Government Regulation of International Corporate Social Responsibility in the US and the UK: How Domestic Institutions Shape Mandatory and Supportive Initiatives

Abstract

While most scholarship on corporate social responsibility (CSR) focuses on company‐level CSR initiatives, it increasingly also examines government programs for CSR. However, research on how governments contribute to CSR has mainly focused on domestic and not international CSR challenges. This literature also does not specify whether governments shape CSR through mandatory regulation or supportive initiatives. This article adopts a process‐tracing approach to determine how governments regulate international CSR. It demonstrates that the legal and political systems in the liberal market economies of the UK and the US lead to different forms of public CSR regulation — notably in the areas of labour standards in apparel and tax transparency in extractives. The UK government has been more likely to support bottom‐up collaborative multi‐stakeholder initiatives, whereas the US government has favoured top‐down mandatory regulation.

Government Promotion of Corporate Social Responsibility: Evidence from the EU Eco‐Management and Audit Scheme

“…Most scholars now agree that even though CSR and EMS systems are the primary domain of businesses, governments still play a strong role in the process of adopting and implementing EMS programs (Delmas, ; Jackson & Apostolakou, ; Kinderman, ; Knudsen, ; Knudsen et al, ; Kollman & Prakash, ; Matten & Moon, ; Moon & Vogel, ; Steurer, ). They can promote it through specific policies, they can shape it indirectly through domestic institutions, or they can downplay the importance of particular programs by failing to support them.…”

“…Recent studies indicate that many governments do promote CSR or EMS programs with these regulatory benefits in mind. Much of the work on government and CSR has utilized the “Varieties of Capitalism” approach (Hall & Soskice, ) to examine whether the domestic economic institutions of nations shape the CSR programs that firms adopt (Jackson & Apostolakou, ; Knudsen, ; Knudsen et al, ). Within this thread of research, there is evidence that domestic institutions matter and affect the measures of support that governments put forward.…”

“…Corporate social responsibility (CSR)—defined by Vogel () as “practices that improve the workplace and benefit society in ways that go above and beyond what companies are legally required to do”—was long considered to be a set of business activities that substitute for and operate separately from government policy. More recent research has challenged this assumption, recognizing that domestic institutions may affect the type of CSR programs businesses adopt (Jackson & Apostolakou, ; Kinderman, ; Knudsen, ; Knudsen, Moon, & Slager, ; Matten & Moon, ; Moon & Vogel, ; Steurer, ). Governments have an interest in promoting such programs, so that market failures can be mitigated with fewer monitoring and enforcement costs (Potoski & Prakash, ) and so that firms become aware of the benefits and the logistics of complying with such programs (Delmas, ; Kollman & Prakash, ).…”

“…We ask these questions specifically with regard to the European Union’s Eco‐Management and Audit Scheme (EMAS), an EU‐wide EMS, introduced in the late 1990s. This question has received some attention with respect to government support and ISO 14001 (Delmas, ; Kollman & Prakash, ) and scholars have made significant recent contributions to our understanding of the relationship between government institutions and business CSR activity (Brown & Knudsen, ; Jackson & Apostolakou, ; Kinderman, ; Knudsen, ; Knudsen et al, ; Matten & Moon, ; Moon & Vogel, ; Steurer, ). While we acknowledge the importance of domestic institutions in evaluating CSR initiatives, these studies focus less on the effects of government support for specific initiatives.…”

“…Second, CSR support programs also speak to the literature on varieties of capitalism and program adoption. Studies from this literature suggest that domestic institutions do shape CSR programs (Jackson & Apostolakou, ; Kinderman, ; Knudsen, ), but also that other factors such as intra‐industry concerns shape CSR practices (Brown & Knudsen, ). Given that our study examines the majority of EU states, it cuts across the VoC boundaries of liberal market economies (LMEs) and coordinated market economies (CMEs) to show where support affects adoption and pace of adoption.…”