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The impact of corporate social irresponsibility on emerging-economy firms’ long-term performance: An explanation based on signal theory

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  • Zhong, Xi
  • Chen, Weihong
  • Ren, Ge

Abstract

Corporate social irresponsibility (CSI) is widespread globally and severely impacts firms negatively. However, scholars have rarely empirically explored the relationship between CSI and emerging-economy firms’ long-term performance. Based on signal theory, we propose that CSI, as a negative signal unintentionally sent by the firm, will significantly weaken the approval and support of core stakeholders, and eventually have a serious adverse effect on emerging-economy firms’ long-term performance. In addition, we further propose that the relationship between CSI and emerging-economy firms’ long-term performance is likely nuanced and may vary by a multidimensional signal environment (e.g., corporate charitable donation, industry competition intensity, and regional marketization degree). After conducting an empirical test on Chinese listed companies from 2003 to 2019, we find that most of our arguments are supported. Our research enriches and expands the CSI and signal theory literature by providing important insights for firms and government departments to control CSI.

Suggested Citation

  • Zhong, Xi & Chen, Weihong & Ren, Ge, 2022. "The impact of corporate social irresponsibility on emerging-economy firms’ long-term performance: An explanation based on signal theory," Journal of Business Research, Elsevier, vol. 144(C), pages 345-357.
    • Handle: RePEc:eee:jbrese:v:144:y:2022:i:c:p:345-357
    DOI: 10.1016/j.jbusres.2022.02.005
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