR actions as signals of the organization’s values and genuine concern

for the employees and the environment/society, and developed more positive evaluations

of the organization itself. This can be considered as the ﬁrst immediate reward for

organizations. CSR usually includes a set of practices that go beyond what is required by

law, thereby using inducements that are not conveyed as legal obligations. Hence, this

discretionary investment in people and environment is rewarded through its impact on

organizational reputation. It means that organizational investments in CSR practices toward

employees and societies spill over and beneﬁt the organization itself, providing further

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support of creating shared value model proposed by Porter and Kramer (2011). These

results also emphasize the link between CSR and reputation and can be explained by the

signaling theory. In summary, our ﬁndings support that CSR activities can be a way for

organizations to do good while improving their organizational reputation. Our ﬁndings had

also been expected based on earlier research (Brammer and Pavelin, 2006;Melo and

Garrido-Morgado, 2012).

We went one step further in this spillover effect to see whether a ﬁrm’s reputation translated

into greater organizational attractiveness. Concerning perceived internal CSR activities, we

found that an organization’s reputation partially mediates the impact on organizational

attractiveness. This means that individuals who perceive that the organization is

employee-focused (internal CSR) rate that organization as both reputable and are attracted

to it. Thus, internal CSR practices are an important tool for organizations to improve not only

employee positive organization associations (i.e. Kim et al., 2010) but also the

organization’s reputation and attractiveness.

Finally, our results did not support the hypothesis that the perception of external CSR is

related to higher organizational attractiveness. Instead, we found that this relationship

existed only when fully mediated by organizational reputation. The absence of a direct

effect of perceived CSR practices and the full mediation by organizational reputation hints

at external CSR being important for organizational attractiveness through social identity

processes. This supports the idea that organizational concerns for the environment and

societies are very important for the image and reputation of employers, which, through

membership bonds, enhances an individual’s self-image (Albinger and Freeman, 2000;

Van Dick, 2004). It seems that from the stakeholders’ perspective, an employee’s image is

enhanced by the image and reputation of their employers. When people perceive that

organizations care about certain societal issues and problems that are relevant from their

perspective, they perceive that ﬁrm as more credible and reputable, which in turns leads

them to consider the organization as an employer-of-choice. Taking into consideration the

signaling theory, internal and external CSR are relevant for organizational attractiveness.

Internal CSR signals that the organization is an attractive place to work, thereby raising

organizational attractiveness, and external CSR signals that the organization cares about

social issues that may be important to prospective applicants, raising the perception of

reputation of the company, and consequently its attractiveness. Our ﬁndings are similar to

those of Lis (2012), which indicate that internal practices for employees are more important

to individuals who are considering that organization to work for. However, we also found

that external CSR practices are important as they signal that the organization has a good

reputation.

Despite our study’s strengths, there are important limitations that we need to address along

with suggestions for future research. Contrary to most of the studies connecting CSR and

organizational attractiveness, our study does not utilize a job-seeking population, but an

external stakeholder population. While this provides us with more conﬁdence regarding our

ﬁndings, we do not have sufﬁcient information about our participant’s professional life.

Many of these individuals could have a positive image of the organization (reputation) but

because they already have a job or work in another industry, the connection between CSR

and organization attractiveness may have been diluted. Future studies should address

some of these concerns by utilizing both a job-seeking population and a non-job-seeking

population in their studies. They could control to see if organizational attractiveness is

greater for those in the job market versus those who are already employed. Future studies

should also seek to control for demographic characteristics and personal characteristics,

such as values. Indeed, studies should examine different mediating/moderating

mechanisms to see if; for example, adding other key variables such as corporate image,

customer loyalty, etc., can enhance the link between CSR and organizational

attractiveness. Furthermore, we studied only the link between CSR and organizational

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attractiveness. Future studies should test the impact that CSR practices may have on

retaining and motivating talent.

In terms of directions for future research only, in this study, we adopted a multi-dimensional

construct of CSR embracing two sets of activities: internal and external. Results

demonstrated that perceptions of internal and external CSR impact organizational

attractiveness through different processes. Therefore, studies should always include

different CSR practices, as they have different inﬂuences on stakeholders.

General discussion

CSR indeed appears to be an important signal for future employees and stakeholders

about the organization. We found the signaling theory to be effective in explaining how

prospective applicants interpret cues about an organization. Speciﬁcally, internal CSR

practices signal that the organization is an attractive employer and external CSR practices

signal that the organization is reputable, and therefore more attractive. We also found that

social identity theory helps explain how CSR practices aimed at external stakeholders

make the ﬁrm more reputable and consequently more attractive. These ﬁndings are

important, as they support the now growing literature of the impact of CSR on a ﬁrm.

Referring to people management, our ﬁndings demonstrate that CSR can play an effective

role in attracting potential employees, through enhancement of organizational reputation

and organizational attractiveness. If organizations are willing to implement practices that

protect and develop their employees, along with practices that improve the quality of the

natural environment and the well-being of the society, they can become an

employer-of-choice. Both internal and external CSR practices promoted organizational

reputation, which in turn, was associated with higher organizational attractiveness. Thus,

management should invest in the development of organizational attractiveness by

emphasizing CSR orientation. It is important that while developing plans to attract talent,

organizations keep in mind the ethical issues in talent management program, primarily

when it comes to attracting and promoting like-minded individuals that could lead to

discriminatory behavior (Swailes, 2013).

It is the assumption of this study that when CSR initiatives signal the values of a company,

they can become part of the “employee value proposition”. According to the expectancy

theory, prospective applicants are more likely to be motivated to join a speciﬁc company

when they perceive the company as being committed to certain values, as signaled by the

organization’s CSR initiatives. Indeed, “great companies identify something larger than

transactions or business portfolios to provide purpose and meaning” (Kanter, 2011, p. 55).

Companies need a coherent identity that is grounded in solid values and purpose. For

example, Procter & Gamble’s “Purpose, Values, and Principles” mission statement is

improving the lives of the world’s consumers. For that aim, every P&G employee has a

quantitatively measurable purpose-driven goal: How many more lives have I touched this

year? As explained by Kanter (2011, p. 57), “Great companies that see themselves as

social institutions ensure that work is emotionally compelling and that meaning resides in

the organization as a whole”. As a result, P&G employees feel a strong emotional

attachment to their work and feel proud of the company’s achievements. Indeed, “although

top leaders communicate the company’s purpose and values, everyone owns them and the

values become embedded in tasks, goals, and performance standards” (Kanter, 2011,

p. 57). Immelt (2004), CEO of General Electric, says people want to work for a good

company “because they want to be part of something bigger than themselves [. . .] They

want to work for a company that makes the difference”.

Hence, prospective applicants expect to experience a behavioral outcome contingency

linking their actions (as future employees) to the result of making a difference in others’ lives

(Vroom, 1964). Therefore, CSR initiatives inﬂuence judgments of valence and

instrumentality, increasing the likelihood of employees seeing their values projected in

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organizational CSR activities. KPMG’s recent call for their North American employees

sharing histories depicting the greatest impact of their job in the society has received

42,000 applications (Feintzeig, 2015), and illustrates a growing concern the identiﬁcation

purposes with meaning for its employees.

Therefore, CSR strategies improve organizational competitiveness in the sense of attracting

and bonding highly skilled employees and “talent” to the company. This study highlights

the need to consider internal CSR practices as much of the strategic CSR thinking has been

restricted to approaches intended to engage external stakeholders such as consumers or

communities. Indeed, results suggest that incorporating CSR into the employee brand can

enhance attraction. Internal CSR activities may positively impact many other different areas

of a company’s human resources policy such as workplace health and safety, work–life

balance, staff diversity and career development (European Commission, 2005).

Furthermore, CSR activities and HRM, especially in the topic of talent management, can foster

organizational competitiveness by attracting talent. A Deloitte (2011b) Volunteer Impact study

found that 61 per cent of Millennials would consider a company’s commitment to the

community when making a job decision. The study also found those who frequently participate

in workplace volunteer activities are more likely to be proud, loyal and satisﬁed employees.

Furthermore, as Agnew (2014) explained, Millennials are “a generation that appears to put a

higher value on fulﬁllment, entrepreneurialism, and a good work-life balance than cash”; and

more than ever, candidates are coming into the job application process better informed about

the company’s culture and practices. Hence, to foster organizational differentiation, the CSR

values need to be reﬂected in all HRM processes starting with how the organizations attract and

recruit employees, to development and career management and rewards and incentive

programs. To achieve this employer differentiation, successful ﬁrms may profess their CSR

strategies in their recruitment branding and marketing programs, promoting the beneﬁts of

working within a values-based culture. Indeed, as Scott (2013) explains, Timberland’s

consistent efforts to foster corporate philanthropy help the company attract talent. As illustrated

in the company’s Employee Global Survey, 67 per cent of employees said they strongly agreed

or agreed that the company’s commitment to the community and its Path of Service™ program

played a strong role in their decision to work at Timberland. Timberland’s Path of Service™

program, which recently celebrated its 20th year, provides employees with up to 40 h of paid

time off for community service. As McIlwraith, Senior Manager of Community Engagement

Atlanta, concludes, “We are a values-driven brand”. Another example comes from Starbucks

Company that has been actively involved in a combination of activities linked to the social,

environmental and economic perspectives (Munshi, 2015). In this company, employees are

called partners (every individual is offered stock options), and are included on a project called

“Partner Engagement”. This includes several CSR initiatives designed to making a positive

impact on neighboring communities throughout the world. Starbucks believes that good

business has to involve and support communities as well. As The CEO of Starbucks Howard

Schultz said: “This is not some marketing or PR exercise. This is to do one thing: use our

national footprint and scale for good” (Munshi, 2015). As explained by Grant (2015),whenwe

ask people what they want in a job, having a purpose is listed as top priority. However, many

times employees are too distant from the end users of our products and services, and therefore,

they do not perceive that impact. These examples of CSR initiatives reinforce the values of the

corporate culture and, by doing so, these initiatives reinforce workers’ sense of belonging,

attitudes, identiﬁcation and feelings of pride, which are difﬁcult to copy or buy. Hence, CSR can

help HRM further protect and enhance an organization’s most intangible asset: its workers. To

that aim, organizations should target speciﬁc CSR programs that meet the needs of employee

segments with the greatest value. Internal CSR initiatives are not equally efﬁcient and

cost-efﬁcient in attracting talent. In fact, a recent survey by NetImpact (Zukin and Szeltner,

2012)foundthat:

[. . .] having a job where they can make an impact on causes and issues that are important is

something the vast majority of undergraduate and graduate students want out of their work life

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[. . .] At this point in their lives, the same number say having a job where they can make a

difference and having children is essential to them (p. 3).

This report indicates that “ﬁnding a comfortable balance between work life and non-work

life is now a societal, consensual value”, regardless of generation (p. 21). The ﬁrst report of

the Deloitte (2011a) Talent Edge 2020 series reported that regardless of generations, when

considering an employer, “creating a fun work environment” and “work–life balance” come

in the top three organizational criteria. This suggests that practices aimed to increase

work-life balance should become a priority in the HRM agenda.

Society for Human Resource Management (SHRM) has called attention to several low-cost

practices that increase workplace ﬂexibility and are effective in attracting prospective

applicants (vacation days, fun policies). Furthermore, with the economic crisis, many

prospective employees are more likely to also seek employment security and stability. This

indicates that competitive organizations integrate their CSR beliefs within the ﬁnancial

business model to prove they are stable and ﬁnancially viable to attract talent. As

mentioned above, internal CSR practices are not limited to the psychological working

environment, but include the betterment of the physical work environment. As a result, there

are several employee volunteer initiatives that create active corporate social networks in

which employees are the actual enactors, and the company acts as an enabler.

Furthermore, organizations (and HRM) provide employees with opportunities to be linked to

relevant activities aimed at the protection of the environment or community development

(external CSR), either through direct involvement in activities or through the enhanced

self-image and social identity provided by being a member of that organization. In both

cases, employees see their values projected in organizational CSR activities. This will

contribute to employees being able to answer their speciﬁc “callings” within the working

context (Heslin, 2005;Wrzesniewski et al., 2003), leading to pride in being a member of that

organization and less willingness to abandon it (higher talent retention). It is very important

to routinely communicate the ﬁrm’s CSR efforts, including those internal practices, and to

consider the needs and values of employees and how these can be fulﬁlled by developing

CSR strategies that are aligned with employees’ values. Regarding talent attraction,

socially responsible corporations may have a competitive advantage because, as seen in

this study, they have better reputations and are more attractive to potential employees

(Albinger and Freeman, 2000;Turban and Greening, 1997). Therefore, the organization will

be more competent in attracting talent, thereby gaining competitive advantage.

Conclusion

Study 1 tested whether adding information about CSR practices to a job advertisement

would improve the organizational attractiveness of raters. We found that there was a

signiﬁcant difference in organizational attractiveness when participants were informed

about the CSR practices of a ﬁrm versus those who did not receive such information. Study

2 tested the impact of perceptions of CSR practices (internal and external) on

organizational attractiveness. Findings indicate that internal CSR practices have a direct

link on ratings of organizational attractiveness. On the other hand, external CSR practices

did not, in general, signiﬁcantly inﬂuence ratings of attractiveness, but did so when fully

mediated by ratings of organizational reputation. Our results indicate that while CSR does

have an effect on organizational attractiveness, internal CSR practices may be more

important for individuals who are looking at an organization as a potential employer. This is

important because attracting talent to organizations is a key challenge facing today’s

human resource manager and a key source for ﬁrm competitive advantage. However,

external CSR practices have a greater impact on organizational reputation ratings, which

also appear to be an important way to attract talented individuals, along with other positive

outcomes.

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Corporate social responsibility and organizational attractiveness: implications for talent management

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