PhD, Associate Professor of Accounting, School of Business, Qingdao University, Qingdao, Shandong, China
PhD, Assistant Professor of Business Intelligence and Analytics, Heider College of Business, Creighton University, Omaha, Nebraska, USA
PhD, Professor of Management Information Systems, College of Business, University of Central Oklahoma, Edmond, Oklahoma, USA
The deficit of mineral resources, the aggravation of environmental problems in the world, the decrease in non-renewable resources determined the increasing role of the responsibility of enterprises for the direct and indirect impact on the economic, environmental and social systems of their functioning. The systematization of scientific work in the field of corporate social responsibility showed the lack of comprehensive studies concerning the nature and strength of the impact of direct and latent factors on enterprises’ compliance with the principles of corporate social responsibility. In this research study, we hypothesized that the common contributing factors for corporate social responsibility benefits in the literature such as institutional pressures, market/societal pressures, and structural support are mediated by the factors of stakeholder influence and supervision effect. The data from an empirical survey of 334 corporate executives were collected to test our hypotheses of mediating effects. The partial least squares structural equation modelling (PLS-SEM) approach was used to test the 11 hypotheses from the research model. The research model is statistically significant with an explanatory power of R2 = 0.468 for the dependent variable CSR benefits. The statistical results show that the direct effects of the three common contributing factors to CSR are not significant. All the standardized path coefficients (β) of direct effects from institutional pressures, market/societal pressures, and structural support to corporate social responsibility benefits are less than 0.1. On the other hand, their effects are significant through the mediating factors of stakeholder influence and supervision. If we characterize stakeholder influence as words and supervision effect as deeds, then words are more significant than deeds (the path coefficient from supervision effect to corporate social responsibility benefits is 0.243, while from stakeholder influence to corporate social responsibility benefits is 0.443). Moreover, if we characterize external pressures as a stick and structural support as carrot, our research results show that stick (0.413 for market/societal pressures, 0.387 for institutional pressures) is more significant than the carrot (0.115) in effectuating corporate social responsibility benefits.
Keywords: Corporate Social Responsibility, Stakeholders, Supervision, Mediating Effect, Factors of Influence.
JEL Classification: M14.
Cite as: Wang, F., Lo, J., Lam, M. (2020). Mediating Effects of Stakeholders and Supervision on Corporate Social Responsibility. Business Ethics and Leadership, 4(1), 43-56. http://doi.org/10.21272/bel.4(1).43-56.2020.
- Ajina, A., Lakhal, F., & Ayed, S. (2019). Does corporate social responsibility reduce earnings management? The moderating role of corporate governance and ownership. Management International, 23(2), 45-55, 147, 150, 153-154. https://doi.org/10.7202/1060030ar.
- Ankur, Roy & Vishal (2013). SMEs Motivation: Corporate social responsibility. SCMS Journal of Indian Management, 01, 11-21. Available at: https://www.scms.edu.in/journal/.
- Atherton, S. C., Blodgett, M. S., & Atherton, X. A. (2011). Fiduciary Principles: corporate responsibilities to stakeholders. Journal of Religion and Business Ethics, 2(2), 1-15. Available at: https://via.library.depaul.edu/jrbe/.
- Aya Pastrana, N., & Sriramesh, K. (2014). Corporate social responsibility: perceptions and practices among SMEs in Colombia. Public Relations Review, 40(1), 14-24. https://doi.org/10.1016/j.pubrev.2013.10.002.
- Bice, S. (2017). Corporate social responsibility as an institution: A social mechanisms framework. Journal of Business Ethics, 143(1), 17-34. https://doi.org/10.1007/s10551-015-2791-1.
- Brekke, K. A., & Nyborg, K. (2005). Moral hazard and moral motivation: Corporate social responsibility as labour market screening. St. Louis: Federal Reserve Bank of St Louis. Retrieved from http://vortex3.uco.edu/login?url=https://search-proquest-com.vortex3.uco.edu/docview/1698480942?accountid=14516.
- Burt, E., & Mansell, S. (2019). Moral agency in charities and business corporations: exploring the constraints of law and regulation. Journal of Business Ethics, 159, 59-73.
- Camilleri, M. A. (2017). Corporate sustainability and responsibility: creating value for business, society and the environment. Asian Journal of Sustainability and Social Responsibility, 2, 59-74.
- Carroll, A. R., & Shabana, K. M. (2010). The business case for corporate social responsibility: a review of concepts, research and practice. International Journal of Management Review, 12(1), 85-105.
- Chin, W. W. (1998). The partial least squares approach for structural equation modelling. Ed. G. A. Marcoulides. Modern Methods for Business Research, 295-336. Lawrence Erlbaum Associates: Mahwah, NJ. Available at: https://www.questia.com/library/95678668/modern-methods-for-business-research.
- Chunfang, Y. (2009). Research on the Driving Mechanism of Corporate Social Responsibility. A thesis submitted in fulfilment of the requirements for the degree of Doctor of Philosophy, Huazhong University of Science and Technology. Available at: https://www.proquest.com/products-services/pqdtglobal.html.
- ECLAC (2008). Promoting Corporate Social Responsibility in Small and Medium Enterprises in the Caribbean: Survey Results. ECLAC Liaison Office in Washington, D.C. Available at: https://www.cepal.org/en/publications/list?search_fulltext=promoting%20corporate%20social%20responsibility.
- Fanghui, J., & Ziyuan, X. (2005). The implementation of corporate social responsibility based on consumer choice. China Industrial Economics, 210(9), 91-98. Available at: https://www.oriprobe.com/journals/zggyjj.html.
- Fornell, C., and Larcker, D. F. (1981). Evaluating structural equation models with unobservable variables and measurement error. Journal of Marketing Research, 18(1), 39-50.
- Freeman, R. E. (1984). Strategic Management: A Stakeholder Approach. Boston: Pitman Publishing. Available at: https://www.amazon.com/Strategic-Management-R-Edward-Freeman/dp/0521151740.
- Garas, S., & ElMassah, S. (2018). Corporate governance and corporate social responsibility disclosures. Critical Perspectives on International Business, 14(1), 2-26.
- Hair, J. F., Black, W. C., Babin, B. J., and Anderson, R. E. (2014). Multivariate Data Analysis, 7th ed. Pearson New International Edition. Pearson Education Limited. Available at: https://is.muni.cz/el/1423/podzim2017/PSY028/um/_Hair_-_Multivariate_data_analysis_7th_revised.pdf.
- Hair, J., Hult, G. T. M., Ringle, C. M., and Sarstedt, M. (2017). A Primer on Partial Least Squares Structural Equation Modeling (PLS-SEM), 2nd ed. SAGE Publications: Los Angeles.
- Henseler, J., Ringle, C. M., and Sinkovics, R. R. (2015). The use of partial least squares path modelling in international marketing. Advances in International Marketing, 20, 277-320.
- Hongling, G. (2006). The Relevance of Corporate Social Responsibility Supply and Financial Performance based on Consumer Demand Supply. A thesis submitted in fulfilment of the requirements for the degree of Doctor of Philosophy, Southwest Jiaotong University. Available at: https://www.proquest.com/products-services/pqdtglobal.html.
- Jackson, G., Bartosch, J., Avetisyan, E., Kinderman, D., & Jette, S. K. (2019). Mandatory non-financial disclosure and its influence on CSR: An international comparison. Journal of Business Ethics, 159, 1-20. https://doi.org/10.1007/s10551-019-04200-0.
- José-Luis Godos-Díez, Cabeza-García, L., Alonso-Martínez, D., & Fernández-Gago, R. (2018). Factors influencing board of directors’ decision-making process as determinants of CSR engagement. Review of Managerial Science, 12(1), 229-253. https://doi.org/10.1007/s11846-016-0220-1.
- Katmon, N., Zam, Z. M., Norlia, M. N., & Farooque, O. A. (2019). Comprehensive board diversity and quality of corporate social responsibility disclosure: Evidence from an emerging market. Journal of Business Ethics, 157(2), 447-481. https://doi.org/10.1007/s10551-017-3672-6.
- Kurbjeweit, B. H. (2011). The relationship between ethics and law in governing the game of business. Journal of Business Ethics Education, 8, 55-62. Available at: https://www.neilsonjournals.com/JBEE/.
- Lindell, M. K., and Whitney, D. J. (2001). Accounting for common method variance in cross-sectional research designs. Journal of Applied Psychology, 86(1), 114-121.
- Lisi, I. E. (2018). Determinants and performance effects of social performance measurement systems. Journal of Business Ethics, 152(1), 225-251. https://doi.org/10.1007/s10551-016-3287-3.
- McKinley, Andrew. (2008). The Drivers and Performance of Corporate Environmental and Social Responsibility in the Canadian Mining Industry. A thesis submitted in fulfilment of the requirements for the degree of Master of Geography, University of Toronto. Available at: https://www.proquest.com/products-services/pqdtglobal.html.
- Mzembe, A., N., & Meaton, J. (2014). Driving corporate social responsibility in the Malawian mining industry: a stakeholder perspective. Corporate Social Responsibility and Environmental Management, 21(4), 189-201. https://doi.org/10.1002/csr.1319.
- Pavlou, P. A., Liang, H., and Xue, Y. (2007). Understanding and mitigating uncertainty in online exchange relationships: A principal-agent perspective. MIS Quarterly, 31(1), 105-136. https://doi.org/10.2307/25148783.
- Ringle, C. M., Wende, S., and Becker, J. M. (2014). SmartPLS 3. Hamburg: SmartPLS. Retrieved from http://www.smartpls.com.
- Roy, A., Vigao, V., & Jain, P. (2013). SME motivation: corporate social responsibility. SCMS Journal of Indian Management, 10(1), 11-21. Available at: https://www.scms.edu.in/journal/.
- Sanchez, R. G., & Bolivar, M. P. (2017). Perception of stakeholder pressure for supply-chain social responsibility and information disclosure by state-owned enterprises. The International Journal of Logistics Management, 28(4), 1027-1053. https://doi.org/10.1108/IJLM-05-2016-0118.
- Schwartz, M. S., & Carroll, A. B. (2003). Corporate social responsibility: a three-domain approach. Business Ethics Quarterly, 13(4), 503-530. https://doi.org/10.5840/beq200313435.
- Sethi, S. P., Martell, T. F., & Demir, M. (2017). Enhancing the role and effectiveness of corporate social responsibility (CSR) reports: The missing element of content verification and integrity assurance. Journal of Business Ethics, 144(1), 59-82. https://doi.org/10.1007/s10551-015-2862-3.
- Shubham, Charan, P., & Murty, L. S. (2018). Institutional pressure and the implementation of corporate environment practices: Examining the mediating role of absorptive capacity. Journal of Knowledge Management, 22(7), 1591-1613. https://doi.org/10.1108/JKM-12-2016-0531.
- Smolennikov, D., & Kostyuchenko, N. (2017). The role of stakeholders in implementing corporate social and environmental responsibility. Business Ethics and Leadership, 1(1), 55-62.
- Susan, L., Y., Mona, V., M. (2014). Firms’ corporate social responsibility behaviour: an integration of institutional and profit maximization approaches. Journal of International Business Studies, 45, 670-698. https://doi.org/10.1057/jibs.2014.29.
- Taisong, S. Q. (2013). Driving mechanism of institutional environment on corporate social responsibility based on the analysis of cases. Studies in Dialectics of Nature, 28(2), 113-119. Available at: https://www.oriprobe.com/journals/zrbzfyj.html.
- The International Organization for Standardization. (2010). ISO 26000:2010 Guidance on Social Responsibility. American National Standards Institute. Available at: https://www.iso.org/standard/42546.html.
- Vashchenko, M. (2017). An external perspective on CSR: what matters and what does not? Business Ethics: A European Review, 26, 396-412. https://doi.org/10.1111/beer.12162.
- Wang, L. & Liang, X. (2017). Profit or legitimacy? What drives firms to prioritize social stakeholders? Asian Journal of Business Ethics, 6, 57-79. https://doi.org/10.1007/s13520-016-0072-4.
- Wayne, V., & Chad, K. (2015). Integrated value creation (IVC): beyond corporate social responsibility (CSR) and creating shared value (CSV). Journal of International Business Ethics, 1, 29-43. Available at: http://www.cibe.org.cn/en/page/Default.asp?pageID=81.
- Yibo, R. (2007). A survey on corporate social responsibility in seven countries − a survey report from the Society for Human Resources Management (SHRM). China WTO Tribune, 5, 66-68. Available at: https://www.shrm.org/hr-today/trends-and-forecasting/research-and-surveys/Documents/2007%20Corporate%20Social%20Responsibility%20Pilot%20Study.pdf.
- Zhao, X., Chen, S., & Xiong, C. (2016). Organizational attention to corporate social responsibility and corporate social performance: the moderating effects of corporate governance. Business Ethics: A European Review, 25(4), 386-399. https://doi.org/10.1111/beer.12124.
- Zhilong, T., & Yuanqiong, H. (2005). Research on non-market strategy and action of enterprise in China. China Industrial Economics, 9, 82-90. Available at: https://www.oriprobe.com/journals/zggyjj.html.