CSR-enhancing factors for business vs public stakeholders: evidence from Hong Kong
| DOI | https://doi.org/10.1108/JABS-03-2018-0108 |
| Published date | 02 January 2020 |
| Pages | 399-419 |
| Date | 02 January 2020 |
| Author | Sungwook Min,Namwoon Kim,Carlos Lo |
| Subject Matter | Strategy,International business |
CSR-enhancing factors for business vs
public stakeholders: evidence from
Hong Kong
Sungwook Min, Namwoon Kim and Carlos Lo
Abstract
Purpose –The purpose of this study provides theenhancing factors of corporate social responsibility
(CSR) and examinestheir differential effects on corporate socialperformances for business-stakeholder
groups (i.e. investors, employees, suppliers and customers) and public-stakeholder groups (i.e.
communitiesand the environment).
Design/methodology/approach –This study uses a differenced-equationmodel to test the differential
effects of CSR-enhancingfactors. The study tests the impact of each factor controllingthe effects of the
other CSR-enhancingfactors in one multivariateanalysis with survey data of 776 small and medium-sized
enterprisesfrom Hong Kong.
Findings –This study finds that firms give more CSR efforts for public stakeholders than for business
stakeholdersas firms’ financial resources, institutionalconformity and their perceived regulatorypressure
increase. On the other hand, firms provide more CSR efforts for business stakeholders than for public
stakeholderswhen such efforts are based on theirstrategic motivation.
Originality/value –The main contribution of this study is to clarify diverse CSR-enhancing factors for
different stakeholders,in particular, business vs public stakeholders, thusto help firms understand the
effectiveways to increase CSR actions for specific target stakeholdergroups.
Keywords Corporate social responsibility, Corporate social performance,
Business and public stakeholders, Financial resources, Institutional conformity,Regulatory pressure
Paper type Research paper
Introduction
The literature on corporate social responsibility (CSR) addresses myriad factors that drive
firms to increase CSR activities. For instance, the CSR literature stresses strategic
motivation for CSR efforts. That is, firms implement CSR as an instrument to seek eventual
financial benefits (Husted and Allen, 2007;McWilliams and Siegel, 2011;Orlitzky et al.,
2003;Wang and Choi, 2013). The literature also emphasizes the presence of non-strategic,
but rather altruistic CSR motivation, which drives firms to engage in CSR activities to fulfill
their social responsibilities (Bansal and Roth, 2000;Hildebrand et al., 2011;Maak, 2008;
Greening and Gray, 1994;Vogel, 1986;Brickson, 2007). This altruistic CSR motivation is
firms’ willingness and desire to contribute to the common welfare of society at large in the
view of the social contract between firmand society.
Organizational resources also influence firms to commit to CSR efforts. Specifically,
whereas financial strength enables firms to implement CSR practices (Branco and
Rodrigues, 2006;McWilliams and Siegel, 2001), an unstable financial status can divert the
attention of a firm away from CSR activities and toward more imminent, profit-seeking
investments that are critical to their ongoing business operation (McWilliams and Siegel,
2000, 2001). Other CSR driving forces include the pressures and influences arisen from
Sungwook Min is based at
the College of Business
Administration, California
State University, Long
Beach, California, USA.
Namwoon Kim is based at
the Department of
Marketing, UTS Business
School, University of
Technology Sydney,
Broadway, Australia.
Carlos Lo is based at the
Department of Government
and Public Administration,
Chinese University of Hong
Kong, Hong Kong,
Hong Kong.
Received 20 March 2018
Revised 6 November 2018
3 May 2019
Accepted 28 October 2019
DOI 10.1108/JABS-03-2018-0108 VOL. 14 NO. 3 2020, pp. 399-419, ©Emerald Publishing Limited, ISSN 1558-7894 jJOURNAL OF ASIA BUSINESS STUDIES jPAGE 399
outside of a firm that induces the firm to engage in CSR activities. Firms often engage in
CSR to conform to industry-wide CSR practices(Brummer, 1991;Chiu and Sharfman, 2011;
Handelman and Arnold, 1999). Associated regulatory pressures from central or local
governments (Albareda et al.,2007;Steurer, 2010;Vallentin, 2015), nongovernmental
organizations (NGOs) and media also give pressure to firms to engage in CSR actions
(Arenas et al.,2009;Baron, 2001;Doh and Guay, 2006).
Although these CSR-enhancing factors are widely discussed in the literature, the relative
impact of each factor on corporate social performance (CSP) for different stakeholders has
not been explored. A specific CSR-enhancing factor that increases CSP for some
stakeholders may not do so for the other stakeholders. This study submits that meaningful,
differential CSR-related impacts should emerge from comparing CSR-enhancing factors for
business vs public stakeholders because of the different degrees of interdependence
between the firm and these two types of stakeholder groups. In line with Clarkson (1995)
and Ni et al. (2015), we define business stakeholders, e.g. employees, investors, suppliers,
customers, as those who are related directly into the firm’s business operation, whereas the
public stakeholders rather indirectly related to the firm’s business operation. Clarkson
(1995, p. 106) defines the public-stakeholder group as “the governments and communities
that provide infrastructures and markets, whose laws and regulations must be obeyed, and
to whom taxes and other obligationsmay be due”.
Key research questions in this study include; do strategic CSR motivations of a firm drive
CSP for its business and public stakeholders? If so, is the effectof strategic CSR motivation
on CSP for public stakeholders greater (or less) than that for business stakeholders? Do
altruistic motivations of a firm drive CSPs for its business and public stakeholders? Does
abounding financial recourse increase CSPs for business and public stakeholders
uniformly? How about the impacts of the other aforementioned CSR-enhancing factors on
CSPs for business and public stakeholder groups? This study examines CSPs for four
different business-stakeholder groups (i.e. investors, employees, suppliers and customers)
and two public-stakeholder groups (i.e. communities and the environment[1]) and explores
if CSR-enhancing factors have differential impacts on CSPs for business stakeholders vs
public stakeholders. A stark absence in research about the relative impact of CSR drivers
for diverse stakeholders motivates this study. Building on the recentadvance of stakeholder
theory, which is grounded in a nature of a high interdependence between the focal firm and
its business stakeholders (Clarkson, 1995;Donaldson and Preston, 1995;Tantalo and
Priem, 2016;Bundy et al.,2018), we build hypotheses about the differentialimpacts of CSR-
enhancing factors on CSPs for business vs public stakeholders. We test the hypotheses
with a sample of small and medium-sized enterprises (SMEs) in Hong Kong. Our study
finds evidence that varied CSR-engaging factors in the literaturedo not uniformly affect CSP
for diverse stakeholders of Hong KongSMEs.
Consequently, the current study seeks to make the following contributions to the existing
literature. First, the study shows the differential impacts of CSR enhancers for business vs
public stakeholders, thus helps firmsand their stakeholders understand ways to initiate and
promote CSR actions for specific target stakeholder groups. Second, the study presents
five different CSR-enhancing factors from the CSR literature and tests the impact of each
CSR-enhancing factor in a multivariate setting. By doing so, we control for the other CSR
factors while testing the impact of the focal CSR factor. Third, we empirically test the
differential impact hypotheses in the context of SMEs in Hong Kong. Because of a unique
cultural and business environmental setting, there have been numerous studies about CSR
of Hong Kong enterprises (Witt and Redding, 2012;Burton et al., 2000;Tsoi, 2010;Tsai
et al.,2012
;Studer et al.,2008;Sjo
¨stro
¨m and Welford, 2009;Welford et al.,2007). The
empirical findings present CSR performances for diverse stakeholders and help to gain a
better understanding of CSR factorsof the SEMs in Hong Kong.
PAGE 400 jJOURNAL OF ASIA BUSINESS STUDIES jVOL. 14 NO. 3 2020
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