Cities and corporate social performance

Abstract

This study examines how and why pollution levels in global cities influence the adoption of corporate social performance (CSP) by firms headquartered in these cities. Drawing on resource-dependence and institutional theories, this study found that urban air pollution is likely to decrease CSP due to low level of regulatory stringency and firms’ cost-reduction motives. However, our research also discovered that environmental CSP is higher when urban air pollution increases in large cities, while environmental CSP is lower when air pollution increases in small cities. Unveiling the influence of city-level characteristics on CSP has a number of theoretical and managerial implications: (1) Theoretically, the adoption of CSP studies at the city level refines institutional theory and resource-dependence theory on drivers of CSP at the subnational (city) level, which hitherto focused on the national and organisational levels. (2) Regarding practical relevance, policymakers can benefit from understanding the mechanisms that explain the relationships between their cities’ environmental concerns and CSP.