Does Local Culture Affect CSR Transparency? The Effect of Corruption Culture on CSR Decoupling

SynopsisThe research problemThis study examines the association between corruption culture and corporate social responsibility (CSR) decoupling.MotivationOnly a handful of studies have examined the effect of local culture on organizational outcomes. Recent studies shed light on the factors contributing to CSR decoupling, highlighting the value of understanding this disparity; however, few studies have documented the role of societal factors that contribute to this gap. Our study seeks to fill this gap by documenting that corruption culture increases dishonest behavior, reduces social stigma and the likelihood of punishment, promotes managerial rent-seeking, and ultimately affects CSR decoupling.The hypothesisCorruption culture is associated with higher CSR decoupling.Target populationWe used a sample of Chinese A-listed firms from 2010 to 2020.Adopted methodologyWe used ordinary least squares, path analysis, two-stage least square (2SLS) regression, generalized method of moment (GMM), and multiperiod difference in difference.AnalysesBy using 5,428 firm–year observations, this study examined the association between corruption culture and CSR decoupling. We employed robustness and mechanism tests to corroborate the findings and proposed mechanisms. Finally, we conducted heterogeneity tests to assess the varied impact of corporate governance, state ownership, and CEO attributes on the relationship between corruption culture and CSR decoupling.FindingsWe documented a positive relationship between corruption culture and CSR decoupling. We also found a less pronounced effect of corruption on CSR decoupling among firms with extensive media coverage and investments from qualified foreign institutional investors. Furthermore, the effect of corruption on CSR decoupling was particularly pronounced for private firms. We also observed that the effect of a corruption culture was especially weak for firms with chief executive officers who have international experience, are nonpolitically connected, and are female.