Trust and corporate social responsibility: From expected utility and social normative perspective

Abstract

While prior studies have mostly highlighted that firms engage in corporate social responsibility (CSR) because of social norms, we introduce a new perspective by proposing that firms’ motive towards CSR is defined largely by the expected utility perspective. Consistent with our proposition, we show that greater social trust in a region has a positive effect on CSR and that this effect is due to the expected utility mechanism rather than the social normative mechanism. We also show that the association between social trust and CSR is stronger when the focal firm’s peers carry out high-level CSR and when a firm is strongly influenced by Confucianism. Our findings extend the theoretical research on CSR by showing that a firm’s motive towards CSR is based mainly on the expected utility mechanism.