A recent study by Hengmiao Bao (Sole Author) has been published in Journal of Business Ethics (FT-50 journal). This study extends the literature by examining how the increased social insurance payments affect corporate product quality compliance, suggesting strategies to advance responsible business outcomes. The study was independently completed by Hengmiao Bao, covering the genesis of the idea, the development of the empirical framework, and the writing.

As a fundamental institutional arrangement for labor protection, social insurance contributions have been validated to yield both positive and negative effects on firms and employees. However, the broader implications of enforcing this obligation, particularly its potential impact on non-employee stakeholders, remain underexplored. Using the 2011 Social Insurance Law in China as a quasi-natural experiment, this study extends the literature by examining how the increased social insurance payments affect corporate product quality compliance, an ESG dimension closely tied to consumer welfare. Our baseline results show that higher social insurance premiums induced by the law are associated with a higher likelihood and frequency of corporate product quality violations. Consistent with elevated labor costs, we identify the intensified financial constraints as a key channel through which the law enforcement undermines corporate product quality compliance. We also present suggestive evidence that diminished employee effort may constitute another plausible mechanism underlying our findings. Furthermore, cross-sectional analyses reveal that this effect is weakened in firms with greater access to external financing, firms offering equity-based employee incentives, and state-owned enterprises (SOEs). Collectively, our findings illuminate the tension in stakeholder management between obligations to employees and commitments to consumers and suggest strategies to advance responsible business outcomes by easing financial constraints and fostering employee engagement.

Journal of Business Ethics is an internationally authoritative journal in the field of business ethics. It is ranked Q1 in both the JCR Business and Ethics categories (top 3 out of 77 in Ethics), holds a Chinese Academy of Sciences (CAS) Top Journal status, and has a 5-year impact factor of 8.7. The journal aims to promote ethical discussion and debate to improve the human condition in a global business context.

This paper can be cited as:

Bao, H. (2026). When Benefits Backfire: The Impact of Social Insurance Contributions on Product Quality Compliance. Journal of Business Ethics, 1-36.

A complete version of this paper can be accessed via:

https://link.springer.com/article/10.1007/s10551-026-06310-y