Unpacking the Drivers of Corporate Social Performance: A Multilevel, Multistakeholder, and Multimethod Analysis

Abstract

The question of what drives corporate social performance (CSP) has become a vital concern for many managers and researchers of large corporations. This study addresses this question by adopting a multilevel, multistakeholder, and multimethod approach to theorize and estimate the relative influence of macro (national business system and country), meso (industry), and micro (firm-level) factors on CSP. Applying three different methods of variance decomposition analysis to an international sample of 2,060 large public companies over a time span of 5 years, our results show that firm-level factors explain the largest proportion of variance in aggregate CSP as well as CSP oriented toward communities, the natural environment, and employees. These results support our hypotheses according to which CSP is not primarily driven by macrolevel or mesolevel factors, except for shareholderoriented CSP, which is relatively more influenced by country-level factors. As a whole, our findings also point to the value of subdividing CSP into its stakeholder-specific components as this disaggregation allows for a more careful examination of distinct drivers of distinct aspects of CSP.Keywords: Corporate social performance; corporate social responsibility; decomposition of variance; hierarchical linear modeling; stakeholders; variance components analysis.Abbreviations: ANOVA = analysis of variance; CSP = corporate social performance; HLM = hierarchical linear modeling; MLE = maximum likelihood estimation; NBS = national business system; REMLE = restricted maximum likelihood estimation; VCA = variance components analysis.Unpacking 2

Corporate Tax: What Do Stakeholders Expect?

“…As such, theories in CSR and ethics lag behind this much more holistic view of business evidenced in the findings of this study by holding on to a legal or regulatory debate in the CSR literature (Mackey et al 2007;Mueckenberger and Jastram 2010;Russo and Perrini 2010;Svendsen and Laberge 2001). Interestingly, this call for more integrated management theory corresponds with a debate in the management literature on the purpose of business (Alexander and Douthit 2016;Hsieh 2015;Nichols 2014) as well as with reviews in CSR and ethics literature on the holistic nature of stakeholder expectations (Aguinis and Glavas 2012;Gond et al 2011;Liston-Heyes and Ceton 2009;Lucea 2010;Matten and Moon 2008;Orlitzky et al 2015). Our study starts to integrate aspects that can be seen to relate to legal, economic, ethical, and social aspects of business by presenting a process, outlined in Fig.…”

“…Indeed, businesses that are trying to avoid paying tax may run the risk of triggering public outcry and crises (Hoi et al 2013;Wallace 2003). A well-established stream of literature within the field of CSR examines social issues related to crises, recalls, and disasters (for recent reviews see Orlitzky et al 2003Orlitzky et al , 2015. It can be argued that the subject of corporate tax may link to the social issues literature in that firms employing corporate tax functions with the aim to minimize tax payments may need to balance such activities with the risk of giving rise to social issues and reputational disasters (Aguinis and Glavas 2012;Brower and Mahajan 2013;Hardeck and Hertl 2014).…”

“…It can be argued that the subject of corporate tax may link to the social issues literature in that firms employing corporate tax functions with the aim to minimize tax payments may need to balance such activities with the risk of giving rise to social issues and reputational disasters (Aguinis and Glavas 2012;Brower and Mahajan 2013;Hardeck and Hertl 2014). Orlitzky et al (2015), for example, combine various levels of influence (including national business systems, industry, company, and time) and several analytical techniques to understand corporate stakeholder responsibility toward groups such as local communities, customers, shareholders, and others. Corporate tax may well influence corporate behavior through national, industry, company, and time perspectives.…”

“…In a pioneering study, Dowling (2014) explores whether corporate tax avoidance is socially irresponsible and whether tax can be seen as a boundary condition of CSR. There are also some suggestions in the literature that if corporate tax payments are widely out of line with societal expectations, public boycotts, interference by regulators/courts or damaging press coverage may follow (Hardeck and Hertl 2014;Hoi et al 2013;Miles 1987;Orlitzky et al 2015;Wallace 2003). However, the concept of corporate tax is often missing in theoretical frameworks, and links to the social issues management literature in terms of the potentially explosive nature of corporate tax as subject of public interest has also been neglected (Orlitzky et al 2003;.…”

“…Likewise, Austin and Wilson (2013) find that companies owning very valuable brands tend to pay higher effective tax rates than otherwise identical firms-presumably to avoid any negative incident. Findings such as these suggest that, from a firm perspective, corporate tax may be a potential threat to reputation and brand, and needs to be managed to forego tax-related crises and costly repayments (Crane et al 2015;Orlitzky et al 2015;Waddock et al 2002;Welcomer 2002;West et al 2015). However, very little is known to date from existing CSR studies about what stakeholders actually think concerning corporate tax-and the potential for dialogue between different stakeholders from within and outside the business in this process has not yet been explored (Mueckenberger and Jastram 2010;Russo and Perrini 2010;Svendsen and Laberge 2005).…”