Corporate Governance

Purpose – This paper sets out to investigate the effect of differences in national cultures on the social and environmental performance of companies around the world.

Design/methodology/approach – Theoretical propositions on how the various dimensions of national culture influence corporate social responsibility are developed and empirically tested.

Findings – The authors propose that companies based in countries characterized by higher levels of power distance, individualism, masculinity, and uncertainty avoidance exhibit lower levels of social and environmental performance. Empirical tests of these propositions are performed via pooled ordinary least squares regression models using a novel proprietary dataset on 463 firms from 23 North American, European and Asian countries. Power distance and masculinity are found to have a significant negative effect on corporate social and environmental performance, whereas cultural differences with respect to individualism and uncertainty avoidance have no significant effect.

Originality/value – The potential contribution of this work lies in offering empirical evidence to test the widely held assumption that corporations' socially responsible behavior is influenced by the cultural context in their home country. The adoption and the external appreciation of this kind of behavior does appear to be contingent on specific dimensions of national culture, but not on others. Thus, positive social change through voluntary corporate action may be optimized via initiatives that build on specific cultural values in the relevant country.