Determinants of CSR Adoption: An Institutional and Social Network Approach

Abstract

This study examines the similarity of adoption of Corporate Social Responsibility (CSR) practices among listed firms in the Mexican Stock Exchange (MSE). We draw concepts from institutional and social network theories to demonstrate how board interlocks among firms in the MSE can influence CSR practice adoption. Using a social and environmental certification named ESR (Empresa Socialmente Responsible) to represent the presence of social and environmental practices in the adopters and board interlocks to create a network of listed firms we test hypotheses using network statistical tools, i.e. multiple regression - quadratic assignment procedures (MR-QAP). The main finding in this study is that the mimetic (network ties) and normative (business group similarity) mechanisms influence the adoption similarity of the ESR certification in listed firms in Mexico. Our results help to explain how firms can influence peers to adopt CSR practices. Increasing firm's connections can create greater communication channels for firms in terms of social and environmental practices. The highly institutional and relational characteristics that are presented in developing countries can be important to strategically promote CSR practices and effectively target firms to increase CSR adoption, helping to diminish some of the social and environmental problems present in these regions.