Can Too Strong of a Corporate Culture Deter Corporate Social Performance? Evidence From Public Firms in the United States

Abstract

Corporate culture represents an important undergird that connects the internal and external stakeholders, resources, and capabilities to improve corporate social performance (CSP). Yet, corporate culture remains a less explored antecedent of CSP. Using a recently developed semi-supervised machine learning-based measure of corporate culture and a panel fixed-effects estimator, we find that corporate culture exhibits an inverted U-shaped relationship with CSP in a sample of 2577 publicly traded firms from 2003 to 2013. The findings are robust to time-invariant unobservables at the firm level, endogeneity between corporate culture and CSP, alternate measures of key variables, alternate model specifications, and a variety of auxiliary and robustness checks. Our findings contribute to the understanding of the association between corporate culture and CSP, an increasingly important non-economic outcome pursued by corporations.