CSR Communication Intensity in Chinese and Indian Multinational Companies

Abstract

Manuscript Type: Empirical Research Question/Issue: Why do firms in China, which has a higher level of economic development, communicate less CSR than firms in India? We use a model that includes country‐, industry‐, and firm‐level factors to predict CSR communications intensity, a proxy for CSR activities. Research Findings/Insights: Using data on 68 of the largest multinational companies in China and India, our study shows that Indian firms communicate more CSR primarily due to a more rule‐based, as opposed to relation‐based, governance environment. Firms in the manufacturing industry tend to communicate more CSR. Firm‐level characteristics such as size, duality of CEO and board chairperson, and percentage of external members on the board also have a significant influence on CSR communications. Theoretical/Academic Implications: The main theoretical contribution of our study is to bring a three‐level perspective, relying not only on firm‐ and industry‐specific factors, but also on the governance environment, to the study of firms' CSR behavior. We show that the national governance environment dominates the national income level in affecting CSR communications intensity. We demonstrate that the macro institutional environment in a country strongly affects firm CSR behavior. Our findings suggest that CSR should be studied by considering multilevel antecedents. Practitioner/Policy Implications: Our study suggests that in order to improve the CSR of firms, policy makers in India and China must first try to improve public governance at the national level. Executives doing business with Chinese and Indian companies need to better understand the contrasting governance and their effects on the CSR practices in each country. For the international community and those concerned about product safety and other social issues related to China and India, our findings suggest that improvement will not be immediate since the governance environment changes relatively slowly.