Relation between occupational safety management and firm performance Beatriz Fernández-Muñiz * , José Manuel Montes-Peón 1 , Camilo José Vázquez-Ordás 2 University of Oviedo, Facultad de Ciencias Económicas y Empresariales, Departamento de Administración de Empresas y Contabilidad, Avda. del Cristo, s/n, 33071, Oviedo, Spain article info Article history: Received 25 September 2007 Received in revised form 3 October 2008 Accepted 30 October 2008 Keywords: Safety management Competitive advantage Occupational accidents Productivity Structural equation modelling abstract Occupational accidents severely deteriorate human capital, and hence negatively affect the productivity and competitiveness of countries. But despite this, we still observe a scarcity of preventive practices, an unsatisfactory management commitment and an absence of safety culture among Spanish firms. The result is evident in firms’ high accident rates. This situation is a consequence of the general belief among firms that investing in safety is a cost, and hence has negative repercussions for their competitiveness. The current work aims to identify good practices in safety management, and analyse the effect of these practices on a set of indicators of organisational performance. For this, we first carry out an exhaustive literature review, and then formulate a series of hypotheses. We then test the proposed model on a sam- ple of 455 Spanish firms. Our findings show that safety management has a positive influence on safety performance, competitiveness performance, and economic-financial performance. Hence they provide evidence of the compatibility between worker protection and corporate competitiveness. Ó 2008 Elsevier Ltd. All rights reserved. 1. Introduction The occupational accident rate has increased considerably in Spain in recent years, in spite of the legal reforms beginning in 1995. This large number of accidents has a significant human cost for Spanish society, and leads to a loss of economic potential and productivity for the country, 3 since apart from the decrease in hu- man capital and the damage done to production equipment, a large number of working days are lost. 4 Although the economic cycle (Bec- erra et al., 1986; Castejón, 2000) and Spanish labour market charac- teristics can explain an important part of the variations in the accident rate, they cannot alone be considered the main causes. Other variables influence the accident rate, including the cultural perception of preventive actions (Castejón, 2000). In this respect, researchers have detected a deficient preventive culture in Spanish organisations (Narocki, 1999). Indeed, it is a priority objective of the new legislation to build such a culture. But creating an authentic safety culture requires not only stronger institutional pressure, but also a change of mentality and an authentic commitment from firms, where everyone participates and commits themselves to occupa- tional health and safety. This commitment must start from the top management of the organisation. Various authors attribute this weak management commitment to the general belief that preventive measures require expendi- tures that have nothing to do with the firm’s production objectives, and consequently have negative repercussions for its profitability and competitiveness. But accidents have adverse affects in terms of decreases in productivity and quality, and deterioration of the firm’s public image or internal climate. It is for this reason that a good occupational safety management can have a positive effect not only on accident rates, but also on competitiveness variables and financial performance. It is therefore a good opportunity for those organisations that take up the challenge and adopt safety management. Many authors have defended this theory (Andreoni, 1986; Grimaldi and Simonds, 1989; Ashford, 1997; HSE, 1997; Kjellén et al., 1997; Narocki, 1999; Smallman and John, 2001; Best- ratén et al., 2003; Rechenthin, 2004), although the literature has provided scarce empirical evidence for it. The current work is conceived in this context, and its funda- mental aim is to analyse the relation between firms’ health and safety management and their performance. This objective breaks down into the following specific goals: (1) to identify appropriate preventive practices as part of an effective health and safety man- agement system and (2) to analyse the effect of such a system on a set of indicators of firms’ safety, competitiveness and economic- financial performance. In order to accomplish these objectives, we first carry out an exhaustive review of the literature on occupa- tional safety management. We then formulate a model summaris- ing the hypotheses of the study. Subsequently, we develop measurement scales of the concepts used in the proposed model, 0925-7535/$ - see front matter Ó 2008 Elsevier Ltd. All rights reserved. doi:10.1016/j.ssci.2008.10.022 * Corresponding author. Tel.: +34 985106215; fax: +34 985103708. E-mail addresses: beatrizf@uniovi.es (B. Fernández-Muñiz), jmmontes@uniovi.es (J.M. Montes-Peón), cvordas@uniovi.es (C.J. Vázquez-Ordás). 1 Tel.: +34 985104975; fax: +34 985103708. 2 Tel.: +34 9853704; fax: +34 985103708. 3 The Spanish economy’s lost productivity due to occupational accidents amounted to 3% of GDP (€13,280m) in 1996, according to estimates from the Spanish Ministry of Labour and Social Affairs. 4 The Spanish Ministry of Labour and Social Affairs reported 21,597,604 working days lost in 2002. Safety Science 47 (2009) 980–991 Contents lists available at ScienceDirect Safety Science journal homepage: www.elsevier.com/locate/ssci