TY - JOUR
T1 - Variations in the corporate social responsibility-performance relationship in emerging market firms
AU - Cuervo-Cazurra, Alvaro
AU - Purkayastha, Saptarshi
AU - Ramaswamy, Kannan
N1 - Funding Information:
Funding: A. Cuervo-Cazurra thanks the Lloyd Mullin fellowship at Northeastern University for finan-cial support. S. Purkayastha thanks Indian Institute of Management, Calcutta for financial support. Supplemental Material: The online appendix is available at https://doi.org/10.1287/orsc.2022.1639.
Publisher Copyright:
© 2022 INFORMS.
PY - 2023/7
Y1 - 2023/7
N2 - Corporate social responsibility (CSR) and its impact on performance have generated a debate that has evolved across several perspectives (shareholder, stakeholder, resource-based, and contingency). Building on the resource-based and contingency perspectives, we shed newlight on this debate by analyzing the impact of CSR on performance in emerging market firms, advancing the idea that CSR is a mechanism that helps address market and government failures. We first argue that CSR's three constituent dimensions (environmental, social, and governance) vary in their impact on performance because each dimension has a differentmitigating effect on contextual failures that hobble emergingmarket firms. Specifically, we contend that social CSR has a larger effect on performance than either governance CSR or environmental CSR for emerging market firms, because the former helps build capabilities thatmore directly reduce the negative consequences of government failures in the provision of public goods and services that firms need to operate efficiently.We then provide additional depth to this idea by arguing that othermechanisms used for mitigating market failures in an emerging market context, namely firm-level business group affiliation and country-level government policy nudges, strengthen this differential influence of each of the three dimensions of CSR on performance. Analyses of a sample of 89 publicly traded Indian firms from2007 to 2017 support these arguments.
AB - Corporate social responsibility (CSR) and its impact on performance have generated a debate that has evolved across several perspectives (shareholder, stakeholder, resource-based, and contingency). Building on the resource-based and contingency perspectives, we shed newlight on this debate by analyzing the impact of CSR on performance in emerging market firms, advancing the idea that CSR is a mechanism that helps address market and government failures. We first argue that CSR's three constituent dimensions (environmental, social, and governance) vary in their impact on performance because each dimension has a differentmitigating effect on contextual failures that hobble emergingmarket firms. Specifically, we contend that social CSR has a larger effect on performance than either governance CSR or environmental CSR for emerging market firms, because the former helps build capabilities thatmore directly reduce the negative consequences of government failures in the provision of public goods and services that firms need to operate efficiently.We then provide additional depth to this idea by arguing that othermechanisms used for mitigating market failures in an emerging market context, namely firm-level business group affiliation and country-level government policy nudges, strengthen this differential influence of each of the three dimensions of CSR on performance. Analyses of a sample of 89 publicly traded Indian firms from2007 to 2017 support these arguments.
KW - Business groups
KW - Corporate social responsibility
KW - Emerging markets
KW - Government failures
KW - Institutional economics
KW - Market failures
KW - Policy
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U2 - 10.1287/orsc.2022.1639
DO - 10.1287/orsc.2022.1639
M3 - Article
AN - SCOPUS:85166769223
SN - 1047-7039
VL - 34
SP - 1626
EP - 1650
JO - Organization Science
JF - Organization Science
IS - 4
ER -