A Dual-Agency Model of Firm CSR in Response to Institutional Pressure: Evidence from Chinese Publicly Listed Firms

As corporate social responsibility (CSR) matters not only for firms’ competitiveness, but also societies’ sustainability, governments often encourage firms to engage in CSR. Yet, the relationship between government CSR initiatives and firms’ CSR performance is quite mixed. To address this research gap, we developed a dual-agency model incorporating both public agents (government officials) and private agents (corporate CEOs) to investigate when firms respond to government initiatives by increasing their CSR. We tested our model in a sample of 746 Chinese listed firms during the period of 2009-2014 when a national CSR initiative, the 12th Five-year Plan, took place. Our results showed that firms responded positively to the Plan by increasing their CSR performance but their response varied by incentives of both public and private CSR agents. Firms were more likely to increase CSR when public agents were more motivated to seek promotion to the central government or when private agents had greater concerns for legitimacy. Our examination of the role of two different types of CSR agents within institutions contributes to the institutional view of CSR by highlighting the interplay of institutions and human agents in promoting firm CSR. It also advances public policy and managerial practices regarding the development and selection of CSR agents inside and outside firms in a given institutional environment.