Journal of Cleaner Production 2020, 259: 120877.

Impact Factor: 7.246

Does corporate integrity culture matter to corporate social responsibility? Evidence from China

万鹏,  Xiangyu Chen, Yun Ke 

Abstract

The purpose of this paper is to examine whether firms’ embrace of an integrity culture will affect the performance of corporate social responsibility (CSR). Employing manually collected data on corporate culture and 5,149 firm-year observations in China from 2008 to 2016, our empirical study finds that corporate integrity culture has a strong positive effect on CSR performance, suggesting that an integrity-oriented corporate culture helps companies to bear CSR on their own initiative. We further find CEO duality leadership strengthens and analyst coverage attenuates the above relationship. This article is the first to explore the effect of corporate integrity culture on CSR behavior and validates the role of corporate culture as a crucial informal institution in guiding companies to uphold CSR. The empirical results also confirm the role of corporate culture in enhancing the social value of corporations. Our paper is helpful to broaden our understanding of the factors influencing CSR and provides a possible solution to the problem of CSR fulfillment.

Our paper makes the following contributions.

First, our research enriches the literature on the impact of corporate culture on corporate behaviors. The existing studies concerning corporate culture mainly focus on its effect on firm performance (e.g., Denison, 1990；Gordon and DiTo⁃maso, 1992；Burt et al., 1994; Denison and Mishra, 1995; Reichheld and Teal, 1996; Sørensen, 2002; Erhard and Jensen, 2017), but little attention is paid to the relationship between corporate culture and corporate behavior. Thence, research on corporate culture in explaining firms’ decision-making and behavior is a new and developing domain. This article empirically examines the impact of corporate integrity culture on CSR behavior from a new perspective, thus providing valuable empirical evidence for the research on corporate culture and corporate behavior.

Second, this paper also provides a new direction for related research on the contributing factors of CSR. Extant literature has explored the influencing factors of CSR from multiple aspects, such as legal systems (e.g., Ioannou and Serafeim, 2012; Williams and Aguilera, 2008), national-level cultural systems (Matten and Moon, 2008; García-Sánchez et al., 2016), media coverage (Reverte, 2009), analyst following (Adhikari, 2016), corporate trade union system (Sacconi, 2006), independent director system, and director characteristics (Katmon et al., 2017; García-Sánchez and Martínez-Ferrero, 2017; Seto-Pamies, 2015; McGuinness et al., 2017; Pucheta-Martínez and López-Zamora, 2018). However, most previous studies have emphasized the influence of social or corporate formal institutions as well as social cultural systems on CSR, while no research that we are aware of explores the impact that corporate culture can have on CSR behavior. Our paper studies CSR from the perspective of corporate culture, an important informal institution rooted within the organization, thereby enriching the literature in the field of CSR.

Third, the theoretical contribution of this article is to point out the limitation of institutional theory that lacks internal perspectives. Existing studies have ignored the internal institutional drivers of firms’ social responsibility behavior. Our study sheds light on how internal institutional mechanisms such as corporate culture of integrity affect firms’ CSR practices and hence may make contributions to neo-institutional theory. Based on this, we call on researchers to attach more importance on the intra-organizational institutional factors of CSR.

Fourth, our paper further investigates under what circumstances the role of integrity-oriented corporate culture in motivating CSR is stronger or weaker by examining the moderating effects of CEO duality and analyst coverage on the relationship between corporate integrity culture and CSR.

Finally, the research conclusion of this paper has important policy implications. That is, to improve the level of firms’ CSR, regulators in emerging markets should not only pay attention to the construction of formal institutions but also attach more importance to the cultivation of informal institutions including corporate culture.