Etica

Journal of Business Ethics (2010) 94:371–394 DOI 10.1007/s10551-009-0269-8

Ó Springer 2009

Corporate Social Responsibility in Western Europe: An Institutional Mirror Gregory Jackson Androniki Apostolakou or Substitute?

ABSTRACT. In spite of extensive research on corporate social responsibility (CSR) and its link with economic and social performance, few studies have investigated theinstitutional determinants of CSR. This article draws upon neo-institutional theory and comparative institutional analysis to compare the influence of different institutional environments on CSR policies of European firms. On the basis of a dataset of European firms, we find that firms from the more liberal market economies of the Anglo-Saxon countries score higher on most dimensions of CSR thanfirms in the more coordinated market economies (CMEs) in Continental Europe. This result lends support to the view of voluntary CSR practices in liberal economies as being a substitute for institutionalized forms of stakeholder participation. Meanwhile, CSR tends not to mirror more institutionalized forms of stakeholder coordination. Instead, in CMEs, CSR often takes on more implicit forms. Ouranalysis also shows that national institutional and sectoral-level factors have an asymmetric effect – strongly influencing the likelihood of firms adopting ‘minimum standards’ of CSR, but having little influence on the adoption of ‘best practices’. KEY WORDS: corporate social responsibility, corporate governance, economic sociology, institutions

Introduction Corporate social responsibility (CSR)is often seen as a strategic response to pressure from stakeholders who may be adversely affected by company practices, or as a pro-active attempt by firms to pre-empt or at least mitigate these pressures and enhance the reputation and value of the corporation. Much research has aimed to establish the business case for CSR by examining its relationship with economic perfor-

mance. Parallel tothese efforts, other literature has focused on the moral and ethical justifications for CSR independent of its potential economic utility. In spite of extensive research on CSR, relatively few studies have investigated how different types of institutions may influence the development and diffusion of CSR practices (Jones, 1999; Stanwick and Stanwick, 1998). Institutional theory sees corporations asbeing embedded in a nexus of formal and informal rules (North, 1990). These rules range from coercive political regulation to less formal constraints such as normative influence of professional groups. The so-called ‘new’ institutionalism, thus, sees institutions as creating a variety of coercive, normative or mimetic pressures on firms to adopt particular structures or practices to enhance theirlegitimacy (DiMaggio and Powell, 1991; Meyer and Rowan, 1977). Comparative research has extended the neo-institutional perspective based on the observations that such institutional contexts tend to differ across countries and often constitute distinct ‘types’ of national business systems with different logics of economic action (Crouch, 2005; Deeg and Jackson, 2007; Whitley, 1999). For example,the socalled ‘varieties of capitalism’ perspective (Hall and Soskice, 2001) has argued that national institutional environments foster systematic differences in the strategic coordination amongst corporate stakeholders that may be categorized in terms of two distinct models of business organization: liberal market economies (LMEs) in the Anglo-Saxon countries and coordinated market economies (CMEs)in Continental Europe. CSR scholars have recently sought to relate neo-institutional theory and comparative institutional analysis to understand how institutional differences across countries might influence how

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Gregory Jackson and Androniki Apostolakou Our analysis of national patterns must, therefore, stand up to comparisons with other measures. Still, our findings have an important...