Recruiting and retaining capable employees is critical to every organisation’s success. The fierce competition for top talents demands companies to constantly assess employer attractiveness. Offering competitive wages, family-friendly working conditions or development benefits are classic ways to attract talents (e.g. Chapman et al.
2005). More recently, researchers started to focus on company ethicality as a distinctive feature that may enhance employer attractiveness and motivate job seekers to pursue with a job application (Solomon
2016; Tsai et al.
2014; Vlachos et al.
2013; Wang
2013). However, effects of ethical market signals on job seekers’ application behaviour remain poorly understood. Building on research in the fields of advertising, human resource management and information processing we contribute to the existing literature on talent acquisition with a theoretical understanding of how and why different types of ethical market signals (i.e. ethical certifications and ethical eWoM) affect job seekers’ job-pursuit intentions.
Theoretical Contributions
We extend the existing literature on company ethicality and job seeker behaviour in various ways. Our experimental results show that market signals, that indicate a company’s ethicality, can effectively increase job seekers’ intentions to apply for a job at that company (H
1). This corroborates previous research findings suggesting that job seekers’ perceptions of company ethicality affect job application decisions positively (Greening and Turban
2000; Lin et al.
2012; Tsai et al.
2014; Wang
2013). While previous studies typically employ cross-sectional survey designs and study effects of ethicality perceptions, we manipulate ethical market signals experimentally and therefore offer more definite insights into cause-and-effect relationships between company ethicality and job seeker behaviour.
We also show that positive effects hold ethical market signals that are under the control of a company (i.e. ethical certifications) and those that are not under company control (i.e. ethical eWoM). While authors have demonstrated beneficial effects of ethical certifications in consumption situations (e.g. Bradu et al.
2014; Vecchio and Annunziata
2015), our research confirms their importance in the recruitment context. Moreover, our findings respond to the growing research interest for effects of ethical eWoM on talent attraction (Frasca and Edwards
2017; Rutter et al.
2016). It has been suggested that eWoM may affect individual decision making independent of its valence; hence even neutral ethical eWoM may positively affect job seekers’ application decisions (Tang et al.
2014). However, our findings demonstrate that positive, in comparison with neutral, ethical eWoM results in significantly higher intentions to apply (H
1b). Hence, while the mere existence of ethical eWoM may encourage candidates to apply, positive endorsements of company ethicality by current or previous employees clearly reinforce these effects. Notably, the eWoM providers were in our study unknown to the respondents. Given that perceived familiarity with the source of information can enhance conviction (cf., Reichelt et al.
2014), it is conceivable that positive effects of positive ethical eWoM may be even stronger when job seekers are familiar with the providers of ethical eWoM.
Furthermore, we provide theoretical explanations of why ethical certifications and ethical eWoM affect job-pursuit intentions and corroborate these empirically. In particular, we identified three psychological intervening mechanisms based on MacKenzie et al.’s (
1986)
Dual Mediation Hypothesis and the consideration of job seekers’ attitude toward the job advertisement,
Signaling Theory (Rynes
1991; Spence
1973) and the consideration of corporate employment image and the
Elaboration Likelihood Model (Petty and Cacioppo
1986), which points to the importance of achieving issue-relevant elaboration that can encourage self-referencing in relation to company ethicality.
First, our findings confirm that ethical certifications and ethical eWoM affect job seekers’ application intentions through their attitude toward the job advertisement (H
2). This adds to previous research which has considered effects of ethical information and message recipients’ attitude towards the ad foremost in relation to purchasing decisions (Bickart and Ruth
2012). Hence, we extend the existing literature by showing the importance of considering attitude toward the ad as an outcome of different types of ethical market signals in recruitment contexts. Given that our results establish mediation for both ethical certifications and ethical eWoM suggests that applicants consider both types of signals to form attitudes toward the ad, and that effects of one signal may compensate or reinforce effects of the other. Considering attitude toward the ad is important as it is known to affect a variety of positive outcomes, foremost in consumption contexts, such as willingness to pay or customer loyalty (Nagar
2013). Hence, it is conceivable that positive effects of ethical market signals on job seekers’ attitude toward a job advertisement extend to other employer-relevant outcomes, such as job satisfaction or employee loyalty.
Second, our results show that both types of ethical market signals increase job-pursuit intentions indirectly through corporate employment image (H
3). In line with signaling theory, ethical certifications and positive ethical eWoM constitute unique or discrete signals that shape learning processes and that encourage the development of aggregated or abstract associations, corporate employment image in particular. Researchers and practitioners alike should consider that such signalling outcomes may go beyond job seekers’ application behaviour, given that corporate employment image is widely recognised as an important correlate of company attractiveness or overall corporate reputation (e.g. Cober et al.
2003; Kim et al.
2011; Lemmink et al.
2003; Tsai and Yang
2010; Turban
2001). Companies that display ethical certifications in job advertisements and that are supported in social media for their good ethical conduct may enjoy long lasting benefits not only for an enhanced corporate employment image, but also for the good overall corporate reputation that these signals build.
Finally, our study points to the importance of considering self-referencing as a third psychological mechanism through which ethical market signals affect job seekers’ application behaviour (H
4). Our findings are consistent with previous research showing that ads that enable self-referencing and that promote feelings of self-image congruity between the ad and the recipient will bias decision making in favour of the advertised product (Kang and Herr
2006; Kahle and Homer
1985; Yoon and Park
2012). Hence, we can conclude that ethical certifications and positive ethical eWoM enable job seekers’ self-referencing and allow them to better connect with related job advertisements which ultimately motivates them to pursue with a job application. Our theoretical reasoning and related empirical results therefore corroborate the argument that foremost millennials value ethical companies because of their strive for ethical value congruency (Solomon
2016).
Implications for Business Ethics
The present study has wider implications for business ethics as it highlights value and means of communicating an organisation’s ethicality in attracting talents, but also the ultimate long-term benefits of organisational efforts to operate ethically toward existing employees and other stakeholders in developing a strong employer brand. Whilst societal benefits of business ethics have been discussed in depth, the positive effects for individual organisations have not yet been fully explored. Our findings suggest that an ethical orientation has the potential to result in competitive advantage because it positively influences the relationship with potential future employees. Given that foremost millennials value ethical organisations, this trend can be expected to persist or even increase.
This study is also a testament for stakeholders’ integration of different sources that communicate an organisation’s ethicality. As these signals can vary in terms of the extent to which they are under organisational control, organisations need to carefully examine their practices in relation to ethicality and ensure authentic and credible communication of ethical information. It appears beneficial for organisations to acquire ethical certifications to attract employees. Nonetheless, certifications may be subject to stakeholders’ scrutiny as they consult sources of information that are beyond an organisation’s control. Despite all, it must be considered that the reasons why stakeholders value the disclosure of ethical features are not yet fully understood; these may involve altruistic motivations related to social benefits just as egoistic motivations related to individual benefits such as fewer working hours or better working conditions.
Clearly, business ethics is relevant in the recruitment context; however, as we have demonstrated, ethical characteristics do not only directly influence an organisation’s key performance measures, but also affect intermediate measures. Ethical market signals affect recipients’ attitudes toward job advertisements, their abstract perceptions of the corporate employment image, as well as their identification with the organisation, all of which explain why company ethicality may consist a long-term competitive advantage.
Managerial Implications
Businesses need to acknowledge the importance of company ethicality as a driver of highly-qualified candidates’ job-pursuit intentions. We recommend that companies should strive to provide ethical signals in an authentic and credible way given that job seekers consider both, company-controlled and non-company-controlled sources of information and discrepancies between the two may generate confusions or distrust. As such, businesses are advised to acquire ethical certifications from independent trustworthy organisations. As part of job advertisements, such certifications can effectively enhance job seekers’ pursuit intentions as our results clearly indicate. Moreover, given that job seekers increasingly use social media networking sites as a source of information about potential future employers, companies should be alerted about the impact of ethical eWoM provisions.
The internal marketing literature indicates some strategies about how positive ethical eWoM can be encouraged, and how ethical certification be obtained. Internal marketing is related to several positive outcomes such as job satisfaction and commitment, because it addresses employees’ needs and values, and allows for an employee-centred view (Shiu and Yu
2010). Specifically, internal marketing does not only directly affect organisational commitment, the relationship is partially mediated by job involvement and job satisfaction (Ting
2011). Organisational commitment is related to the provision of positive WoM because employees with a strong organisational attachment recommend their organisation more likely to other stakeholders, including job applicants (Paulin et al.
2006). Similarly, research in related domains has supported that identification, satisfaction and commitment can be understood as antecedents of positive WoM (Brown et al.
2005). Hence, companies may encourage current or past employees to talk positively about the company’s ethicality. At the same time, internal marketing can also help organisations to obtain ethical certifications given that certifications such as for example B Corporation (
2017), evaluate the companies for their impact on employees, including job satisfaction. Thus, organisations should acknowledge the importance of internal marketing in order to obtain ethical certifications which are relevant for talent attraction.
Finally, businesses should be aware that the influence of ethical market signals is subject to underlying mediating mechanisms. The implication that follows is that companies can benefit from controlling these mediator variables, for example by conducting periodic checks of attitude toward the ad, corporate employment image and self-referencing in relation to their job advertisements; all three mediator variables can serve as indicators to effectively predict job-seeker behaviour.
Limitations and Future Research
Several limitations in our study provide avenues for further research. First, the study focuses on the effects of company-controlled and non-company-controlled market signals on job seekers’ job-pursuit intentions, whilst keeping other characteristics of the job advertisement or the job application context constant. The importance of both types of ethical market signals in relation to other drivers of job-pursuit intention, such as company name, company size, salary and industry field, is therefore subject to future investigations.
Likewise, the influence of ethical market signals on application decisions may depend on individual characteristics such as age, social class, cultural origin or person-organisation fit. Research suggests person-organisation fit as a crucial driver of organisational success. For example, Yu (
2014) shows that job seekers who perceive value congruence during recruitment processes develop positive work expectations which, in turn, have a positive impact on organisational attraction. Similarly, Tsai et al. (
2014) show that higher levels of socio-environmental consciousness enhance the impact of Corporate Social Performance on job seekers’ job-pursuit intentions. We recommend that future research should detail the moderating role of such individual characteristics, based on the theoretical framework established in this study.
Further work is also required to specify the particular influence of different appearances of ethical market signals. Ethical certifications may be distinguished regarding their prominence, their meaning or the certifying source. In the present study, when an established international scheme certifying the company’s ethicality (B Corporation, Ethisphere) was provided, respondents reported a higher willingness to apply for the position. However, it must be acknowledged that both schemes used in our experimental study are well-established and provided by recognised independent organisations. Research in the food industry shows that effects of certifications depend on the certifying source (Ortega et al.
2011). Hence, we cannot conclude that ethical certifications per se affect pursuit intentions. The effects may differ for certifications that are provided by less well-recognised independent certifying organisations, just as they may differ for certification labels that are issued by the company itself. Future research should take this into account. At the same time, future research should explore differences in elaboration in addition to the observed increase in self-referencing. For example, researchers may consider measuring the time respondents took to looking and processing different types of job advertisements. This would allow for a stronger test of our hypotheses, in particular in relation to elaboration.
Similarly, different operationalisations of ethical eWoM should be tested (for example in terms of the degree of positivity). Moreover, given the growing reports of greenwashing incidents, the effects of negative ethical eWoM deserve particular attention in comparison with company-controlled signals. Relatedly, future research should also consider the relationship between the provider of ethical eWoM and the recipient (e.g. in terms of perceived similarity).
Finally, an important issue for future research is the reason why applicants value ethical market signals. Whilst ethical signals can be important due to disclosing ethical features of the company (e.g. gender equality, hiring applicants with disabilities), they may also be perceived as an indicator of wider company characteristics such as overall company performance and career development opportunities.