Social Responsibility Engagement Research Articles

Peer Effects on Corporate Social Responsibility Engagement of Chinese Construction Firms through Board Interlocking Ties

Peer Effects on Corporate Social Responsibility Engagement of Chinese Construction Firms through Board Interlocking Ties

CEO duality and corporate social responsibility: A moderation effect of founder CEO

With a panel of 6613 firm-year observations of NSE-listed firms during 2015–2020, we construct a corporate social responsibility (CSR) engagement score based on entropy measures to analyse the impact of chief executive officer (CEO) duality on CSR practices in India. This study shows that CEO duality negatively influences the CSR practices of the firm. We also examine the moderation impact of the founder status of CEO on the relationship between CEO duality and CSR practices and find a positive moderation effect. We have also checked the validity of CEO duality and CSR relationship under high and low external and internal monitoring. The results are in line with agency theory and the Uday Kotak committee and suggest the non-duality structure for strong corporate governance. We also extend the study by analysing the relationship between CEO duality and CSR practices across different business life cycles. The result shows that the duality structure of mature and declining firms negatively influences the CSR practices of the firm compared to introduction, growth, and shakeout firms. This result suggests that CEO duality of mature and declining firms utilize their power to maximise available resources for their personal benefits at the cost of other stakeholders. Further, the findings are robust to applying propensity score matching, two stage least squares, and three stage least squares.

The Characteristics and Institutional Factors of Sustainable Business Models

Abstract The need for sustainable business models (SBMs) has grown significantly in response to contemporary environmental and social challenges such as climate change. This article offers a literature review of the characteristics and institutional factors in the landscape of SBMs. We define SBMs as transformative models that yield positive impacts on the environment and society. It emphasizes the fundamental reconfiguration of how organizations create, deliver, and capture value. The literature review describes the characteristics of SBMs which attempt to balance profitability with the management of environmental and social impacts. We underline the relevance of stakeholder theory in the creation of SBMs in the context of the triple bottom line. Challenges in SBM adoption, such as organizational inertia, are also discussed. The circular economy model is a promising approach within SBMs, emphasizing product and material reuse in contrast to the linear take-make-use-dispose model. The alignment of SBMs with broader sustainability goals, corporate social responsibility (CSR) engagement, and proactive consideration of future regulatory changes would enhance the companies’ strategic advantage. The paper concludes by advocating the adoption of SBMs not just as a responsible choice but as a strategic imperative for long-term success, resilience, and positive social impact.

Evaluating the Relationship between Corporate Social Responsibility Incentives and Financial Outcomes of Corporations Operating in the GCC Region

Corporate Social Responsibility (CSR) is a concept that has gained traction in strategic management over the years, and it is continuously being cited as important for both the business and the business shareholders. Although there is much research examining the general CSR-CFP relationship, there is very little, if any, research that investigates the firms operating in GCC countries, which is the main objective of this study. One of the new methods used to measure Corporate Social Responsibility engagement in any organisation is the ESG rating. The ESG rating measures the Environmental, Social and Governance (ESG) dimensions of Corporative Social Responsibility engagement. This research uses the stakeholder theory framework, together with the agency theory framework to find the impact that CSR has on the financial performance of organisations. In the research, we used annual data of ESG and financial ratios of 98 publicly listed firms operating in the Gulf Cooperation Council, from 2008 to 2018. Regression analysis was used to test the impact of ESG scores on the financial performance of organisations. According to the results, the Environmental, Social, and Governance dimensions have a significant impact on the financial performance of organisations operating in the Gulf Cooperation Council. This study contributes to the body of knowledge on the relationship between CSR performance and Financial Performance.

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.

Responsible risk-taking and the CSP-financial performance relation in the banking sector: A mediation analysis

In this study, a mediation analysis is conducted using data for 394 banks listed in 54 countries from 2002 to 2017 with the aim to investigate the role of bank risk-taking as a mediation channel to explain the CSP–financial performance relationship in the banking sector. Results show that stronger CSP is associated with improved financial performance and this relationship is partially mediated by bank risk-taking, with CSP increasing financial performance through the reduction of bank risk. Adopting more prudent—less risky or speculative—banking practices is a key method through which banks can embody social responsibility, given the systemic importance of bank stability. However, such banks tend to be more financially successful. The empirical results are consistent across various robustness checks, thereby supporting to the notion that corporate social responsibility (CSR) engagement helps banks to achieve a “win-win” situation—more profitable yet more responsible and less risky banks.

Can CSR engagement improve firm’s resilience to the COVID-19 pandemic? Evidence from the Moroccan stock market.

The purpose of this paper is to investigate empirically the role of corporate social responsibility engagement on stock returns during the COVID-19 crisis in the case of a sample of Moroccan-listed companies. The authors use a difference-in-difference (DiD) regression estimated on a panel dataset of a sample of 23 Moroccan listed companies for the period spanning from March 2019 to March 2021. We identified the connection between CSR activities and financial returns by comparing the monthly stock returns of the treatment and the control groups. Empirical results reveal that the pandemic-induced decrease in stock returns is stronger for firms with CSR activities. It means that engaging in CSR activities does not immunize Moroccan firms during the pandemic. Our findings show that Moroccan’s stock market is unable to positively value CSR activities. The results indicate that agency problems lead Moroccan investors to overinvest in costly CSR activities, which reduce the value of the firms in times of the COVID crisis and delay their recovery from it. To the best of our knowledge, this study is the first to investigate the relationship between CSR activities and the resilience of Moroccan companies. Also, this study is distinguished by using the DiD method and by exploiting data from the Eikon Refinitiv database.

Why do sports goods manufacturers choose different corporate social responsibility engagements?

This study examines the impact of financialization and product market competition on the corporate social responsibility (CSR) engagements in sports goods manufacturing industry. Utilizing a dataset of China's listed firms, we employ textual analysis to identify organizations within this sector and create a panel data model to analyze the determinants of CSR engagements. Our empirical findings reveal that financialization and product market competition positively influence shareholder-related CSR engagements. Additionally, product market competition enhances the effect of financialization on these engagements. Conversely, a negative correlation exists between product market competition and stakeholder-related CSR engagements. Moreover, firms not categorized as State-Owned Enterprises (SOEs) or within high-pollution industries show a positive response in CSR engagements to both financialization and product market competition. Our results also highlight that managerial compensation and financial constraints modify the impacts of financialization and product market competition on shareholder-related CSR engagements. Collectively, our findings shed light on the challenges that sports goods manufacturing firms face in aligning their primary goals with CSR commitments.

Drivers and outcomes of CSR engagement in UK SMES

ABSTRACTBuilding on insights from the motivation-opportunity-ability (MOA) theory, we develop and test a conceptual framework of perceived antecedents, contingencies, and broader performance outcomes of corporate social responsibility (CSR) engagement within small and medium enterprises (SMEs). By following a micro-level approach and using multisource data including a sample of 219 responses from UK entrepreneurs and objective performance data, we reveal the importance of perceived individual-level characteristics such as the entrepreneur’s personal values and competence, as well as the moderating role of perceived firm-level employee supportiveness in strengthening CSR engagement. We further highlight the positive effects of CSR engagement on a broad range of business, social and environmental performance outcomes as revealed by the entrepreneurs in our sample.

Do CSR performance and reporting facilitate access to debt financing in emerging markets? The role of asset structure and firm performance

PurposeThis study aims to guide firms in emerging markets on whether corporate social responsibility (CSR) engagement facilitates their access to debt with the moderation of asset structure and firm performance. Considering the moderating effect analysis, this study explores the substitutive or complementary effect of these two contingencies on CSR-oriented firms in accessing debt financing.Design/methodology/approachDrawing on data collected for 16 emerging markets between 2008 and 2019, this study runs country–industry–year fixed-effects regression.FindingsThis study finds that CSR performance and reporting facilitate access to debt in emerging markets. However, CSR performance does not have an inverted U-shaped influence on firms’ access to debt financing. The moderation analysis of this study shows that asset tangibility has a negative moderating effect on the link between CSR engagements (i.e. both CSR performance and reporting) and access to debt, confirming a substitutive relationship between asset tangibility and CSR engagements in accessing debt. In contrast, firm performance is positively moderating the nexus between CSR engagement proxies and access to debt, which confirms a complementary type of relationship between firm performance and CSR engagements in accessing debt.Practical implicationsThe empirical evidence of this study implies that creditors critically consider CSR engagements of firms in the loan-granting decision process. Similarly, the inverted U-shaped relationship between CSR and access to debt implies that there is an optimal level of CSR engagement creditors might consider in their decision. Likewise, the moderating effects analysis highlights that asset tangibility and firm performance are two conditions under which CSR performance and reporting are linked to access to debt.Originality/valueEmerging countries are a different set of countries than developed ones; they have high growth rates and hence need financing, have a weaker institutional environment and have weaker stakeholder power. These particularities motivated the authors to conduct a separate study focusing on CSR and debt financing links drawing on a wide range of emerging countries. Thus, this study adds to the ongoing debate by examining the conditions under which CSR-oriented firms can access debt financing in emerging economies.

Socially responsible local firms and stock market participation: Evidence from the U.S. household survey

In this study, we examine the relation between local firms’ corporate social responsibility (CSR) engagement and households’ stock market participation. Using data from U.S. household surveys, we find that households are more likely to participate in the stock market and hold a larger proportion of their portfolios in stocks when the average level of CSR performance of local firms is high. Results from further analyses show that the positive relation between local firms’ average CSR engagement and households’ stock market participation is stronger for households (1) in states in which firms’ CSR engagement tend to receive greater media and more positive exposure; and (2) with a more educated, younger and wealthier head. Overall, our findings suggest that local firms’ CSR performance plays an important role in enhancing investors’ confidence in firms’ ethical practices and financial return from their equity investment, thereby influencing their willingness to participate in the stock market.

Does country sustainability improve firm ESG reporting transparency? The moderating role of firm industry and CSR engagement

Sustainable development is a crucial topic of public debate, and the private sector is essential to achieving the United Nations' 17 Sustainable Development Goals (SDGs). Previous research has shown that Environmental, Social, and Governance (ESG) reporting can encourage firms to better integrate sustainability in their strategy. In such context, this study investigates the relationship between a country's SDG achievements and firms' engagement in ESG reporting by analysing a large sample of 1327 firms in 14 countries from 2016 to 2020. Our main finding reveals a significant positive relationship between a country's SDG achievement and firms' ESG disclosure transparency scores. This effect is particularly strong for firms in light industries, firms with a higher Corporate Social Responsibility (CSR) engagement, and those with the presence of women on their boards of directors. We conducted multiple sensitivity analyses, and our findings are robust, which can provide useful recommendations for firms, investors, and policymakers.

Voluntary or Mandatory Corporate Social Responsibility Engagement? A post-2000 Analysis of China-Zimbabwe Economic Relations

The quest for economic development in Africa's emerging economies like Zimbabwe is an uphill undertaking that necessitates multi-stakeholder contribution. Since 2000, China and Chinese firms have played a considerable role in contributing to the Zimbabwean economy and community well-being through CSR programmes. However, in the absence of a CSR regulatory framework, it is not clear whether Zimbabwe harnesses the full social-economic potential of CSR arrangements. Existing research on CSR in the country provides sketchy evidence and mainly from a foreign perspective. This paper analyses Chinese corporations’ engagement in promoting the socio-economic progress of communities in a non-mandatory CSR environment and presents a case for a regulatory framework in Zimbabwe. It applies interpretivism to desk review evidence from sources published between 2017 and 2022 and reveals that, despite voluntary CSR arrangements, Chinese firms have contributed to the socio-economic well-being of communities by investing in some development projects. This notwithstanding, a voluntary CSR engagement has provided a leeway for Chinese firms to neglect environmental concerns, violate employee labour rights, and threaten community displacement, especially in mineral-rich areas. The paper concludes that Zimbabwe’s economic hardships push the country to prioritise economic over social and environmental concerns of communities in fear of losing the scarcely available Foreign Direct Investment. However, mandatory CSR arrangements provide mutual benefits to both Zimbabwe and China, thus an opportunity to legislate CSR without jeopardising Sino-Zimbabwe's economic and political relations.

Do venture capitalists with foreign experience drive corporate social responsibility better? Evidence from China

AbstractUsing a manually collected dataset, we examine the effects of venture capitalists with foreign experience on firms' corporate social responsibility (CSR) engagement. By analysing firm‐, deal‐ and venture capitalist‐level samples, we find that venture capitalists with foreign experience significantly improve their portfolio firms' CSR; this finding holds across extensive robustness tests. Venture capitalists with foreign experience promote CSR more significantly if they join the board of directors or invest in the firm's early stages. Our results suggest that venture capitalists with foreign experience transplant the client demands, management practices and social norms they have experienced abroad to their firms.

CEO behavior and CSR engagement: the moderating role of bank risk-taking

PurposeThe main purpose of this paper is to look at the link between chief executive officer (CEO) behavior and corporate social responsibility (CSR) engagement with the moderating role of bank risk-taking behavior.Design/methodology/approachBased on a 13-year data set (2007–2019), the authors applied the feasible generalized least squares with panel data to test the hypotheses.FindingsThe findings reveal a positive and significant link between CEO behavior and CSR engagement. Based on these findings, it can be argued that the characteristics of the CEO of the banks would improve the CSR strategies. Furthermore, the study suggests a moderating effect of bank risk-taking in the link between psychological bias and corporate social responsibility engagement (CSR engagement).Practical implicationsAs CEO behavioral characteristics are essential to understanding CSR practice, boards of directors should consider the behavioral traits of dominant and overconfident CEOs while designing CSR practices.Social implicationsIf the bank behaves in a socially responsible manner, direct and indirect stakeholders may be able to evaluate the level of risk-taking in more detail.Originality/valueThis research highlights the importance of CEO behavior characteristics for CSR, which is a crucial application that supports the upper echelons theory; and fills a gap in literature research. It is one of the few studies examining the interaction between risk-taking, CEO behavior and CSR engagement.

Does Regulatory Reform of Internal Controls in China Improve Internal Control Effectiveness? Role of Corporate Social Responsibility Engagement

ABSTRACT The regulatory reform of internal controls (ICs) in China mandates that certain firms incorporate corporate social responsibility (CSR) engagement into ICs and issue IC reports. Using a staggered difference-in-differences research design, we find that IC effectiveness has worsened following this reform, but this deterioration is partially mitigated when mandated firms report their CSR engagement. Additional analyses demonstrate that this deterioration is further lessened when CSR reports are prepared in accordance with Global Reporting Initiative reporting guidelines or assured by external auditors and when firms spend more on CSR activities. Finally, cross-sectional analyses suggest that CSR engagement mitigates the deterioration in IC effectiveness more in non–state-owned enterprises and in firms that have better financial performance, lack political connections, or are located in regions with higher market development or social trust. Data Availability: Data are available from the public sources cited in the text. JEL Classifications: M4; M48.

Regulatory uncertainty and corporate social responsibility

Drawing upon the notion that the legal environment provides the conceptual and practical space in which corporate actions are deemed to be responsible (or not), we examine the effect of regulatory uncertainty on Corporate Social Responsibility (CSR) engagements. Using a sample of US firms, we find that when the legal and regulatory environment is uncertain, firms decrease overall CSR activities, as well as activities related to environmental performance and social performance. We introduce and develop the importance of the legal framework in which CSR is activated and demonstrate how its non-static nature impacts how such CSR engagements are carried out.

Human versus Virtual Influencer: The Effect of Humanness and Interactivity on Persuasive CSR Messaging

Virtual influencers (VIs) are computer-generated avatars whose purpose is to exert influences on social media. The unique features of VIs have the potential to overcome several shortcomings that plague human influencers (HIs) while maintaining the advantages of HIs. Hence, this study (1) compares the persuasiveness of HIs and VIs with different humanlike visual cues; (2) examines how interactivity and visual humanness interplay in determining source credibility; and (3) investigates how credibility of endorsers can promote corporate social responsibility (CSR) engagement and brand reputation. Conducting an online experiment with 2 (humanness: VIs versus HIs) × 2 (interactivity: high versus low) between-subjects design (n = 219), the study found that social media influencers (SMIs) with higher humanness led to higher source credibility. Further, an interaction effect between humanness and interactivity has been found, as interactivity played more critical role in elevating credibility for VIs than HIs. Source credibility mediated the positive effect of humanness over CSR engagement and brand reputation. Moderated mediations have also been found, as the mediating effect of source credibility was more pronounced in the low-interactivity condition than in the high-interactivity condition. Overall, the study provides empirical evidence suggesting that VIs’ credibility and effectiveness can be greatly enhanced via active interaction.

Striving for sustainable development: The impact of corporate social responsibility on corporate performance of Chinese manufacturing multinationals in Africa

AbstractThe Forum of China‐Africa Cooperation benefits both China and Africa in tackling development issues. Increased foreign direct investment from China can specifically help to reduce Africa's struggles to meet its 2030 sustainable development goals. Due to insufficient global investment experience and stigmatization, Chinese multinational companies (MNCs) often experience unsatisfactory corporate performance in host countries. A successful strategy to mitigate stigma and be perceived by stakeholders as “legitimate” is through corporate social responsibility (CSR) engagement. Exploring how Chinese MNCs in Africa can achieve desirable corporate performance through CSR engagement is important to promote mutual benefits for both Chinese MNCs and African societies. This study aimed to contribute to emerging market CSR literature by examining the relationship between CSR engagement and corporate performance of Chinese manufacturing MNCs operating in Africa, with emphasis on moral legitimacy as a mediating factor and institutional distance as a moderating factor. Survey data were collected between June 2019 and January 2020 from a sample of 203 Chinese manufacturing MNCs subsidiaries in Africa. By using hierarchical regression and bootstrapping, we find that the positive relationship between CSR engagement and corporate performance is fully mediated by moral legitimacy gaining. This mediation effect is moderated by institutional distance. The results enrich our understanding of how Chinese manufacturing MNCs' corporate performance can be enhanced by addressing social challenges and promoting sustainable investment cooperation with African countries. These results are important for Chinese MNCs and authorities, as well as African public authorities when designing policies to promote China‐Africa sustainable investment cooperation.

Staging or real commitment? CEO reputation management as a moderator of the influence of firm size on corporate social responsibility performance and controversies

The increasing importance of corporate social responsibility over recent decades has led research on its drivers to grow exponentially. However, the mystery of different levels of commitment despite comparable firm characteristics related to size, such as financial resources and similar external pressures, has still not been completely unravelled. Given that corporate engagement in social responsibility is not only shaped by firm characteristics but also – and even especially – by the preferences and motivations of its leaders, this study explores how CEOs' reputational ambitions moderate the relationship between firm size and corporate social responsibility. We argue that CEOs who actively manage their reputation are more aware of the reputation-enhancing potential of corporate social responsibility. We test our ideas with a cross-sectional sample of 128 listed companies from seven Western European countries, operationalising CEOs' reputation management with a novel measure based on their self-presentation and posting behaviour on LinkedIn. Our results show support for a weakening influence of CEOs’ reputation management on the positive relationship between firm size and corporate social responsibility controversies, but we do not find support for a strengthening effect on corporate social responsibility performance. In light of the fact that adequate corporate social responsibility performance involves more than just staying away from scandals, our findings indicate that CEOs who actively present themselves as environmentally and socially committed are more likely to do so in response to the pressure and current trend of being green and social than out of a real commitment.