Task Environments and Pressures to Conform to Corporate Social Performance Norms

Recent studies describe the degree to which variance in corporate social performance (CSP) is determined by firm-level choices versus constrained by industry pressures. However, the degree to which each matters likely varies across industries. We construct a theoretical framework grounded in institutional theory that explains how organizational task environment dimensions impact the relative importance of firm and industry effects on CSP. Hypotheses are tested using hierarchical linear modeling with longitudinal data from 4,109 firms in 378 industries between 1991 and 2009. Results show that industry effects increase and firm effects decrease in stable, hostile, and complex environments. The study helps explain why CSP serves as a legitimating mechanism in some industries but as a source of differentiation in others.