IGOs and the Impact of Institutional and Economic Integration on CSR Performance

Abstract

Intergovernmental organizations (IGOs), such as the European Union, coalesce divergent member countries toward cooperative political, social, environmental, and economic activities to promote the betterment of communities and societies. The level of integration of member countries in the IGO is thereby expected to shape the level of betterment. To understand this connection, we study the impact of institutional and economic integration of IGO member countries on the Corporate Social Responsibility performances of its firms. Building on insights from political science, nonmarket strategy, and institutional theory as well as an empirical analysis of the EU, we find that low levels of institutional integration of IGO member countries reduce CSR performances of their firms. We also find that high levels of economic integration enhance CSR performances and that this high economic integration also moderates the negative impact of low levels of institutional integration on the CSR performances of firms. We contribute to institutional theory and societal sustainability concerns, by connecting the supranational, national, and firm-level.