Who Captures the Value from Organizational Culture? Evidence from Glassdoor Reviews and the Universe of Online Job Postings from Burning Glass Technologies

Who captures the value from cultural retention mechanisms? While firms make large investments in their corporate cultures, their effects on the labor force are yet not completely understood. The authors argue that strong cultures act as a retention mechanism by facilitating employees’ coordination and reducing the portability of their social skills, thus capturing more value from their employees. They test these predictions on a sample of 6,208 firms based in Illinois and Michigan. The authors measure labor-related variables from 1,265,760 job vacancies posted by those firms, and their cultural strength from 203,093 employees’ text reviews about the companies. They find that, following a regulatory shock that increases employee mobility in Illinois, strong cultures post fewer jobs and offer lower salaries than weak one, compared to Michigan.