Institutional effect on corporate commitment to socially responsible behavior

Abstract

Prior studies examine organizational or CEO characteristics to find antecedents of CSR. I depart from these studies by focusing on a focal firm’s ‘social’ environment. Specifically, drawing upon an institutional perspective, I suggest that a degree of CSR commitment largely depends on its institutional environment. Using Global Fortune 500 listed firm data over 2006-2011, I find that; 1) firms headquartered in a country following civil law system consistently make more commitment on CSR than those headquartered in a country following common law system; and 2) firms headquartered in a country with strong legal enforcement or higher corruption make less commitment on CSR. Our finding suggests that the future research should understand whether a focal firm’s institutional environment promotes CSR before assessing the firm’s CSR commitment.