A Wolf in Sheep’s Clothing? Corporate Social Responsibility as Corporate Political Activity

Abstract

The purpose of this paper is to explore corporate social responsibility (CSR) as part of a firm’s nonmarket strategy. Drawing on the legitimacy perspective, we argue that in institutional contexts, such as the developing world, where traditional CPA strategies are severely limited or prohibited, and where extensive pressures for CSR engagement prevail, firms may adopt disguised ways to increase access to political circles. One possible way is employing CSR as a political tool to address social issues preferred by the government. Utilizing the experiment of the 2013 Indian CSR law, our results based on 540 CEO statements over 9 years (2007 to 2015) demonstrate that firms’ CSR narrative significantly shifts after the implementation of the CSR law, both in intensity and in content, and mirrors government’s signalling on preferred social issues. We also find that this phenomenon is prevalent across firms of all ages, and specifically pronounced in the case of non-state owned firms. We argue that such an intentional re-alignment of the CSR narrative results in the employment of CSR as a political tool, providing political legitimacy to firms. Through this paper, we make contributions to both CSR and CPA literatures.