Corporate Social Responsibility and Operating Performance: The Role of Local Character in Emerging Economies

Fang He,Christina W.Y Wong,Yanhong Tang,Xin Miao

doi:10.3390/su12124874

Abstract

Local character can shape corporate resource accumulation and utilization, especially in emerging economies, and accordingly plays an important role in affecting the performance results of corporate social responsibility (CSR) practices. This paper thus aims to examine how local character affects the performance results of CSR practices. Drawing on the resource dependence theory and resource orchestration view, this study empirically investigates the effects of internal character (in terms of state ownership) and external local character (in terms of eight-dimension infrastructure) on the relationship between CSR and operating performance. Using samples of firms listed in the Chinese CSI 300 (capitalization weighted stock market index) in the years 2012 and 2016 and applying hierarchical multiple regression analysis, this study empirically verifies that CSR has a positive effect on corporate operating performance, and state ownership and infrastructure positively moderate the performance results of CSR efforts. Additionally, the results show that three dimensions (environmental, social, and governance) of CSR practices impact performance differently. Overall, this study unveils the crucial role of the local character on CSR to achieve performance and carries important theoretical and practical implications. Future research should include long panel data to increase statistical power as well as explore the linkage and synergy effect of CSR and governmental social responsibility (GSR).

Highlights

A large amount of investment and attention to corporate social responsibility (CSR) has resulted in ongoing debates and inconclusive research findings on whether CSR practices benefits the competitiveness of organizations [1,2]
By considering the mechanisms of resource accumulation and resource utilization, this study shows the derivation of a positive relationship between CSR and operating performance and how the positive relationship can be strengthened by state ownership and local character
This study finds a positive correlation between broad CSR practices and operating performance for state-owned enterprises (SOEs) and firms that are in a business environment with well-developed infrastructures

Summary

Introduction

A large amount of investment and attention to corporate social responsibility (CSR) has resulted in ongoing debates and inconclusive research findings on whether CSR practices benefits the competitiveness of organizations [1,2]. Previous studies have frequently explored the firm-, industry-, and country-specific factors to explain the distinguished performance effects of CSR [5], but still paid little attention to the role of the local character, which may dominate the success or failure of CSR practices [6], in the emerging economies. The ownership arrangement (i.e., state-owned vs private-owned) is influential to businesses in emerging economies [11] and substantially related to external resource dependence, affecting corporate practices and performance

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Conclusion