Dare to be different? Investigating the relationship between analyst categorisation hierarchies and corporate social responsibility (CSR) conformity

Abstract

This paper investigates how analyst categorisation hierarchies (CH) affect corporate social responsibility (CSR) conformity. We argue that firms that are labelled as either high rank or low rank by analysts have higher institutional immunity, while firms that are categorised as middle rank have lower immunity. These heterogeneous institutional immunities will affect the levels of CSR conformity differently. Our results, which originate from a sample of Chinese listed firms from 2009 to 2016, suggest that CH exhibit an inverted‐U‐shaped relationship with CSR conformity. High‐ranked and low‐ranked firms are most likely to be CSR nonconformist, while middle‐ranked firms tend to conduct CSR like the majority of their industry peers. Moreover, we also investigate the environmental boundary conditions of this curvilinear relationship. This relationship is moderated by environmental munificence (positively) and dynamism (negatively). Our findings fill the theoretical gap by proposing an institutional‐based explanation for the CSR conformity heterogeneity which is rarely discussed and extending the boundary conditions for the categorisation‐CSR conformity relationship.

Global and local corporate social responsibility: a study of foreign entry mode choice in Spanish quoted firms

“…In this case, the global corporate social responsibility of the company acts as a reference which exerts a direct influence on the choice of entry mode, compared to the moderating role of local social responsibility of the host country. This agrees with the findings of Pan et al (2020) that suggests that the effectiveness of CSR practices in terms of differentiation largely varies with the extent to which audiences appreciate the firm's differentiation efforts.…”

Conformity or differentiation? A U-shaped relationship between peers’ CSR and focal firms’ CSR

“…Following this differentiation logic, focal firms’ CSR should be different from peers’ CSR. However, some scholars also suggested that CSR is just a symbolic tool to show firms’ conformity to external institution environments (Pan et al , 2020; Zhang et al , 2020). Following this conformity logic, focal firms’ CSR should increase with the increase of peers’ CSR.…”

“…For a particular firm, its peers’ CSR is measured by the average CSR of all firms within the same industry except the firm considered (Gao and Hafsi, 2015). Prior studies usually use industry average as a reference point when computing CSR conformity or differentiation (Pan et al , 2020; Zhang et al , 2020). Thus, we believe this operationalization is proper to identify the peers.…”

One size doesn’t fit all: How institutional complexity within the state shapes firms’ environmental innovation

“…Institutional theory has long been recognised as an effective way to explain how firms participate in environmental innovation. According to institutional theory, firms should comply with the prevailing institutional demands that firms mostly rely on, and non‐conformity will lead to firms being deemed illegitimate and outsiders in the market (Pan, Chen, Yang, & Chen, 2020). DiMaggio and Powell (1983) suggested that firms’ strategies are shaped by institutional pressures from where they are located.…”

“…How will firms respond when they are facing two conflicting institutional forces simultaneously? Firms often establish certain organisational structures, production processes and organisational cultures to satisfy the demands of institutional logics and accrue benefits such as credibility and legitimacy from their fulfilment (Pan, Chen, Yang, et al, 2020). The more one stakeholder matters, the more likely it is that firms will gear their systems towards the stakeholder's expectations.…”