Using CSR to complement or substitute national institutions? The value of balancing firm attention

Crilly, D, Gupta, K and Greckhamer, T (2016) Using CSR to complement or substitute national institutions? The value of balancing firm attention. [Conference proceeding]

Abstract

Whether you can “do well” by “doing good” could well depend on what “good” you are doing and where. Therefore, Corporate Social Responsibility (CSR) can be considered an outcome of both institutional contexts and corporate agency, with a host of different CSR activities that a firm can focus on. In this paper, we situate a firm’s CSR activities in its local institutional context and study their combined effect on its financial performance. We theorize that there are two broad ways in which organizations can design their discretionary CSR activities. First, they may design their CSR activities to complement the dominant institutions of their local environment. Second, their CSR activities may substitute for the dominant institutions in their local environment. We use fsQCA to test which approach is financially rewarding, analysing a cross-national sample of firms spanning 2004- 2011. We find that high-performing firms substitute their local institutions by focusing CSR activities on areas that are neglected by dominant institutions. A substitutionary CSR strategy allows firms to balance their attention on a broader range of areas, thereby moving resources away from an area of diminishing marginal value and allowing them to differentiate themselves from competitors in attracting resources.