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How Does Environmental Corporate Social Responsibility Matter in a Dysfunctional Institutional Environment? Evidence from China

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Abstract

Drawing on institutional and signaling theories, this study examines how environmental corporate social responsibility (ECSR) affects firm performance in a dysfunctional institutional environment. We extend the ECSR literature by suggesting that ECSR indirectly influences firm performance through the mediating effects of business and political legitimacy. Based on a dataset of 238 firms in China, we find that ECSR affects business and political legitimacy followed by firm performance. Moreover, legal incompleteness weakens and legal inefficiency strengthens the effects of ECSR on business and political legitimacy.

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Acknowledgments

The authors thank Prof. Alex Michalos, Prof. Thomas Clarke, and the two reviewers for their constructive comments and helpful suggestions, which enable us to substantially strengthen our paper. We would like to thank the grants from the General Research Fund from the Research Grants Council, Hong Kong SAR Government (No. HKU793613) and National Natural Science Foundation of China (Nos. 71302144 and 71102096).

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Authors and Affiliations

  1. School of Management, Xi’an Jiaotong University, Xi’an, 710049, Shaanxi, People’s Republic of China

    Zelong Wei

  2. School of Economics and Finance, Xi’an Jiaotong University, Xi’an, 710061, Shaanxi, People’s Republic of China

    Hao Shen

  3. Faculty of Business and Economics, University of Hong Kong, Pokfulam, Hong Kong

    Kevin Zheng Zhou

  4. College of Business, City University of Hong Kong, Kowloon Tong, Hong Kong

    Julie Juan Li

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  1. Zelong Wei
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Correspondence to Hao Shen.

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Wei, Z., Shen, H., Zhou, K.Z. et al. How Does Environmental Corporate Social Responsibility Matter in a Dysfunctional Institutional Environment? Evidence from China. J Bus Ethics 140, 209–223 (2017). https://doi.org/10.1007/s10551-015-2704-3

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