Why do Institutional Forces Matter more in Corporate Social Responsibility?

Abstract

In this paper, we analyze the effect of the country's institutional forces on the level of corporate social responsibility disclosure (CSRD) within the companies listed on Pakistan's stock exchange. Numbers of theories (e.g., institutional theory, legitimacy theory) are used to understand the relationship among the formal institutional forces and the level of CSRD. The available assumptions for the regression model were fulfilled in addition to Hausman's test. It was found that the level of CSRD is sensitive to the intensity of various local institutional forces. Such types of institutional forces predict the limits how to understand, build, and maintain the relationship between business and society. The results of the study offer a comprehensive picture for policy-makers, practitioners, and common corporate beneficiaries to understand the "why" and "how" of the corporate social responsibility (CSR) phenomena in developing countries context, particularly in Pakistan.