Two Routes to CSR: Mixing Religion, State, and Market

Abstract

Religion, as a critical component in both personal value system and wider institutional order, is relatively under-investigated in strategic management. Drawing on institutional complexity and Weber’s classical thinking, we propose that firms with religious top executives are embedded in the tension of religion, market, and state logic, which further shapes their conflicting interpretations of external institutional pressures and variation in practicing CSR. Based on a matched two-year survey of firms across multiple industries and regions, we find that religious CEOs perceive lower normative pressure from industry peers but higher coercive pressure from the government, which mediate the different effects of CEO religiosity on corporate social responsibilities (CSR). Furthermore, we find that when firms are positioned in the hub of a business ecosystem, both the negative effect of religious belief on normative pressure and positive effect on coercive pressure becomes weaker; when firms are located in the environment with high regional marketization, only the negative effect of religious belief on normative pressure becomes weaker. We contribute by uncovering a more complicated but nuanced mechanisms through which CEO religiosity affect CSR and revealing the double-edged nature of business embeddedness with religious categories.