National culture and environmental, social, governance controversies: a cross-country evidence

Ranjan DasGupta

Applied Economics, 2025, vol. 57, issue 26, 3642-3659

Abstract: Empirical literature is silent in examining the impact of informal institutions on firm-level environmental, social, governance [ESG] controversies. This study aims to fill this research gap by investigating how country-level national culture overall and individual dimensions measured by Hofstede’s (1980, 2011) and Hofstede and Hofstede’s (2005) framework influence firms’ intent to engage in ESG controversies in a cross-country setting consisting of 2,466 firms for the period 2010–20 from six developed and four emerging economies countries. Additionally, this study examined whether ethical behaviour and corruption level prevalent within a country could moderate the primary studied association. This study has found that a strong national culture environment actually restricts firms to indulge into ESG controversies. More specifically, I found support that national culture dimensions of high power distance, high individualism, long-term orientation and indulgence motivate firms to explore ESG controversies. On the contrary, masculinity and high uncertainty avoidance national culture prohibits firms to explore firm-level ESG controversies. Additionally, strong ethical behaviour and low corruption level when interact with strong cultural environment further weaken firms’ intent to engage in ESG controversies. For sensitive firms and firms from emerging economies, this study found strong cultural environment’s positive impact on firm-level ESG controversies.

Date: 2025
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DOI: 10.1080/00036846.2024.2337813

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