Ethnic Diversity, Trust and Corporate Social Responsibility: The Moderating Effects of Marketization and Language

Gaowen Kong (), T. Dongmin Kong (), Ni Qin () and Li Yu ()
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Gaowen Kong: Guangzhou University
T. Dongmin Kong: Huazhong University of Science and Technology
Ni Qin: Huazhong University of Science and Technology
Li Yu: University of Manitoba

Journal of Business Ethics, 2023, vol. 187, issue 3, No 3, 449-471

Abstract: Abstract While the effect of culture on finance and management has been well documented in the literature, it is unclear whether and by which channel(s) ethnic diversity affects corporate social responsibility (CSR). Integrating social identity theory and neo-institutional theory, we investigate the ethnic diversity–CSR relation and explore potential mechanisms and boundary conditions. Based on the distribution of ethnic groups across different regions in China, We find that ethnic diversity negatively affects firms’ CSR performance. We document that social trust mediates the negative ethnic diversity–CSR relationship, and linguistic diversity strengthens and marketization mitigates this relation. The results are robust for potential endogeneity and alternative measures of ethnic diversity and CSR performance. Our study highlights the impact of ethnic diversity on corporate behaviors, and provides practical and ethical implications on CSR promotion.

Keywords: Ethnic diversity; Corporate social responsibility (CSR); Social trust; Linguistic diversity; Marketization (search for similar items in EconPapers)
JEL-codes: J15 M14 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (8)

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DOI: 10.1007/s10551-022-05236-5

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