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CSP and governance in emerging and developing country firms: Of mirrors and substitutes

Published online by Cambridge University Press:  22 October 2019

Abstract

A recent debate in the international CSR literature has focused on the question whether CSR serves as a mirror or a substitute of country-level governance. Advocates of the mirror view highlight the role of country level institutions to drive corporate social performance (CSP) levels, whereas proponents of the substitute view find companies to become more active in light of governance gaps. We contribute to this debate by moving the focus to a sample of 264 emerging economy and developing country companies and by comparing the relationship between country-level governance and CSP based on three different CSP dimensions, namely, emissions, human rights, and community performance. Whilst we find corporate emissions performance and human rights performance to align more closely with the mirror view, there is some indication that corporate community performance—possibly traced back to the longstanding tradition of corporate philanthropy in non-Western contexts—instead acts as a substitute to fill institutional voids. We discuss implications of our findings for research and policymakers.

Type
Research Article
Copyright
Copyright © V.K. Aggarwal 2019 and published under exclusive license to Cambridge University Press 

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