An empirical investigation of determinants of corporate social performance using multi‐dimensional panel data analysis

• Published date: 01 February 2023
• Author: Ishani Patharia,Sahil Gupta,Sanjay Rastogi
• Date: 01 February 2023
• DOI: http://doi.org/10.1002/pa.2843

RESEARCH ARTICLE

An empirical investigation of determinants of corporate social

performance using multi-dimensional panel data analysis

Ishani Patharia

1

| Sahil Gupta

2

| Sanjay Rastogi

3

1

Department of Commerce, Bhagat Phool

Singh Mahila Vishwavidyalaya, Sonipat,

Haryana, India

2

Jaipuria School of Business, Indirapuram,

Ghaziabad, India

3

Graduate Studies in Management, Indian

Institute of Foreign Trade, New Delhi, India

Correspondence

Sanjay Rastogi, IIFT, New Delhi, India.

Email: srastogi@iift.edu

Funding information

Indian Council of Social Science Research,

Grant/Award Number: 02/002/2016-17/RP

An assessment of the determinants of corporate social performance (CSP) in emerg-

ing economies is still too fractured. This article contributes to general management

literature by developing an empirical model based on the existing theoretical models

rooted in neo-institutional theory (legitimacy approach), stakeholders management

theory, agency theory, the resource-based view of the firm, slack resources argu-

ment, and managerial control theory. A robust, multidimensional, unweighted disclo-

sure index was used to measure CSP. This article provides a methodologically and

empirically more rigorous assessment of determinants of CSP compared to previous

studies by performing panel data regression analysis on 307 firms for 10 years. The

results reveal that the presence of a legal framework, board attributes (board size,

board diversity, board interlocking), women on board, ownership pattern, financial

performance, firm attributes (size, age, leverage), and industry characteristics affect

CSP significantly. These findings provide very important clues to design pragmatic

strategies to improve CSP.

KEYWORDS

corporate governance, corporate social performance, financial performance, firm characteristics,

industry characteristics, panel data regression, presence of a legal framework

1|INTRODUCTION

Sustainable development is the major impending challenge for the world

today. Therefore, all the United Nations member states have designed

and adopted “The 2030 Agenda for Sustainable Development”that

includes 17 “Sustainable Development Goals”(SDGs). These goals

encompass the challenges of ending poverty and deprivations by working

toward zero hunger, good health and wellbeing, quality education, gender

equality, decent work, and economic growth, tackling climate change,

responsible consumption and production and similar sustainable activities

(United Nations, 2015). Since the past few decades, corporate social

responsibility (CSR) has become an issue of keen interest for researchers

due to its significance in the sustainable development of an economy. It is

not only the complementary measure of firm performance but also the

predictor of long-term performance and viability. It has become all the

more important to communicate non-financial performance as it serves

the increasing need for transparency and accountability toward stake-

holders (Ahmad et al., 2021; Breitbarth et al., 2010).

The concept of corporate social performance (CSP) is a measur-

able concept that goes beyond CSR that gained popularity during the

1970s. There is a difference between the scope of activities and

approaches to implication of CSR and CSP (Battaglini, 2019;

Carroll, 2021). CSR is a reactive concept and includes all the activi-

ties undertaken to meet the responsibility toward stakeholders and

resolve social problems often generated by the business itself (Ahmad

et al., 2021). CSP is a proactiveconcept such that it is the aggregate of

overall proactive social efforts toward various sections of society

(Barnett, 2007;Battaglini,2019). There is a lack of consensus on well-

establishedmeasurement criteriafor CSP because these proactive mea-

sures may includemany welfare activities aimed towardprotecting and

improving the condition of the environment, customers, employees,

stakeholders, and society. It has been proposed that CSP should be

evaluated based on principles, processes, and outcomes of proactive

corporate efforts rather than reactive ones (Battaglini, 2019;

Wood, 2010).Thus, its measurement must includeboth mandatory and

voluntaryactivities.

Received: 5 July 2020 Revised: 19 June 2022 Accepted: 22 August 2022

DOI: 10.1002/pa.2843

J Public Affairs. 2023;23:e2843. wileyonlinelibrary.com/journal/pa © 2022 John Wiley & Sons Ltd. 1of15

https://doi.org/10.1002/pa.2843