An investigation of corporate social responsibility conformity: The roles of network prominence and supply chain partners
Falcone, Ellie C. Ridge, Jason W.
Falcone, Ellie C.
Ridge, Jason W.
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Wiley
Date
3/27/2024
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Numerous studies on corporate social responsibility (CSR) indicate that firms adopt CSR practices for various reasons related to their supply chain. However, the necessity to conform to a firm's own industry CSR norm is overlooked. Conforming to one's industry CSR norm-a herding behavior known as CSR conformity-ensures firm in-group legitimacy and preserves internal resources for core business activities. On the other hand, deviating from industry norms sets a firm apart from its peers, making the firm more appealing to supply chain partners. Motivated by this dilemma, this study draws on middle-status conformity theory and explores how a firm's network prominence determines its CSR conformity. Panel data analyses of 1650 firm-year observations reveal an inverse U-shaped relationship between firm network prominence and its CSR conformity, indicating that firms with a mid-level network prominence engage in higher CSR conformity. However, the inverse U is flattened when a firm's supply chain partners (and their respective industries) share similar CSR standards, suggesting that a firm can only prioritize its own industry CSR norms if its supply chain partners share a compatible CSR standard. These findings highlight the importance of understanding CSR from an organizational conformity perspective, especially in the context of supply chain network. Firms use industry CSR norms as a benchmark for CSR engagement-a firm herding behavior known as CSR conformity. Firms conform to industry CSR norms to ensure legitimacy and preserve resources; however, they also need to deviate to differentiate themselves and attract supply chain partners. This research uncovers an inverse U-shaped relationship between firm network prominence and CSR conformity. Additionally, a focal firm can prioritize its industry CSR norms only when its supply chain partners share a compatible CSR standard.
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Supply and Value Chain Management