Introduction

Theory and hypothesis development

Method

Results

Discussion

Implication and limitation

References

Abstract

Purpose – A bad safety accident at a manufacturing company usually results in casualties and economic losses. The company affected by such an accident must deal with pressure from multiple stakeholder groups. Employees, in particular, play a key role in pushing the affected company to develop strategies to improve occupational safety and health. The purpose of this paper is to seek answers to two questions: does a safety accident affect employee behavior in terms of giving up prospects to develop a career at the affected company? If yes, could innovation initiatives adopted by the company help moderate the negative consequences from a safety accident?
Design/methodology/approach – By investigating 120 safety accidents reported by publicly listed Chinese manufacturing companies between 2009 and 2016, the authors conduct an empirical study using regression-based statistical hypotheses testing to describe the companies’ responses and prospects for their employees.
Findings – The results show that the magnitude of the accident and the accident being caused by an employee error positively affect the turnover of employees. Furthermore, technical innovation initiatives, such as spending on R&D, by the accident-affected companies increase the positive effect of the accident magnitude on employee turnover. On the contrary, management innovation initiatives, such as corporate social responsibility activities, weaken the impact of the accident magnitude and employee error on employee turnover.
Originality/value – This study contributes to knowledge development by adding a crisis perspective in human resource management research. It helps to better understand the impact of safety accidents on employee behavior and the response taken by companies through innovation initiatives.

Introduction

With a large labor force and booming industries, China is part of the global manufacturing chain. The country’s initial competitive advantages, based on availability of cheap resources, including labor, gradually weakened as people’s quality of life and employee wages increased. To maintain competitiveness, many sectors had to undergo economic restructuring and were upgraded; manufacturing was one of them (Chin and Rowley, 2018). The transformation of the manufacturing industry brought about improvements in product quality resulting in economic benefits. However, rapid technological upgrade, if not performed carefully, can also trigger concerns about safety and, indeed, workplace accidents (Khanzode et al., 2012). In 2007, China ratified the 1981 International Labour Office’s Convention on Occupational Safety and Health (Casale and Zhu, 2013). The convention’s purpose was to provide safe working environments for employees by offering protection and minimizing the causes of hazards. Nevertheless, industrial accidents and occupational injuries were (and continue to be) a frequent occurrence in China. According to the national workplace safety statistics (www.gov.cn/xinwen/2018-01/29/content_5261953.htm) released by the State Administration of Work Safety, there were 53,000 safety accidents and 38,000 deaths only between January and December 2017. In addition to casualties, these safety accidents also cause serious damage to the affected companies. They range from economic losses and costs due to suspension of production, to reduced competitiveness and employee dissatisfaction. For example, in 2015, a safety accident of poisoning and suffocation occurred in Zhongyuan Special Steel Company, resulting in six casualties (www.szse.cn/disclosure/listed/ bulletinDetail/index.html?b2671d18-7dad-4f94-bd0c-e264f31f58a6). The severe accident was caused by major defects in the project design and poor safety in the production process. Its negative impact on the company included a drop in share price and an increase in the number of employees leaving in search for safer working conditions. In response to the accident and loss of personnel, Zhongyuan Special Steel took some countermeasures, which included updating the company’s safety management standards, developing new technologies and introducing protection procedures for the production floor employees. Many of these countermeasures were based on novel approaches and involved new initiatives, such as: protective alarm systems detecting unacceptable levels of contaminants; changes in the production process to avoid direct exposure; and regular interactive employee training based on virtual reality scenarios. This example raises an interesting question for both researchers and managers: can companies redeem their reputation after a serious safety accident by implementing innovation initiatives? More specifically, can a company use technical innovation (e.g. investing in research and development (R&D)) and management initiatives (e.g. adopting corporate social responsibility (CSR) activities) as a means to recover from the negative effects of a workplace safety accident?