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Over the last several decades, businesses have faced mounting pressures from diverse stakeholders to alter their corporate operations to become more socially and environmentally responsible. In turn, many firms appear to have responded by implementing more sustainable practices — measuring, documenting, and publishing annual CSR or sustainability reports to showcase how they are addressing important issues in this area, including: resource stewardship, waste management, greenhouse gas emission reductions, fair and safe labor practices, amongst other stakeholder concerns. And yet, research in this domain has not yet systematically examined whether businesses have, on the whole, changed their practices in tandem with the important changes in its institutional context over time. Have corporate CSR initiatives, in fact, been growing over the last 25 years or has the increased attention to CSR actually been much ado about nothing? In this chapter, we review the empirical literature on CSR to uncover that common measures of CSR such as the KLD do not support the concept that CSR practices have increased substantively over the last 25 years. We supplement this historical review by modeling the growth curves of CSR implementation in practice and find that the pace of positive change has indeed been glacial. More alarmingly, we also look at corporate social irresponsibility (CSiR) and find that, contrary to expectations, businesses have become more, not less, irresponsible during this same time period. Implications of these findings for theory are presented as are suggestions for future research in this domain.

This chapter examines the association between corporate governance and environmental performance. The purpose of governance mechanisms is to build trust by ensuring that corporate responsibilities, including environmental responsibilities, are met. We obtain corporate governance data from the Investor Responsibility Research Center, Inc’s (IRRC’s) governance and director database and additional corporate governance and environmental performance data from Kinder, Lydenberg, and Domini’s (KLD’s) database. Our analyses document a significant positive association between corporate governance and environmental performance. Moreover, we find that corporate governance is positively related to environmental strengths, and negatively related to environmental concerns. Our findings contribute to and extend our understanding of the relationship between governance and performance and have important implications for policy makers, managers, investors, and others.

Purpose – The purpose of this study is to investigate whether a firm’s cost structure (specifically, its cost stickiness) is associated with environmental, social, and governance (ESG) sustainability factors of performance and disclosure.

Methodology/approach – This study uses MCSI Research KLD Stats (KLD) and Bloomberg databases for the 13-year period from 2003 to 2015 in constructing ESG performance and disclosure variables, respectively. The authors adopt the general cost stickiness models from Anderson, Banker, and Janakiraman (2003) and Banker, Basu, Byzalov, and Chen (2016) to perform the analysis.

Findings – The authors find that a firm’s level of cost stickiness is positively associated with certain sticky corporate social responsibility (CSR)/ESG activities (both overall and when separately classified as strengths or concerns) but not with other nonsticky CSR activities. The authors also show that the association between cost stickiness and ESG disclosure is incrementally stronger for firms with CSR activities classified as sticky. Furthermore, the authors provide evidence that ESG disclosure is greater when both cost stickiness and the degree of sticky CSR activities increase. The authors show that when cost stickiness is high and CSR activities are sticky, management has incentives to increase CSR/ESG sustainability disclosure to decrease information asymmetry.

Originality/value – The findings present new evidence to understand how management integrates cost management strategies with various dimensions of sustainability performance decisions and show that not all ESG activities are equally effective when it comes to cost stickiness. The authors also demonstrate that increased sustainability disclosure helps reduce information asymmetry incrementally more when both costs are sticky and CSR activities are sticky.

We examine the relationship between the degree of internationalization (DOI) of a sample of 148 U.S.-based MNEs and measures of their corporate environmental performance. Using cross-sectional data for 1993 and 1998, and longitudinal data for 1993–1999, we tested for associations between the two variables of interest. Cross-sectional data suggested a positive relationship between DOI and highly rated environmental performance. Longitudinal findings were similar with positive correlations that grew stronger the longer the “lag” between measurement of DOI and environmental performance. This research supports arguments that MNEs tend to be proactive leaders rather than laggards in fostering better corporate environmental performance.

The objective of this chapter is twofold. It first explores the complementarities of Islamic investment with Socially Responsible Investment. Secondly, it examines the financial price, for investors, of being both shariah-compliant and socially responsible.

Using a value-weighted approach, we experiment the construction of a set of sharia-compliant stock portfolios with different Environmental, Social, and Governance (ESG) performance. We use the KLD ratings of 238 companies listed in U.S. stock market from 2007 to 2011. We measure and compare their performance using the model developed by Fama and French (1993) and extended by Carhart (1997).

The results indicate no adverse effect on returns due to the application of a double screening, Islamic and SRI, and show a substantially higher performance for positive governance screen during 2008–2011 periods. This outperformance cannot be explained by differences in investment style. Though, we observe significant outperformance for some ‘irresponsible’ portfolios involved in community and human rights controversies.

The study only focuses on U.S. market. Future works should extend the experimentation to other markets.

This study provides a venue for Islamic funds managers to consider SRI screening as fully in line with shariah-compliance requirements, while preserving the performance of their portfolios.

Potentially, the reconciliation of Islamic investment with positive SRI practices may foster the implementation of CSR policies by firms’ manager willing to attract Islamic investors.

With reference to the many studies emphasising the compatibility between CSR criteria and Islamic principles, this experimental study is the first to investigate the integration of a positive screening process designed to select companies based on their ESG performance in addition to a traditional shariah-compliant screening.

This chapter develops a novel conceptualization of corporate social irresponsibility (CSI) and identifies possible avenues for further research in the international business (IB) and related fields.

A conceptual chapter examining the existing definitions of CSI and proposing a classification of irresponsible behaviours using an international law approach.

The concept of CSI has been weakly conceptualized and measured so far. We improve this by distinguishing between unethical conduct bearing no direct impact on human rights and those behaviours that do entail a human rights impact. Next, we classify human rights abuses in two categories based on whether they entail the violation of a derogable or a non-derogable human right. Finally, we make a distinction between direct and indirect irresponsible actions. These distinctions are also illustrated empirically.

This chapter bridges the gap between IB, management and international law research on human rights or else defined irresponsible behaviours. Our novel conceptualization of CSI can help to better address unanswered questions about factors driving CSI in IB firms.

This paper provides a perspective on the field of nonmarket strategy. It does not attempt to survey the literature but instead focuses on the substantive content of research in the field. The paper discusses the origins of the field and the roles of nonmarket strategy. The political economy framework is used and contrasted with the current form of the resource-based theory. The paper argues that research should focus on the firm level and argues that the strategy of self-regulation can be useful in reducing the likelihood of challenges from private and public politics. The political economy perspective is illustrated using three examples: (1) public politics: Uber, (2) private politics: Rainforest Action Network and Citigroup, and (3) integrated strategy and private and public politics: The Fast Food Campaign. The paper concludes with a discussion of research issues in theory, empirics, and normative assessment.

Prior research shows different associations between corporate social responsibility (CSR) and executive compensation in the United States versus Canada (i.e., McGuire et al., 2003; Mahoney & Thorne, 2006). It follows that these cross-national differences may be attributable to: (1) different compensation strategies; (2) other national differences; or (3) differences in the sampling and measurement techniques used in the respective studies. To gain insight into the factors underlying the cross-national differences, our study uses a single statistical approach on a U.S./Canada database to compare the association between CSR and executive compensation while controlling for size, industry, financial structure, and using common measures of salary, bonus and long-term compensation (LTC). We find that after controlling for size there are no differences in the association between executive compensation and CSR between the United States and Canada, and that LTC is positively associated with CSR in both countries. Thus, our findings suggest that previously reported differences in CSR between the United States and Canada are likely due to differences in the size of the firms used in the samples from the respective countries. Furthermore, our findings show the importance of the association between LTC and CSR for both the U.S. and the Canadian context. Implications of these findings are discussed.

The rate of alliance formation by firms has greatly increased over the past two decades. Congruently, firm interest in corporate social responsibility (CSR) initiatives has also increased. Signaling theory suggests that firms may be increasing their CSR strategies in an effort to signal their willingness to operate within social mores. However, firms are faced with the problem of how to communicate their social commitment objectively to stakeholders. We argue that firms are forming CSR alliances in an attempt to signal an objective message to stakeholders concerning their commitment to CSR. To provide insight into these explanations, we compare the Total CSR performance (TCSR) scores of firms that form CSR alliances with those firms that do not. We control for firm size, leverage, profitability, and industry. We find that firms that form CSR alliances generally have higher TCSR scores, which suggests that one of the reasons that firms form these alliances is to publicize their stronger social and environmental records to stakeholders.