In weak institutional contexts characterized by institutional voids, firms often struggle to demonstrate their ethical conduct. They are seen as raising the costs of influencing stakeholders and correspondingly the level of investment needed in stakeholder influence capacity in order to achieve corporate financial performance (CFP). We hypothesize and find support for a U-shaped curvilinear relationship between corporate social responsibility (CSR) engagement level and CFP in the context of India—a country characterized by relatively weak institutions. We also investigate whether family firms can help overcome the drawbacks of weak institutional contexts and thus influence the relationship between CSR and CFP. We adopt a large sample, panel data approach to test our theoretical model. We observe a U-shaped relationship, consistent with earlier findings in developed countries. However, we find that this significant U-shaped relationship is observed only in the case of family firms in our sample.

The CSR–CFP relationship in the presence of institutional voids and the moderating role of family ownership

Galeazzo A.;
2021

Abstract

In weak institutional contexts characterized by institutional voids, firms often struggle to demonstrate their ethical conduct. They are seen as raising the costs of influencing stakeholders and correspondingly the level of investment needed in stakeholder influence capacity in order to achieve corporate financial performance (CFP). We hypothesize and find support for a U-shaped curvilinear relationship between corporate social responsibility (CSR) engagement level and CFP in the context of India—a country characterized by relatively weak institutions. We also investigate whether family firms can help overcome the drawbacks of weak institutional contexts and thus influence the relationship between CSR and CFP. We adopt a large sample, panel data approach to test our theoretical model. We observe a U-shaped relationship, consistent with earlier findings in developed countries. However, we find that this significant U-shaped relationship is observed only in the case of family firms in our sample.
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11577/3396626
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