Corporate Social Responsibility in Western Europe: An Institutional Mirror or Substitute?

Abstract

In spite of extensive research on corporate social responsibility (CSR) and its link with economic and social performance, less work has investigated the institutional determinants of corporate social responsibility. This paper draws upon recent developments in comparative institutional analysis to compare the influence of different institutional environments on CSR policies of European firms. Using a dataset of European firms, we find that firms from the more liberal market economies of the Anglo-American countries score higher on most dimensions of CSR than firms in the more coordinated market economies in Continental Europe. This result lends support to the view of voluntary CSR practices in liberal economies as being a substitute for institutionalized forms of stakeholder participation. Meanwhile, CSR tends not to mirror more institutionalized forms of stakeholder coordination. Rather, in coordinated market economies, CSR often takes on more implicit forms. Our analysis also shows that national institutional and sectoral-level factors have an asymmetric effect - strongly influencing the likelihood of firms adopting "minimum standards" of CSR, but having little influence on the adoption of "best practices."

Keywords: Comparative Analysis of Economic Systems, Corporate Governance, Corporate Social Responsibility, Economic Sociology, Institutions

JEL Classification: G30, K30, L21, M41, 057, P51