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The dark side of economic success: ESG crime rate of European countries is driven by the conditions for doing business

Author

Listed:
  • Gabriela Chmelikova

    (Department of Regional and Business Economics, Faculty of Regional Development and International Studies, Mendel University in Brno, Czech Republic)

  • Renata Kucerova

    (Department of Management, Faculty of Business and Economics, Mendel University in Brno, Czech Republic)

  • Helena Chladkova

    (Department of Management, Faculty of Business and Economics, Mendel University in Brno, Czech Republic)

  • Jindrich Spicka

    (Department of Statistics, Faculty of Economics and Management, Czech University of Life Sciences, Prague, Czech Republic)

Abstract

This paper investigates the role of the institutional business environment with favourable conditions for conducting business in the process of the EU transition towards sustainability. We draw on the theory of institutional economics and empirically investigate our overarching research question as to which extent the conditions conducive to do business are linked to increased levels of irresponsible corporate behaviour in the EU.. Pursuing an econometric approach, we test a set of hypotheses using various measures of favourable conditions for conducting business as drivers for corporate social irresponsibility. We build a unique dataset that includes observations of irresponsible corporate behaviour in 16 EU countries over the period 2015 – 2020. Our findings show that institutions conducive to support the ease of doing business lead to an increased ESG (Environmental, Social, and Governance) crime rate measured by the share of firms acting irresponsibly and that the intensity of past ESG incidents is associated with a lower current occurrence of offences against sustainability. Our conclusion could help drive progress toward sustainability by the recommendation to orient policies more toward countries with attractive business environments, as they tend to harbour a concentration of the most harmful firms. Further, it is recommended to harmonise corporate tax rates and other business conditions across EU member states.

Suggested Citation

  • Gabriela Chmelikova & Renata Kucerova & Helena Chladkova & Jindrich Spicka, 2024. "The dark side of economic success: ESG crime rate of European countries is driven by the conditions for doing business," MENDELU Working Papers in Business and Economics 2024-97, Mendel University in Brno, Faculty of Business and Economics.
    • Handle: RePEc:men:wpaper:97_2024
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    References listed on IDEAS

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    More about this item

    Keywords

    Corporate Social Irresponsibility; Institutional Economics; Attractive Business Environments; Sustainability; ESG;
    All these keywords.

    JEL classification:

    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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