Hazard Abatement as a Function of Firm Size: The Effects of Internal Firm Characteristics and External Incentives

Publication Date: November 1988

Publisher: Pardee Rand Graduate School

Author(s): Richard H. Sims

Research Area: Business; Labor

Type: Report


Using survey data collected from 2,000 members of the National Federation of Independent Business, the author examines which factors influence firms to manage hazards in the workplace. The author constructs a simple economic model of the decisionmaking process firms use to manage hazards to structure the survey data collected from firms of various sizes in high- and low-risk industries.

The model classifies the factors that affect hazard management decisions into two groups: (1) external incentives for hazard management (e.g., the worker's compensation program and OSHA) and (2) internal characteristics of the firm (e.g., management attitudes and firm capabilities).

Using descriptive and tabular analysis and multiple regression analysis of the determinants of hazard abatement actions, the author finds that the likelihood of hazard abatement actions increases with firm size and industry risk levels. The significance and magnitude of the substantive variables in the regression model support the hypothesis that firm-size variation in abatement actions is due to differences in the internal characteristics of the firm and differences in the external incentives for hazard abatement across the firm-size continuum.