Are CSR and advertising complements or substitutes in spurring firm visibility? Moderating effect of board diversity, CSR committees, and financial slack

Abstract

This paper examines corporate social responsibility (CSR) and advertising as two firm visibility channels and tests their complementarity/substitution. The study extends the investigation with moderating variables, including board gender diversity, CSR committees, and financial slack. Using a sample that includes 53,835 firm‐year observations worldwide associated with 10 business sectors from 2007 to 2019, we find that CSR performance is negatively associated with advertising; this holds for the aggregate CSR score as well as for environmental and social pillars but not for the governance pillar. This implies that two visibility channels—namely CSR and advertising—are substitutes except for the governance dimension. Furthermore, female directors do not advocate for the two visibility channels but instead are proponents of one, in line with the agency cost approach. However, CSR committees fully promote two communication channels supported by the composite and three individual pillars of CSR. Finally, financial slack matters in utilizing two publicity channels concurrently. The findings show that several contingencies must be taken into account to improve companies' visibility while avoiding exacerbating agency costs for better business management.

Determinants of corporate environmental performance and the moderating effect of economic crises

“…Thus, CEP is less ambitious in a crisis context (Bansal et al, 2015;Iatridis and Kesidou, 2018). The results show how the mechanisms that foster CEP might be affected by a situation of economic crisis (Jaakson et al, 2012;Karmani et al, 2023). In the same sense, the commitment to stakeholders is moderated by a crisis (Lin et al, 2021).…”

“…The financial crisis and these conflicts have caused a global recession according to the International Monetary Fund. It is important to observe what mechanisms companies used to drive the creation of environmental value in previous financial crises, as the COVID-19 crisis and wars have highlighted the importance of responsible and efficient use of resources to protect biodiversity and combat climate change (Gromis di Trana et al, 2022;Karmani et al, 2023).…”

“…The 2007 crisis exemplifies a new crisis. The analysis of the effect of a crisis on CEP drivers – whether the management of environmental issues (stakeholder relations and EMS) is affected during an economic crisis – to determine the main factors that affect CEP or act as a resilience mechanism may be important in view of the emergence of new threats that may make companies reconsider the place of environmental practices (Karmani et al. , 2023; Sajko et al.…”

“…During a recession, the effect of EMSs and a company's commitment to stakeholders on environmental performance would diminish but not the effect of a diverse board composition. These boards have high-level links with different stakeholders, tend to develop diverse views, and might promote policies that are not solely directed at better financial performance (Ferrero-Ferrero et al, 2015a) and would therefore take decisions to safeguard environmental performance also in times of economic downturn (Jaakson et al, 2012;Karmani et al, 2023).…”

“…, 2015a) and would therefore take decisions to safeguard environmental performance also in times of economic downturn (Jaakson et al. , 2012; Karmani et al. , 2023).…”