Why Do Firms Engage in CSR? Theories, Institutions, and Models of Capitalism

Abstract

Corporate social responsibility (CSR) has become an important area of managerial and scientific debate. Many researchers have contributed to the theoretical development of CSR and, on the basis of empirical evidence, they have tried to formulate theories to analyze the relative issues. These theories, however, are unable to explain why firms’ commitment to CSR varies over time and in different national contexts. This chapter contributes to the existing literature on CSR by providing a multidisciplinary framework to investigate how different national institutions and the governance of economic spheres influence firms’ behavior. The proposed theoretical framework highlights the relationship between the national model of capitalism, stakeholders’ institutional entrenchment, and firm’s choices regarding CSR. Legislators should take into account that the model of capitalism adopted by each country produces direct effects on stakeholders’ institutional entrenchment and therefore on CSR decisions adopted by firms. This chapter concludes by highlighting some implications for policymakers and regulators and suggests future lines of research.