Safety hazards and injuries are an ever-present risk across various business sectors that can greatly impact service quality, costs, and reputation. To mitigate such risks, suppliers commonly invest in safety training programs for their staff as a preventative measure. But do these programs actually help improve safety outcomes? And perhaps more importantly, do business-to-business (B2B) customers value safety training investments when evaluating potential suppliers?

A new study published in the Journal of Marketing Research by Dr. Shrihari (Hari) Sridhar, senior associate dean, professor of marketing, and Joe Foster ’56 Chair in Business Leadership at Mays Business School, set out to rigorously test the causal impacts of supplier safety training programs on both safety metrics and customer buying decisions. Through three distinct studies examining different business contexts, the research underscores safety training as an important strategic investment for suppliers seeking risk reduction as well as competitive advantage.

The Multifaceted Study: A Comprehensive Approach

The study, conducted through three distinct empirical analyses, offers a novel perspective on the causal effects of safety training programs. It comprises:

1. Study 1: Utilizing site-level data from a global oilfield services company, this study finds that a 10% increase in safety training hours per capita leads to a notable decrease in safety hazards per capita (6.45%−9.57%).
2. Study 2: Leveraging New York City’s Local Law 196, which mandates safety training for construction workers, this study shows that this legislation reduces injury rates by 0.54–0.68 percentage points (a 15.56%–18.84% decline) at construction sites relative to their counterparts.
3. Study 3: A choice-based conjoint study among B2B procurement professionals reveals that suppliers’ investment in safety training markedly increases the probability of their proposals being selected.

Why This Matters

The prevalence of safety training programs in the B2B sector is not only a matter of compliance but also a strategic consideration. Approximately 41% of publicly traded U.S. companies invested in these programs in 2020, recognizing their potential in risk management and value creation for customers. This study demonstrates the tangible effects of safety training on reducing workplace hazards and injuries and its value in influencing B2B buying decisions.

Objectives and Goals: Beyond Risk Mitigation

The research aims to measure and establish the impact of safety training on mitigating hazards, preventing injuries, and influencing supplier selection in the B2B sector. It also seeks to provide empirical evidence and practical implications for suppliers, customers, and regulators on the value of these programs.

Methodology: A Blend of Designs for Robust Insights

The research employed a combination of quasi-experimental designs and a choice-based conjoint study. It exploited exogenous variables, like catastrophic accidents and legislative changes, to measure the impact of safety training on safety outcomes and B2B buying decisions.

Key Findings: Safety Training as a Strategic Asset

1. Risk Reduction: Safety training significantly reduces safety hazards and workplace injuries.
2. Enhanced Customer Value: B2B customers place high value on suppliers’ safety training investments, viewing them as indicative of service quality and reliability.
3. Financial Benefits for Suppliers: The average return on safety-training investment is estimated at 42%, positioning it as a strategic tool for enhancing service quality and customer value.

Contributions to Research and Practice

This study is pioneering in providing causal evidence of the effects of safety training programs in B2B settings. It enhances the generalizability of results across different sectors and offers a detailed analysis of safety training as a risk-mitigation tool, valuable for building sustainable customer relationships.

Implications and Applications: A Strategic Lever for Business Success

1. For B2B Customers: Safety training is a value-added attribute, reducing perceived risk and enhancing supplier attractiveness.
2. For B2B Suppliers: It serves as a risk-mitigation vehicle, improving service quality, reducing costs, and enhancing reputation.
3. For B2B Firms Overall: Safety training is a cross-functional initiative with implications for marketing, operations, human resources, and finance, advocating a holistic approach to workplace safety.

Key Takeaways

These collective findings make a persuasive case for suppliers to dedicate resources to robust safety training programs as more than just a compliance necessity. The data highlights that such programs can:

• Produce a meaningful reduction in safety incidents, preventing injuries and potential liabilities
• Enhance service quality and reliability for customers
• Signal competence to customers and increase win rates

Additionally, the research estimates an average 42% return on investment for safety training expenditures when accounting for injury prevention.

These insights pave the way for suppliers to embrace safety training as an impactful component of business and risk management strategy. The programs demonstrate good corporate citizenship while also directly improving bid competitiveness – a true win-win investment for any organization operating in higher-risk industries. Furthermore, the proven benefits should compel policymakers to advocate for continual improvements in safety education.

Conclusion: A Paradigm Shift in Safety Training

Safety training programs, a vital component of occupational health and safety interventions, are widely utilized in industries like oilfield services, construction, and manufacturing. Their role extends beyond mere compliance, influencing the quality, reliability, and efficiency of suppliers’ offerings, and consequently, the operations and reputation of their B2B customers.

This study does more than highlight the efficacy of safety training; it underscores its strategic significance in the B2B sector. By demonstrating its impact on risk mitigation, customer value, and financial returns, it encourages a reevaluation of safety training programs not just as a compliance requirement but as a key factor in business success and competitive advantage.