The Convergence of Corporate Social Responsibility Practices

Abstract:     
This paper tries to explain why many socially-responsible firms appear to converge on a standard set of corporate social responsibility (CSR) practices instead of striving to differentiate themselves from rivals and achieve competitive advantage. Three explanations of this convergence are presented: herd behaviour, institutional isomorphism, and strategic cooperation. The different empirical predictions of these theories are laid down. The resulting framework is used to analyse a recent self-regulatory scheme launched by the steel industry, in which knowledge-sharing was used to stimulate poor performers to curb carbon dioxide emissions.

The main finding is that social practices of firms are very often driven by pressures to conform, instead of pressures to perform. Even firms that want to be innovative may be forced by stakeholder requests to adopt passive and imitative behaviour. The paper suggests that there are two types of CSR - convergent and divergent - and that firms need to establish which type of CSR best fits their needs before they address the issues raised by stakeholders. While the literature on CSR focuses on the relationship between stakeholders and single firms, the paper tries to add to this literature by analysing the relationship between stakeholders and industries. The paper also contributes to the debate on the financial benefits of CSR by arguing that in industries where the convergent type of CSR is dominant researchers should not expect above-average returns for socially-responsible firms.

Keywords: Corporate social responsibility, strategy, institutional isomorphism, herd behaviour, cooperative behaviour, private regulation.

JEL Classifications: M14, M10, L20

Accepted Paper Series