Being Good or Being Bad: A Demand-Based View of Customer Landscape and Corporate Social (Ir)Responsibility

Abstract

While researches on the disclosure of corporate social responsibility (CSR) and irresponsibility (CSiR) recognize the influence of between stakeholder group heterogeneity and multiplicity, less attention has been given to the within stakeholder sub-group demand heterogeneity and the relative importance of these demands. We develop a framework wherein CSR reporting is viewed as an organizational response to features of one of the most significant stakeholder groups of a firm —its customers. Drawing upon the demand-based view and stakeholder theory, we argue that two fundamental dimensions of customer base—c ustomer heterogeneity and customer concentration—help explain how firms make balance along multiple social demands. We propose that customer heterogeneity drives firms to invest in diverse types of CSR activities (i.e., higher level of CSR strength) and restricts CSiR activities (i.e., lower level of CSiR strength) to gain customer legitimacy and support. While customer concentration allows firms to invest in limited CSR activities (i.e., lower level of CSR strength) and initiate more types of CSiR activities (i.e., higher level of CSiR strength) for efficiency considerations. Our framework was supported through a longitudinal analysis between 1991 and 2008. Our study contributes to the literature on strategic CSR, stakeholder theory, and demand-based view.