Microfoundations of Corporate Social Responsibility and Irresponsibility

Abstract

This study examines how social perception of corporate social responsibility (CSR) and irresponsibility (CSI) affects organizational outcomes. Drawing from the social psychology literature on stereotypes, we argue that two fundamental dimensions of social perception — warmth and competence — mediate and moderate the effects of socially responsible and irresponsible practices. We propose that firms engaging in CSR are perceived as higher in warmth and, by default, competence than firms engaging in CSI; moreover, different perceptions of warmth and competence of the organization explain the asymmetric rewards and penalties for CSR and CSI. We conduct two experiments: Experiment 1 links CSR with perceptions of warmth and competence, and shows that warmth perceptions mediate the relationship between CSR and important organizational outcomes, such as sales and reputation. Experiment 2 adds information on firms’ countries of origin to show that CSR rewards and CSI penalties will differ depending on the (mis)alignment of CSR strategy with country stereotypes. We find that firms from high-warmth countries (USA, Portugal) receive lower benefits for CSR and pay higher penalties for CSI than firms from low-warmth countries (Germany, Pakistan); furthermore, this effect reverses when combined with high competence. This micro-macro study extends social evaluation, strategic CSR, and international management literatures.