The relationship between labour social responsibility practices and reputation

Purpose – The purpose of this paper is to analyse whether labour social responsibility (LSR) practices influence on corporate reputation (CR) and on labour reputation (LR). Design/methodology/approach – LSR is defined as all those labour practices made by a company for the benefit of employees voluntarily and not imposed by labour legislation. An index developed by content analysis was created to measure LRS. CR and LR scores were obtained from the Business Monitor of Corporate Reputation (MERCO) for the period of 2006-2010. Furthermore, based on the previous literature, the study considers other generic variables that influence the process of creating reputation, such as visibility and environmental impact, as well as intrinsic characteristics of each company (size, financial performance and debt). The model was estimated by the generalised method of moments (GMM) on a data panel for the 100 most reputable firms in Spain in each year during the period 2006-2010. Findings – The results obtained show that LSR carried out by the company has a direct and positive relationship with the reputation. Thus, corporate and labour reputation and their evolution depend on ability of the LSR strategy of the company to satisfy to future expectations of stakeholders. Originality/value – Previous literature considered the impact of different dimensions of corporate social responsibility on CR, e.g., environmental, communication, quality of products, but did not consider labour practices.