Article2018

Indulgence versus Restraint: The Moderating Role of Cultural Differences on the Relationship between Corporate Social Performance and Corporate Financial Performance

52 citations0/0 files storedJournal of Global Marketing

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Corporate Social Responsibility Reporting Environmental Sustainability in Business Corporate Social Responsibility and Sustainability

Abstract

Adapting to the cultural environment surrounding, a firm is of paramount importance in international marketing practices. Extant marketing literature provides meager guidance to marketers on how to adapt to cultural factors to turn corporate social responsibility strategies into financial outcomes. To address this gap, we utilize the instrumental stakeholder theory and Hofstede's cultural framework to investigate the moderating effect of indulgence versus restraint culture on the relationship between corporate social performance (CSP) and corporate financial performance (CFP). Applying a panel data regression analysis to a dataset of CSP and CFP data for 3753 firms from 43 different countries, we demonstrate that CSP has a positive effect on CFP. However, we show that CSP has a weaker effect on CFP in firms located in indulgent countries. Therefore, to generate financial outcomes, we recommend managers to allocate more resources to CSP initiatives if the firm is operating in a culturally restrained country.

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References

2002Culture's Consequences: Comparing Values, Behaviors, Institutions, and Organizations across Nations 1995Managing Legitimacy: Strategic and Institutional Approaches 1979A Three-Dimensional Conceptual Model of Corporate Performance 1997Toward a Theory of Stakeholder Identification and Salience: Defining the Principle of who and What Really Counts 1995A Stakeholder Framework for Analyzing and Evaluating Corporate Social Performance 2003Corporate Social and Financial Performance: A Meta-Analysis 2001Corporate Social Responsibility: A Theory of the Firm Perspective 1997THE CORPORATE SOCIAL PERFORMANCE-FINANCIAL PERFORMANCE LINK

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