Does institutional ownership and internationalization affect corporate social responsibility in emerging economy firms? An empirical evidence from India
| Pages | 345-358 |
| Published date | 26 November 2020 |
| Date | 26 November 2020 |
| DOI | https://doi.org/10.1108/JABS-12-2019-0361 |
| Subject Matter | Strategy,International business |
| Author | Manogna R.L.,Aswini Kumar Mishra |
Does institutional ownership and
internationalization affect corporate social
responsibility in emerging economy firms?
An empirical evidence from India
Manogna R.L. and Aswini Kumar Mishra
Abstract
Purpose –The preference of firm corporatesocial responsibility (CSR) spending is shapedby different
groups of owners and the institutional environment in which the firm operates. This paper aims to study
the heterogeneity among the controlling groups and firms’ internationalization in influencing the CSR
decisionin emerging economy firms.
Design Methodology Approach –This paper draws understandingfrom institutional theory to inspect
the propensities of various ownership groups such as lending institutions (LI), domestic mutual funds
(MF) and foreign institutional investors (FIIs). The empirical analysis was conducted from a sample of
1,594 unique Bombay stock exchange (BSE)-listed non-financial Indian firms during the 2014–2019
period usingTobit panel regression analysis.
Findings –The findings reveal thatfirms’ CSR activities are impacted differently byownership share of
different types of institutional investors aftercontrolling for firm-level resources and capabilities.Lending
institutions, FIIsand MF are supportive of CSR investments by firms along with international investments
by the firm. Further, the results showthat the CSR spend is positively influenced by the business group
affiliationof the firm compared to the unaffiliatedgroup of firms.
Practical Implications –The analysis has implications for both institutionalinvestors and multinational
firms. In themerging market context, managers andowners who target long term strategiessuch as CSR
will benefit from increasingshareholdings of creditors (lending institutions).They can also take steps to
improve their transparency and corporate governance structure so as to attract foreign institutional
investments,thus, in turn, helping the internationalizationprocess of the firm.
Originality Value –This paper considers the role of the diverseness of the ownership institutional
investors along with the moderating effect of business group affiliation of the firm and international
investments in impacting the CSR spend. Thisdisparity has not been previously studied with the latest
data in an emergingeconomy context.
Keywords India, Institutional investors, Internationalization, Ownership structure,
Corporate social responsibility
Paper type Research paper
1. Introduction
Reporting of firms’ corporate social responsibility (CSR) activities, defined as integrated
responsibilities comprising of legal, economic and ethical expectations has become a
mainstream and received significant prominence from both the business practitioners and
researchers. With gained prominence in socially responsible investment, an increasing
number of investors consider firms’ CSR contribution into their investment decisions
(Sievanen et al., 2013). Corporate social actions reflect a firm’s actions considering them as
investments and also add value to its shareholders (McWilliams and Siegel, 2001;
Manogna R.L. and
Aswini Kumar Mishra are
both based at the
Department of Economics,
BITS Pilani, K K Birla Goa
Campus, Mormugao, India.
Received 14 December 2019
Revised 31 July 2020
Accepted 25 August 2020
DOI 10.1108/JABS-12-2019-0361 VOL. 15 NO. 2 2021, pp. 345-358, ©Emerald Publishing Limited, ISSN 1558-7894 jJOURNAL OF ASIA BUSINESS STUDIES jPAGE 345
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