Community Social Capital and Corporate Social Responsibility

44 Pages Posted: 21 Sep 2016

See all articles by Chun Keung (Stan) Hoi

Chun Keung (Stan) Hoi

Rochester Institute of Technology - Saunders College of Business

Qiang Wu

Rensselaer Polytechnic Institute (RPI) - Lally School of Management

Hao Zhang

Rochester Institute of Technology (RIT) - Saunders College of Business

Date Written: September 19, 2016

Abstract

This study examines whether community social capital in US counties, as captured by strength of civic norms and density of social networks in the counties, affects corporate social responsibility (CSR) of resident corporations headquartered in the counties. Analyses of longitudinal data from 3,688 unique US firms between 1997 and 2009 provide strong empirical support for the propositions that community social capital facilitates positive CSR activities that benefit non-shareholder stakeholders and constrains negative CSR activities that are detrimental to non-shareholder stakeholders. Additionally, we explore the effects of institutional logics arising from community isomorphism on positive and negative CSR activities, respectively. And, we explore the respective effects of corporate engagement in positive and negative CSR activities on corporate financial performance. Firms undertake more positive CSR activities when such activities are more prevalent among other local corporations headquartered in the same county. But, there is no systematic relationship between negative CSR activities and the community level corporate engagement in negative CSR activities. Positive CSR activities enhance a firm’s future financial performance and the positive effect is more prominent among firms headquartered in counties with high community social capital. However, negative CSR activities only reduce a firm’s future financial performance among firms headquartered in counties with high community social capital; negative CSR activities do not affect performance among firms headquartered in counties with lower levels of community social capital. Collectively, these results highlight the distinct effects of local social institutions, namely community social capital, on positive CSR activities and negative CSR activities, respectively.

Keywords: Corporate social responsibility; Social capital; Social Norm

Suggested Citation

Hoi, Chun Keung (Stan) and Wu, Qiang and Zhang, Hao, Community Social Capital and Corporate Social Responsibility (September 19, 2016). Journal of Business Ethics, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2840791

Chun Keung (Stan) Hoi (Contact Author)

Rochester Institute of Technology - Saunders College of Business ( email )

105 Lomb Memorial Drive
Rochester, NY 14623
United States
585-475-2718 (Phone)

Qiang Wu

Rensselaer Polytechnic Institute (RPI) - Lally School of Management ( email )

110 8th St
Troy, NY 12180
United States
518-276-3338 (Phone)
518-276-8661 (Fax)

Hao Zhang

Rochester Institute of Technology (RIT) - Saunders College of Business ( email )

105 Lomb Memorial Dr.
Rochester, NY 14623
United States

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