Does Past Corporate Social Performance Matter in a Crisis? Layoffs During the COVID-19 Pandemic

In this paper, I examine the effects of a firm’s historical corporate social responsibility (CSR) on its involuntary turnover behavior during the first year of the COVID-19 pandemic. Specifically, for 3,011 publicly traded US firms over the period 2013-2020, I compare announced layoffs across firms with a history of above and below par corporate social performance. CSR comprises several metrics of employee treatment and well-being, and is expected to have shielded workers from mass layoffs during the pandemic. On the other hand, downsizing may be more accessible to high-CSR firms because they have superior managerial agility and organizational capabilities. Consistent with the latter theory, the findings of this paper suggest that past corporate social performance may be a poor indicator of job security during the recent unemployment crisis, and that the expected value of CSR for one of the firm’s most important stakeholders may not be realized.