Why do U.S. public companies continue to join the UN global compact: Ethics or economics?

Abstract

Abstract Not long after the formation of the United Nations Global Compact (UNGC) in 2000, two opposing theories emerged regarding its efficacy and why organizations continue to join UNGC. The critics take the position that because it has low barriers to entry and no enforcement of compliance, it attracts organizations with low CSR performance who merely want to enhance their reputations. The advocates reject these arguments because of their belief in the purpose of the UNGC, to offer a platform for learning and improvement, especially for under-resourced organizations. Haack, Martignoni, and Schoeneborn have offered a conceptual framework that has the potential to bridge the differences between these two opposing theoretical positions by suggesting that CSR can be adopted ceremonially under conditions of opacity and evolve to substantive adoption over time as transparency increases. In this study, we use the Haack et al. conceptual framework to empirically test this proposition by investigating U.S. corporations that have joined UNGC. We expand the analysis to examine the motivations for ceremonially adopting CSR. Our results support the conditions proposed by Haack et al., and we emphasize the importance of organizational learning to achieve substantive adoption of CSR practices over time.