Corporate Social Irresponsibility Research Articles

Schadenfreude and purchase intention for counterfeit luxury brands among Iranian consumers

Purpose The purpose of this study is to investigate the impact of brand hate, personality traits (jealousy and sadism) and corporate social irresponsibility (CSI) on schadenfreude and the effects of brand hate, CSI and schadenfreude on purchase intention for counterfeit luxury brands (CLBs). Design/methodology/approach The statistical population of this study is consumers of luxury and CLB. Simple random sampling method was used, and data from 200 questionnaires were analyzed through structural equation modeling and SPSS 20 and AMOS 20 software. Findings The results indicated that brand hate, personality traits (jealousy and sadism) and CSI have a direct positive effect on schadenfreude. In addition, brand hate, CSI and schadenfreude have a direct positive effect on purchase intention for CLB. Originality/value TO the best of the authors’ knowledge, this research is among the first to evaluate the impact of brand hate, personality traits and CSI on schadenfreude and purchase intention.

Board gender diversity and corporate social irresponsibility in a dominant owner context

AbstractThe growing prominence of women directors has increased interest in their role in firms' social performance. However, knowledge of what impact female directors might have on corporate social irresponsibility (CSI) remains virtually non‐existent. This study aims to fill this gap. Using a sample of 107 Spanish listed non‐financial companies from the OSIRIS database (Bureau Van Dijk) for the period 2014–2022, together with alternative regression methods to account for endogeneity (2SLS, propensity scoring matching and generalised method of moments), our results show an inverted U‐shaped relationship between female directors and CSI. This supports arguments that dominant owners might appoint a small number of female directors symbolically to create a ‘halo effect’ or to enhance their public image and thus reinforce their entrenchment and divert attention away from CSI episodes. However, the appointment of a critical mass of female directors does evidence dominant owner commitment to move away from irresponsible corporate practices, since the presence of a larger number of female directors encourages the firm's ethical behaviour and increases the costs of penalising CSI episodes in the face of the firm's hypocritical behaviour. This study contributes to the emerging literature on CSI by complementing the knowledge gained from studies on ethical behaviour in a concentrated ownership setting. However, the study is not without limitations, especially in terms of the difficulty of measuring CSI episodes since, despite the work of the media, some socially irresponsible practices may remain hidden.

Focusing on the fundamentals? An investigation of the relationship between corporate social irresponsibility and data breach risk

In an era of growing social activism, companies engaged in socially irresponsible practices are increasingly vulnerable to data breaches, resulting in substantial reputational and financial losses. This study examines how corporate social irresponsibility (CSI) influences a company's data breach risk. We argue that CSI has an impact on data breach risk by influencing the intentional behaviors of both employees and external hackers. Given that CSI is a broad concept and can take on various forms, we further examine whether some forms of CSI pose a more significant threat than others. Our empirical analysis of data breaches in publicly listed US firms from 2005 to 2017 indicates that compared to the forms of CSI that violate broader social norms (e.g., environmental damages), CSI activities that jeopardize a company's economic value delivery (e.g., product deficiencies) play a more dominant role in driving data breach risk. Furthermore, we find that corporate social responsibility (CSR) can have a dual impact on moderating the relationship between CSI and data breaches. While CSR often helps mitigate CSI-induced data breach risk, this risk is heightened when both CSR and CSI relate to a firm's economic value delivery. This study provides critical insights into how companies can navigate complex data breach risk by managing their social performance.

Does corporate social responsibility relate to corporate social irresponsibility? Toward an integrative framework for future research

AbstractBusiness research shows the growing interest in corporate social responsibility (CSR) and, more recently, in its counterpart, corporate social irresponsibility (CSI). Yet existing literature on how these two concepts relate to each other is fragmented and sometimes contradictory, leaving an unanswered fundamental question about their dynamic relationship. We narrow this gap by systematically synthesizing and narratively analyzing 34 relevant studies. We uncover three core mechanisms underlying the connection between CSR and CSI: insurance, penance, and trade‐off. Our integrative framework on these mechanisms can benefit future studies on this emerging research topic.

The impact of corporate social irresponsibility on prosocial consumer behavior

AbstractCorporate social irresponsibility (CSI) refers to violations of the social contract between corporations and society. Existing literature documents its tendency to evoke negative consumer responses toward the firm involved, including unethical consumer behaviors. However, limited research attention deals with its potential impacts on prosocial consumer behavior. With six studies, the current research reveals that when consumers perceive harm due to CSI, they engage in more prosocial behavior due to the arousal of their anger. This effect is weaker among consumers who find the focal CSI issue more personally relevant but stronger among consumers with strong self-efficacy for promoting justice. Perceptions of CSI harm increase with the degree of control that the focal firm has over the CSI. This research thus establishes an effect of CSI harm on prosocial consumer behaviors, through the emotional mechanism of anger; it further shows that consumers seek to restore justice by engaging in prosocial behaviors.

Corporate social responsibility disclosure and corporate social irresponsibility in emerging economies: Does institutional quality matter?

AbstractThe Panama Papers (2016), Paradise Leaks (2017), and Pandora Papers (2021) have revealed the extensive practice of corporate tax avoidance. Yet, the tax behavior of companies claiming to be “socially responsible” has been less examined. This study examines the association between corporate social responsibility disclosure (CSRD) and tax avoidance, particularly in developing economies, focusing on Sub‐Saharan Africa (SSA). By analyzing data from 600 firm‐year observations across 13 SSA countries using panel quantile regression, we found a negative relationship between CSRD, which includes ethical, social, and environmental dimensions, and tax avoidance. This aligns with legitimacy theory, indicating that firms are increasingly adopting CSR transparency to meet societal expectations and gain stakeholder trust, avoiding socially irresponsible behaviors. Furthermore, the quality of national governance significantly moderates the CSRD–tax avoidance relationship, supporting the concept of institutional isomorphism. This evidence is valuable for professionals and policymakers and encourages further research to deepen and broaden these findings.

Workplace Corporate Social Irresponsibility in Supply Chain Operations: Generation and Gender Impacts on New Talent Recruitment

Amidst stakeholder demands for transparency and the recent pandemic, the inner workings of supply chains have become more visible. This visibility has shone a spotlight on workplace corporate social irresponsibility (CSI)—actions within a company's internal supply chain operations perceived to harm the well-being of its employees. At the same time, companies scrambling to recruit new talent for operations and supply chain management (OM/SCM) face dual challenges in the shortage of diverse talent and the emergence of new generations in the workforce. Research indicates that younger generations and women more broadly expect social responsibility from their employers, but it is unclear how they perceive social irresponsibility when evaluating job offers. To begin to address this gap, we draw on attribution theory and develop hypotheses that examine prospective employees’ responses to workplace CSI in supply chain operations and whether their responses vary with gender and pay. Results from a conjoint task and mixed effects models reveal that both young men and young women respond negatively to job offers from firms with pervasive workplace CSI across their supply chain operations and atypical levels of workplace CSI relative to other firms. Although we do not find gender differences in general, supplementary analyses offer more nuanced insights (e.g., young men respond less favorably than young women when workplace CSI is pervasive, whereas young women respond more favorably than young men to above-average pay). Overall, our study advances understanding of the spillover effects of workplace CSI on new talent recruitment and highlights that the new generation's preferences run deeper than traditional gender-based expectations. In doing so, we offer timely guidance for executives and human resource managers as companies struggle to recruit diverse new OM/SCM talent.

Does media coverage of firms' environment, social, and governance (ESG) incidents affect analyst coverage and forecasts? A risk perspective

We examine whether and how media coverage of firms' environment, social, and governance (ESG) incidents is associated with analyst coverage and forecasts. We propound that the risks of firms could either increase or decrease as a result of media-covered ESG incidents, depending on the firms' actions on the media coverage, and thus its impact on analyst coverage and forecasts would vary. Based on a sample of U.S. listed companies, we find evidence that the level of analyst coverage is negatively associated with a firm's ESG incidents covered by the media. This association is more pronounced for firms with more intense industrial product market competition, more severe ESG scandals, or coverage by less sophisticated analysts. We also find that the firms' ESG incidents covered by the media would lead to higher levels of forecast error and dispersion. Our mediation analysis further reveals that business risk and information risk tend to be higher for firms covered by the media for having been involved in ESG incidents, thereby explaining why the analysts' coverage and forecasts for these firms are adversely affected. Overall, our results highlight the importance of curbing corporate social irresponsibility and improving analyst performance in forecasting.

The cost of corporate social irresponsibility for acquirers

Few studies have examined the reputational damage of environmental and social (E&S) scandals ex-post. Using an international sample of mergers and acquisitions (M&A) across 18 countries, we examine whether heightened E&S risks arising from acquirers’ E&S incidents affect the cost of acquisition. We find that the severity of the incident increases acquisition premium and this effect is explained by incident acquirers compensating target shareholders for heightened reputation risks, rather than seeking to repair their reputation through the acquisition. At the country level, incident acquirers in countries with stronger E&S standards and policies also experience higher premium. Further analysis shows that E&S incidents reduce shareholder value upon the announcement of an M&A and increase the time taken for M&A completion. Firms are less likely to make acquisitions after experiencing an E&S incident, but this decision depends on the cost of delay. Finally, we show that the adverse impact on acquisitions dissipates after six months.

The price of corporate social irresponsibility in seasoned equity offerings: International evidence

We examine the impact of poor corporate social responsibility engagement signalled through negative environmental and social (E&S) incidents on equity financing via seasoned equity offerings (SEOs) across 25 countries. The results show that negative E&S incidents significantly aggravate SEO underpricing, thereby increasing the cost of raising equity capital. Managers appear to take the adverse effects into consideration as reflected in the reduced likelihood of issuing equity following the experience of negative E&S incidents. Further analysis shows that such adverse pricing effects are stronger for firms that are subject to significant social and regulatory penalties for their E&S misconducts, suggesting that negative E&S incidents increase corporate reputational losses and elevate regulatory risk. Finally, there are rich cross-country variations in the SEO pricing effects of E&S risks with legal investor protection and national culture playing an important role in influencing the pricing of E&S risk.

How is CSR scepticism amplified? Effects of corporate social irresponsibility and perceived controversy in the casino industry

ABSTRACT Although corporate social responsibility (CSR) has been instrumental in achieving corporation’s competitive advantage, this is not the case for casinos. This study examines how CSR scepticism develops in the context of the casino industry by investigating the effects of customers’ attitudes towards casinos engaged in corporate social irresponsibility (CSI) and the controversy surrounding casino businesses on CSR scepticism, which leads negative word-of-mouth (WOM) and protest behaviour. To this end, 310 South Korean casino customers completed an online questionnaire. The results of partial least squares path modelling revealed direct effects of customers’ attitudes towards firms exhibiting CSI and the perceived controversy on CSR scepticism leading to negative WOM and protest behaviour. The impact of the attitude towards firms exhibiting CSI on CSR scepticism was found to differ between low perceived controversy and high perceived controversy customers. The findings suggest that casino companies should strive for transparency and develop appropriate CSR initiatives.

Corporate Social Irresponsibility in Business: A Systematic Literature Review and Future Agenda

AbstractDespite increased interest in corporate social irresponsibility (CSI) among business scholars, the current research is still fragmented, its findings lacking a nuanced understanding. We conduct a systematic literature review of 173 journal articles on CSI published in the field of business and synthesize insights regarding the antecedents, consequences, and mechanisms of CSI. We begin by providing a clear definition, distinct types, and the measurement methods of CSI. Then, we provide a comprehensive research framework that demonstrates the three key components of CSI research: antecedent, consequence, and moderating. Building on this, we identify additional specific research methods for each component and apply them to assess and analyze the existing research findings and research gaps concerning CSI. We suggest that scholars pay more attention to (a) the impact of stakeholders on CSI behavior, (b) the different impacts of CSI on firm performance, (c) the relationship among CSI, corporate social responsibility, and firm performance, (d) CSI in the context of emerging economies, and (e) measuring CSI.

MNCs' corporate social irresponsibility and foreign subsidiary performance

AbstractResearch SummaryBuilding on the cognitive view of stakeholder evaluation, we propose that multinational corporations' (MNCs') socially irresponsible acts transcend geographic boundaries and negatively affect foreign subsidiary performance. Moreover, we propose that foreign subsidiaries' product innovation and marketing campaigns create strategic noise in the information space that can mitigate the negative effect of MNCs' corporate social irresponsibility (CSI) incidents occurring elsewhere on the performance of their foreign subsidiaries. We test our arguments on 335 subsidiaries of 42 multinational grocery retailers from 18 different home countries. Our analyses, based on a sample of 2185 subsidiary‐year observations over the period of 9 years (2012–2020), largely support our core argument that CSI incidents negatively influence the sales growth of foreign subsidiaries.Managerial SummaryThis research underscores the importance for MNC managers to be cognizant of the potential fallout from CSI incidents. With the global spread of information, MNCs' misconduct that occurs elsewhere can quickly impact the sales growth of foreign subsidiaries. The study found that product or service innovations are more effective than marketing campaigns in managing reputational damage, emphasizing the value of genuine, capability‐enhancing strategies. Furthermore, the findings highlight the interconnectedness between socially responsible practices and innovation, suggesting that MNCs and their subsidiaries should focus on maintaining strong ethical standards while simultaneously fostering an environment conducive to innovation. This approach not only addresses the adverse effects of CSI but also strengthens the MNC's overall standing with its stakeholders.

How Corporate Social (Ir)Responsibility Influences Employees’ Private Prosocial Behavior: An Experimental Study

AbstractThe micro-level corporate social responsibility (CSR) literature has broadly demonstrated the effects of CSR on employees’ behavior but has mostly been limited to employees’ behavior within the work domain. This business-centered focus overlooks the potential of organizations to change employees’ private social and environmental behavior and thus to address grand societal challenges. Based on the social psychology literature on moral consistency and moral balancing, we conduct three experiments to investigate whether employees’ private prosocial behavior is consistent with their organization’s corporate social (ir)responsibility or whether employees aim to balance their private prosocial behavior, e.g., by compensating for their organization’s CSR activities with a reduced willingness to contribute outside the work domain. Our results provide support for a consistency effect such that employers’ environmental CSR activities increase employees’ donations and willingness to volunteer outside work. Environmental corporate social irresponsibility activities, on the contrary, reduce employees’ private donations and willingness to volunteer. We further find that the positive effects of environmental CSR are partly explained by the strengthening of employees’ environmental self-identity. Our findings highlight that organizational activities have consequences for employees’ moral behavior outside the work domain and thus have important implications for research and practice.

Effect of corporate social irresponsibility on organizational workplace deviant behaviour: the meditating role of moral disengagement

Purpose This study aims to investigate the effects of both internal and external corporate social irresponsibility (CSI) on organizational workplace deviant behaviours (OWDB) by using social cognitive theory. The study also explores the role of moral disengagement as a mediator in this relationship. Design/methodology/approach Data was collected from a sample of 321 individuals employed in the textile industry of Pakistan. The study used partial least square-structural equation modelling (PLS-SEM) to estimate the relationships within the model. Findings The findings indicate that both internal and external CSI have a positive impact on moral disengagement. Secondly, moral disengagement drives OWDB positively. Thirdly, moral disengagement is a significant mediator that mediates between both internal and external CSI and OWDB positively. Practical implications This research offers novel perspectives to organizational leaders, highlighting the significance of addressing CSI in conjunction with sustainability endeavours. It is imperative for business managers to prioritize the morality of their employees. Originality/value This study’s novelty lies in its confirmation of the mediating role of moral disengagement in the relationship between internal and external CSI and OWDB.

Firms’ corporate social irresponsibility behaviors during interplay with consumers in evolutionary game models

We employ an evolutionary game model to investigate the interaction between firms’ engagement in corporate social irresponsibility (CSI) behaviors (without violating laws) and consumers’ perception of corporate social responsibility (CSR) within a consumer market. The core paradox revolves around the trade-off between firms benefiting from pursuing economic performance without adhering to social responsibility and the maximization of social welfare achieved when firms are socially responsible, and consumers possess strong CSR perception. Through an asymmetric two-population evolutionary game model, we identify two distinct scenarios of evolutionary stable strategies based on different industrial environments. Additionally, the evolution of a healthy market is contingent upon an increase in consumers’ bargaining power, although it is also influenced by the initial states of the two-group system, resulting in path dependence as a significant feature of the system’s evolutionary equilibrium. Furthermore, we observe that the added willingness to pay for CSR, while not impacting the evolutionary outcomes, could increase the likelihood of a healthy market when consumers’ bargaining power is high. These findings underscore the diverse dynamics of firms’ CSI behaviors, which depend on transaction costs, industrial structure, and consumers’ willingness to pay, offering valuable insights from a micro perspective.

Window Dressing in Impression Management: Does Negative Media Coverage Drive Corporate Green Production?

This study addresses the calls for research attention on corporate greenwashing and analyzes an environmental strategy in corporate impression management. We assume that negative media coverage triggers impression motivation and causes firms to adopt environmental strategies for impression construction based on the two-component model in impression management. Specifically, firms release credible signals, such as green investment, to cover concealed pollution emissions under the framework of a game with incomplete information. We posit that firms can select a window-dressing strategy under the pressures of negative media coverage by constructing two regression models, respectively. We also assess our underlying assumption of constraints from state ownership and institutional shareholdings by testing additional moderating relationships. Utilizing a sample of Chinese publicly listed firms from 2000 to 2010, our empirical results suggest that negative media coverage increases corporate green investment, but pollutant emissions are reduced correspondingly, and state ownership aggravates corporate window dressing while institutional shareholdings curb it. Our findings reveal the corporate social irresponsibility in environmental protection and sustainable development, and they offer important implications for firm stakeholders.

Media coverage of corporate wrongdoing: International evidence on the stock market reaction and the buffering effect of prior corporate social performance

AbstractUsing an international sample of 111,251 news published in print, online, and social media between 2007 and 2021 covering 3202 firms in 20 countries, I find that superior prior corporate social performance (CSP) buffers the adverse market reaction to media coverage of corporate social irresponsibility (CSI), indicating that stakeholders interpret the misbehaviour as an anomaly rather than a pattern. Generally, the magnitude of the negative market reaction to CSI news intensified over time, confirming increased social awareness of corporate responsibility. I complement existing literature by revealing a diminishing marginal benefit of prior CSP: the buffering effect is consistently positive while strongly flattening, suggesting that stakeholders are somewhat indifferent between good and excellent CSP but highly sensitive towards previous misbehaviour. The shareholder value loss and insurance‐like effect of prior CSP are enhanced for firms located in stakeholder‐oriented business cultures, indicating that societal culture shapes stakeholders' attitudes towards corporate responsibility.

Fintech business and corporate social responsibility practices

Through a proprietary dataset of listed firms on the Shanghai and Shenzhen Stock Exchanges, we establish a positive link between firms' financial technology (Fintech) business and their corporate social responsibility (CSR) practices. Such a link can be more pronounced among firms of stronger political connections, lower agency costs, and better internal control. Enhanced supply of bank loans, internal capital market, public scrutiny, and firms' strategic differences are underlying the link. Fintech business may also effectively curb firms' corporate social irresponsibility (CSI) behaviour. Fintech business may have become a strategic endeavor to sustain long-term economic growth in the digital age.

The pitfalls of corporate social irresponsibility: Hypocrisy of family firms in South Korea

Corporate hypocrisy poses a significant risk to businesses striving for sustainable management. Stakeholders' increasing interest in ESG (environmental, social, and governance) activities and easy access to information makes maintaining authenticity essential. Any firm caught in hypocrisy risks losing stakeholder trust and damaging its legitimacy. Family firms willing to preserve socioemotional wealth are more susceptible to hypocrisy than general firms due to the family’s significant influence on decision-making, including CEO (chief executive officer) turnover and legitimacy crises. This study examined the impact of CSIR (corporate social irresponsibility) on sustainability in two South Korean companies and assessed how internal factors (e.g., CEO turnover and succession) and external factors (e.g., market competition and environmental dynamism) influenced them. To this end, we employed a case study as the central methodology and conducted text mining, interviews, and financial analysis through content analysis. Our first finding is that CSIR negatively affects financial and non-financial performance in family firms. Second, family firms must make genuine efforts to restore their legitimacy. As per the moderation effect of CEO succession, the pivotal consideration is appointing an external CEO rather than whether the subsequent CEO is a family member. Beta chose an external CEO who was a family member, while Alpha selected a long-time company insider who was not a family member as the succeeding CEO. Alpha, which designated an internal nonfamily CEO after the CEO succession, demonstrated a financial performance resilience inferior to Beta. Third, firms must communicate promptly with stakeholders in external conditions. With internationalization and digitalization, stakeholders enjoy a greater array of choices, and the evolution of public media has heightened the prominence of CSIR. The diminishing reliance of stakeholders on a particular company, the active articulation of opinions, and enhanced knowledge magnify the impact of a company’s CSIR on the sustainability of family firms.