In weaker institutions, lack of corporate social responsibility (CSR) constituencies causes organizations to naturally incline toward corporate socially irresponsible actions. Grounded in the institutional theory, this paper aims to explore the nature of corporate social irresponsibility (CSIR) in the weaker institution and its effect on legitimacy and reputation. The presence of corporate ability moderates the impact of CSIR on legitimacy and reputation.
A list of manager’s contact information was generated from an online database. In total, 1,500 employees in 560 Pakistani organizations received the self-reported survey. In total, 203 managers working in 110 Pakistani organizations responded with the completed questionnaire that provided empirical support to the hypotheses.
Institutional drivers were positively significant to CSIR and negatively associated with the manager’s CSR attitudes. CSIR was negatively significant to legitimacy and reputation. Group differences between high and low corporate ability indicated that corporate ability played a vital role between CSIR and reputation.
These results have important implications for leaders, business-to-business and human resource (HR) managers in weaker institutions highlighting that organization’s supply chain partners consider adopting CSR practices. This can help the organization avoid undesirable and detrimental impact on its legitimacy and reputation, which are linked to irresponsible behaviors. HR managers should build CSR cognition in employees to bring effective change in the organization.
Lack of investigation into corporate ability and CSIR has raised questions about the organization’s efforts in the weaker institution that are sensitive to institutionalized corruption. This research adds to the literature by exploring how the organizations develop legitimacy and reputation while still acting irresponsibly in a weaker institution, presenting a paradox.
