The Impact of Corporate Label Change on Long-term Labor Productivity

Corporate label change (CLC) is a common way to establish a firm's new corporate identity to drive revenue nowadays, but its merits are controversial. We investigate the impacts of CLC, being a signal of corporate identity change, on firm's long-term labor productivity. We find that CLC negatively affects long-term labor productivity. We also find that reputable and labor-intensive firms suffer more from CLC. In the post-hoc analysis, we find that these firms may increase their research & development and capital intensity in their operations prior to pursuing CLC to mitigate CLC's negative impacts. An important managerial implication of this study is that senior management should not ignore employees as a major stakeholder in making CLC decision. Our findings also offer lessons to business executives on how to manage CLC to reduce its potential negative impacts.