The Effect of Corporate Visibility on Corporate Social Responsibility

Abstract

Outside of direct ownership, the general public may feel it is an implicit stakeholder of a firm. As the public becomes more vested in a firm’s actions, the firm may be more likely to engage in Corporate Social Responsibility (CSR) activities. We proxy for the public’s stake in a firm with public visibility. Based on 3400 unique newspaper publications from 1994–2008, we measure visibility for the S&P 500 firms with the frequency of print articles per year concerning the firm. We find that visibility has a signficant, positive relationship with the CSR rating. Evidence also suggests this relationship may be causal and working in one direction, from visibility to CSR. While the existing literature provides other factors that influence CSR, visibility proves to have the most significant impact when tested alongside those other factors. Visibility also has a mediating effect on the relationship between CSR rating and firm size. CSR rating and firm size relate negatively for the lowest visibility firms and positively for the highest. This paper provides strong evidence that visibility is an important factor to consider for studies on corporate social performance.

Exploring the Determinants of Strategic Corporate Social Responsibility: An Empirical Examination

“…This study further suggests that the motivation of a firm's strategic CSR initiatives is to respond to stakeholders' implicit claims. Different from prior studies examining on determinants of CSR [25][26][27][28], this study compares the impact of external competitive pressure and external stakeholder claims. Second, we find that corporate reputation has a significantly positive impact on the level of strategic CSR.…”

“…Third, we find that customer awareness has a significantly positive impact on the level of strategic CSR. Existing studies mostly analyze corporate visibility from the public's perspective and identify corporate visibility as a key factor in affecting a firm's CSR initiatives [26,33,34]. This study analyzes corporate visibility from the customers' perspective.…”

“…Enhancing customer awareness will expose a firm to its external stakeholders' implicit claims. Failure to comply could disappoint stakeholders and lead to negative opinions of the firm [26]. Therefore, a firm with elevated customer awareness will think more highly of stakeholders and will be more willing to engage in strategic CSR.…”

“…First, it shows that the motivation of a firm's engagement in strategic CSR is to respond to external stakeholders' claims rather than responding to external competitive pressure. Although some recent studies have touched on the issue of motivations for CSR [25][26][27][28], they do not compare the impact of external competitive pressure or stakeholder claims. Second, we address the importance of corporate reputation in driving a firm's strategic CSR initiatives.…”

“…External stakeholders can be classified into primary stakeholders, such as customers, and secondary stakeholders, such as the public [21,32]. Existing studies mostly analyze corporate visibility from the public's perspective, identifying it as a key factor in affecting a firm's CSR initiatives [26,33,34]. This study analyzes corporate visibility from the customers' perspective.…”