Community Social Capital and Corporate Pollution: An Informal Governance

Abstract

This study focuses on the influence of headquarters community social capital on facility-level corporate pollution. Our findings reveal that the level of pollution is lower for facilities whose headquarters are located in communities with higher social capital. Further, we find that firm’s and CEO’s long-term orientation helps to moderate the influence of community social capital on facility pollution, by affecting the extent to which firm value is aligned with community’s cooperative norms. Facility-level contexts such as facility’s geographic location also affect the effect of community social capital on facility pollution. Based on a sample of US firms during the period of 1998-2015, we find empirical support for our predictions.