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Mind the Gap: The Interplay Between Internal and External Actions in the Case of Corporate Social Responsibility


Olga Hawn


Boston University School of Management

Ioannis Ioannou


London Business School

July 2, 2014


Abstract:     
We explore the effect of the interplay between a firm’s internal and external actions on performance in the context of corporate social responsibility (CSR). Drawing from the neo-institutional theory, we argue that internal and external CSR actions jointly contribute to the accumulation of intangible firm resources and therefore are associated with better performance. Importantly, though, we theorize that a wider gap between internal and external actions — one reflecting more “talk” and less “action” by firms — negatively affects performance. Empirically, we use the market-value equation and a sample comprising 1,987 firms in 43 countries from 2002 to 2008. We find support for our hypotheses in the main analyses and robustness tests addressing potential endogeneity. We discuss implications for future research and practice.

Number of Pages in PDF File: 41

Keywords: corporate social responsibility (CSR), firm performance, legitimacy, internal and external actions, market-value equation

JEL Classification: M10, M14

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Date posted: July 6, 2012 ; Last revised: July 3, 2014

Suggested Citation

Hawn, Olga and Ioannou, Ioannis, Mind the Gap: The Interplay Between Internal and External Actions in the Case of Corporate Social Responsibility (July 2, 2014). Available at SSRN: http://ssrn.com/abstract=2101775 or http://dx.doi.org/10.2139/ssrn.2101775

Contact Information

Olga Hawn (Contact Author)
Boston University School of Management ( email )
595 Commonwealth Avenue
Boston, MA 02215
United States
Ioannis Ioannou
London Business School ( email )
Sussex Place
Regent's Park
London, NW1 4SA
United Kingdom
02070008748 (Phone)
HOME PAGE: http://www.london.edu
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