Extrinsic and Intrinsic Drivers of Corporate Social Performance: Evidence from Foreign and Domestic Firms in Mexico

Abstract

The literature on corporate social performance (CSP) is largely split between approaches that consider CSP to be extrinsically driven and those that consider it to be intrinsically driven. While the management literature has paid attention to drivers of both types, the relationship between the two remains largely unstudied, particularly in the international setting. Meanwhile, the international business (IB) literature has addressed the international dimension of CSP more directly, but focuses largely on extrinsic pressures. Our paper links the management and IB literatures by addressing intrinsic drivers (management commitment to ethics) in conjunction with extrinsic (trade‐related) drivers for both foreign‐ and domestically‐owned firms in a single‐market setting. Using survey data from 121 auto parts suppliers in Mexico, we find that management commitment to ethics is a dominant driver of CSP among both foreign and domestic firms. More importantly, management commitment to ethics interacts positively with trade‐related pressures in raising CSP levels.