The best intentions? Corporate social action and the beliefs in the virtues of liberalism.

Abstract

Previous literature has shown contradictory results regarding the relationship between economic liberalism at the country-level and firms’ engagement in either substantive or symbolic corporate social actions (CSA). A first proposition suggests that when liberalism is favored, firms are fierce and engage in symbolic CSA. On the contrary, some argue that firms will embrace voluntarism and favor substantive CSA. In this study, we explain these results by disentangling the effects of the fundamental underpinnings of economic liberalism, more specifically the beliefs in the virtues of economic liberalism. Building up on the existing conflicting literature, we derive hypotheses regarding the impact of these beliefs and test them empirically. In doing so we both attempt to understand how cultural beliefs in the virtues of liberalism affect the nature of corporate social actions, and to understand whether decision- makers are inherently selfish, as a significant part of the literature on the subject seems to attest. We paradoxically show that in countries where beliefs in the virtues of competition are strong, firms tend to favor symbolic CSA, while in countries where beliefs in the virtues of individual responsibility are prominent, firms are more likely to implement substantive CSA. Those findings suggest that managers are inherently benevolent – concerned by the well-being of others when it serves their own interests, in particular when it is necessary to maintain others’ participation in social exchanges.