How do buyers respond to corporate social irresponsibility of suppliers? (Extended abstract)

Abstract

Often, corporate social responsibility (CSR) is solely associated with “doing good”, although firms also have the responsibility to prevent corporate social irresponsibility (CSI) (i.e., “avoiding bad”). Many firms engage in CSR in the hopes that a reputation for CSR mitigates negative stakeholder reactions in case the firm suddenly gets involved in a CSI incident. However, research on the effects of CSR reputation on stakeholder reactions to CSI is equivocal and has mainly focused on consumers and investors. Some studies theorize insurance-like effects of ex ante CSR in case of misconduct mitigating subsequent stakeholder reactions, whereas other studies suggest that a reputation for CSR may also aggravate negative reactions to CSI. Moreover, some firms might engage in shallowly symbolic CSR while stakeholders often demand substantive actions. The present study is innovative in that it focusses on the business-tobusiness (B2B) context from a purchasing perspective and proposes a model which explains the conditions under which CSR acts like an insurance or like a liability subsequent to CSI. The predictions are tested by means of a vignette experiment with supply chain managers. The empirical insights add to the understanding of how CSR activities affect negative stakeholder reactions to CSI and provide important theoretical and practical implications.