Strategic motivations for corporate social responsibility: profitability or legitimacy?

Patrick J. Callery ()
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Patrick J. Callery: University of Vermont, Grossman School of Business

Journal of Business Economics, 2024, vol. 94, issue 6, No 4, 947-974

Abstract: Abstract Management research has broadly categorized strategic motivations for corporate social responsibility (CSR) as profit-seeking or legitimacy, which are at times conflicting and complementary. The nature of firm motivations has significant implications for firm-level and societal outcomes yet is not directly observable. In this study I theorize that strategic motivations may be inferred based on observed performance relative to context-specific groups of relevant peer firms. I integrate economics and strategic management traditions to develop both a theoretical framework and an empirical model of peer effects and their underlying strategic motivations, and employ a novel instrumental variables estimation that exploits unique aspects of a recent innovation in dynamic industry classification. Results indicate that firms select referent peers based on strategic context and shed new light on the multi-dimensional nature of CSR strategies, revealing subtleties of firm behavior often masked by traditional empirical approaches. Contributions to theory and opportunities for future research are highlighted.

Keywords: Behavioral strategy; Corporate social responsibility; Instrumental variables; Peer effects; Performance feedback (search for similar items in EconPapers)
JEL-codes: C36 D21 D22 M14 M21 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s11573-024-01193-9

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