Paradox of CSR distinctiveness: The tension between stakeholder legitimacy evaluation and stakeholder integration efficiency

Abstract

AbstractCorporate social responsibility (CSR) is an important strategic decision for firms. Firms must decide on the configuration of CSR scope or the resource allocation in different CSR domains in addition to the extent of resource investment in CSR. However, question about the performance implications of different CSR scope configurations remain unresolved. Extending the paradoxical perspective in CSR literature, we propose a paradox of CSR distinctiveness and argue that distinctive investments in CSR domains facilitate the improvement of efficiency in garnering advantageous market position and competitiveness, but leads to potential legitimacy discount in stakeholders' evaluation. We thus argue that CSR distinctiveness is negatively associated with short‐term firm performance but positively related to long‐term performance. In addition, we contend that such a paradox can be mitigated by firm status: when firm status is high, the negative effect of CSR distinctiveness on short‐term performance decreases while the positive effect on long‐term performance increases. Using a data set of Chinese publicly listed firm, we find strong support for our hypotheses. Our findings shed important lights on strategic CSR studies as well as the paradox in CSR research.