The Effect of Business Strategy on the Relationship between Social Responsibility and Labor Cost Stickiness in Tehran Exchange Companies

Document Type : Original Article

Authors

1 Department of Accounting, Arvand International Branch, Islamic Azad University, Abadan, Iran.

2 Department of Accounting, Ramhormoz, Payam Noor University, Ramhormoz, Iran.

Abstract

Labor cost stickiness refers to the phenomenon in which labor costs do not easily and quickly decrease or increase in response to changes in economic conditions (such as recession or boom). This phenomenon typically arises for various economic, contractual, and social reasons. Fulfilling social responsibility is one of the factors that can influence labor cost stickiness, depending on the strategies adopted by the company. Given the significance of labor cost stickiness and the lack of comprehensive studies on the effect of business strategy on the relationship between social responsibility and labor cost stickiness, this study aims to investigate that effect. For this purpose, a library research method was used to gather information related to the theoretical foundation. Additionally, to test the research hypotheses, a sample of 145 companies was selected from those listed on the Tehran Stock Exchange (specifically manufacturing companies whose fiscal year ends in March and that did not cease operations for more than two months during the study period), and financial statement information was analyzed for the years 2017 to 2023. A logistic regression model was employed to test the research hypotheses using a pooled data approach, with statistical analysis performed using Eviews software. The findings revealed that social responsibility has a significant positive effect on labor cost stickiness. Additionally, the results indicated that business strategy also has a significant positive effect on labor cost stickiness. Finally, the study concluded that business strategy has a significant incremental effect on the relationship between social responsibility and labor cost stickiness, meaning that business strategy strengthens the positive relationship between social responsibility and labor cost stickiness in companies.

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