Does Local Religiosity Impact Corporate Social Responsibility?

Abstract

Recent research indicates the social norms of geographic areas where firms are headquartered have an impact on corporate decision-making. Drawing on instrumental stakeholder theory and social norm theory, we extend this line of research by examining the influence of local religiosity on corporate social responsibility (CSR). This study shows that firms headquartered in areas with a strong religious presence receive lower ratings for CSR, and the market rewards these firms for their choices. Our findings contribute to understanding factors that impact individual firm choices regarding CSR as well as demonstrating the role of religious attitudes in corporate behavior.