The pressure behind corporate social performance: Ownership and institutional configurations

Abstract

Research summary Drawing on the “varieties of capitalism” literature, we develop an actor‐centered framework that explains firm‐level corporate social performance (CSP) by emphasizing the importance of considering owners' and other stakeholders' motives toward CSP—which can be instrumental, relational or moral—and their salience in the national institutional setting. Results from an international panel show that investment company (government) ownership has a stronger negative (positive) relationship with CSP in liberal markets, in which owners are the key stakeholder, as compared to coordinated markets, which counterbalance the interests of multiple stakeholders. Family and company ownership have weaker links to CSP across institutional settings. We discuss implications for research and practice and argue that CSP policies may hold more relevance in liberal rather than coordinated market economies. Managerial summary Existing debates focus on the impact of corporate social performance (CSP) on firm outcomes. Less is known about the motives and pressures behind CSP, which may explain its variability across firms and institutional settings. We argue that powerful owners' motives are important for explaining CSP in liberal markets, where shareholders are the most important stakeholder, as compared to coordinated markets, which confer prominence to multiple stakeholders. Owners' motives are not homogenous and depending on the type of owners the link between ownership concentration and CSP can be negative (for investment companies) or positive (for governments). In coordinated markets, owners have a weaker impact on CSP, which is mostly attributable to their lower salience relative to stakeholders, rather than to a change in their motives.

Sustainable corporate governance: A review of research on long‐term corporate ownership and sustainability

“…Thus, more multi-country examinations of the effects of ownership may shed light on the influence of ownership on sustainability. In this vein, the examination of ownership structures of corporations where owners from different countries (with often different institutional settings) hold stakes may add to our understanding of how firm goals and behavior are affected by the co-existence and interaction of owners of different types and from different countries (e.g., Desender & Epure, 2020;Dyck et al, 2019;Kavadis & Castañer, 2014, 2015.…”

Global shift towards stakeholder-oriented corporate governance? Evidence from the scholarly literature and future research opportunities

“…One apparent gap deriving from our review is that most of the studies do not link institution-level and firm-level governance factors to examine how stakeholder-oriented CG practices are adopted at the firm level. Rare exceptions are the study by Essen et al (2013), which examines how the strength of labour institutions positively affects the effectiveness of blockholder ownership in Europe and the study by Desender and Epure (2020). The latter shows that ownership structures such as block holdings and government holdings have stronger effects on corporate social performance in liberal market economies than in coordinated market economies.…”

A Systematic Literature Review on Ownership and Corporate Social Responsibility in Family Firms

“…Some scholars have found a negative relationship between family firm ownership and CSR performance [67,87,99,100], such as ESG (environmental, social, and governance) performance [20,[101][102][103]. One explanation is that family owners have invested their private wealth into the firm and have both economic and personal motives to run the firm [101,104,105].…”

“…Finally, Desender and Epure [100] examined the effect of investment company ownership and government ownership on CSR and found that investment company ownership reduces, whereas government ownership increases corporate social performance more in liberal market economies than in coordinated market economies, which counterbalance the interests of multiple stakeholders.…”