Corporate Social Responsibility Failures: A Comparative Analysis of Developed and Emerging Markets

This work analyzes the causes for failure of CSR activities in both developed and emerging markets and draws on information from 189 companies located in the USA, UK, Germany, Brazil, South Africa, and Nigeria, including developed and emerging markets. Using negative binomial regression, the analyses explored the effects on CSR controversies posed by the quality of institutions, governance systems, and certain characteristics at the firm level. Suggested in the results is the failure rate on CSR activities in developed markets that do not significantly differ from those in emerging markets (M=.66 and M=.70 respectively), which is coupled with the results that emerging markets are contradictory to the prevailing thought on levels of institutional protection. Rule of law is pertinent in the results: in weak law countries, firms have 97% more CSR controversies. Board independence results in the analyses in 43% lower controversy odds, and profitable firms in the analyses have 42% lower CSR controversy. The results contradict the prevailing thought on firm size and systemic corruption: neither predicts the failure rate on CSR activities. It therefore emerges from the governance of CSR that the level of market development is secondary to the more important factors pointed to. They are the quality of institutions and the strength of the board to the reputational risks of the firm.