Religious Diversity and Corporate Social Responsibility

Abstract

The relationship between religion and Corporate Social Responsibility (CSR) has received significant attention in the literature. Yet, the relationship between religious diversity and CSR has until now remained unexamined. Drawing on institutional and stakeholder theories, we investigate the empirical association between local religious diversity within which firms are headquartered and firms’ CSR initiatives focusing, in particular, on community initiatives. Employing a large U.S. sample, we document that firms that are headquartered in high religiously diverse counties are more involved in CSR initiatives. This positive relationship remains robust after using a variety of CSR measures (expressed with measures of CSR strengths and concerns) and controlling for a wide range of firm and demographic characteristics. Taken together, the findings support the hypothesis that local religious diversity is significantly associated with firms’ decisions concerning CSR. In this respect, the paper offers a contribution to the extant literature shedding light on the mechanism by which religiosity affects CSR showing the positive effects of the presence of multiple religions living in the same region to foster firms’ CSR commitment.