The influence of institutional qualities on CSR engagement: a comparison of developed and developing economies
Meditari Accountancy Research
Purpose: This study aims to investigate the effects of institutional qualities on corporate social responsibility (CSR) engagement from a global perspective. Design/methodology/approach: The authors examine CSR engagement across 83 developed and developing economies focusing on four potential institutional drivers: the rule of law, economic financial development, human capital formation and exposure to international trade. Findings: The authors find that the level of human capital formation and financial development is positively associated with CSR engagement in both developing and developed economies. However, the rule of law was only associated with CSR engagement in developing economies whereas the level of international trade was found having no association with CSR engagement across both developed economies and developing economies. Research limitations/implications: The effect of macroinstitutional qualities on aggregate CSR engagement practices across 83 developed and developing economies was examined; however, the analysis did not attempt to identify the relevance of these institutional factors at the micro or mezzo level and how they interplay with firm-level factors. Practical implications: The empirical findings in this study offer some important insights into the theoretical constructs of institutional qualities and institutional logics that impact CSR engagement from both developing and developed economy contexts. Not only will these findings encourage regulators and stakeholders to call for enhanced CSR engagement, it will also benefit the accounting and assurance profession’s efforts to evaluate organizational risk and mitigate corporate opportunistic use of CSR disclosure. The finding that strengthening a country’s rule of law enhances CSR engagement in developing economies is further evidence for the current debate in the accounting literature regarding mandating firm CSR disclosure. Originality/value: The authors conclude that improving the level of human capital formation and encouraging financial development is important for the overall social well-being of all economies, whereas developing economies can further encourage CSR engagement by enhancing their rule of law.
Open Access Status
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