The Bidirectional Relationship between Digital Transformation and Corporate Social Responsibility: A Legitimacy Perspective

Guangyu Huang and Liqiong Shen ()
Additional contact information
Guangyu Huang: Business School, Foshan University, 528000 Foshan, China
Liqiong Shen: School of Business Administration, South China University of Technology, 510640 Guangzhou, China

Sustainability, 2024, vol. 16, issue 7, 1-21

Abstract: The pursuit of efficiency or legitimacy is an important choice facing corporate sustainability, especially in uncertain environments. Digital transformation contributes to corporate efficiency, while fulfilling corporate social responsibility (CSR) is a non-market-based strategy for companies seeking legitimacy. However, sustainability research remains unclear about the link between digital transformation and CSR and the mechanisms behind it. To fill this research gap, we incorporate economic policy uncertainty (EPU) into our analytical framework and elucidate the theoretical mechanism of the simultaneous bidirectional relationship between digital transformation and CSR from the perspective of organizational legitimacy. We construct a simultaneous equation model and analyze a sample of 468 Chinese listed companies collected from 2011 to 2018 using the three-stage least squares method. Our findings reveal a mutually reinforcing bidirectional relationship between digital transformation and CSR. Furthermore, we discover that EPU weakens the facilitating influence of digital transformation on CSR but strengthens the positive impact of CSR on digital transformation. Our conclusions suggest that companies taking on more CSR in digital transformation contexts can help achieve the organic unity of efficiency and legitimacy for sustainable development, but uncertainty can undermine this positive interaction.

Keywords: digital transformation; corporate social responsibility; economic policy uncertainty; bidirectional relationship; sustainability (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.mdpi.com/2071-1050/16/7/3029/pdf (application/pdf)
https://www.mdpi.com/2071-1050/16/7/3029/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:16:y:2024:i:7:p:3029-:d:1370434

Access Statistics for this article

Sustainability is currently edited by Ms. Alexandra Wu

More articles in Sustainability from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().