The role of national corruption in the relationship between corporate social responsibility and corporate reputation: Evidence from Europe

Abstract

National corruption can affect the value of the signals that stakeholders use to build expectations about a firm's ability to meet their interests and can thus influence the process of corporate reputation building. Corporate social responsibility (CSR) performance is an important signal for stakeholders to build such expectations. Drawing on signaling and institutional theories, this study examines how national corruption moderates the relationship between CSR performance and corporate reputation based on the coexistence of institutional adaptation processes (institutional isomorphism) and differentiating strategies (signaling effect) across firms. Panel estimators were applied to a sample of 586 observations from 127 companies across eight European countries from 2011 to 2016. The results confirm that CSR performance affects corporate reputation and reveal that, in countries with higher levels of corruption, CSR has a greater effect on corporate reputation. These findings provide further evidence of the moderating effect of contextual factors on the process through which stakeholders build expectations about firms.