The CSR Department and Organizational Learning: Effects on Tax Strategy

Abstract

Purpose – This paper addresses the question of how a CSR department and organizational learning processes affect a company’s tax strategy. We argue that establishing a CSR department and developing a CSR tax strategy guideline lead to less aggressive tax avoidance. Design/methodology/approach – We test three hypotheses with linear, logistic and Poisson panel-regressions. Therefore, we use a dataset derived from the seven largest economies from the European Union and the UK for the timespan from 2011 to 2018. Our total dataset consists of 2,930 firm-year observations. Findings – The findings indicate that the establishment of a CSR department significantly reduces aggressive tax strategies. Additionally, codification of a socially responsible tax strategy has a significant effect on the reduction of illegal tax avoidance strategies like tax fraud, but no effect on overall tax avoidance. Originality/value – First, this study contributes to the literature by providing insights on the effects of organizational aspects on CSR. Second, the study addresses the question of how organizational learning affects CSR and companies’ tax strategies. Third, it broadens the understanding of the relationship between CSR and tax strategy. Finally, it provides insights in the link of CSR and financial performance.