Corporate Social Responsibility Strategy: Resource Conservation or Relationship Preservation?

Extant studies have shown how institutional complexity, posed by the incompatibility of shareholder logic and stakeholder logic, affects firms’ corporate social responsibility (CSR). Yet little is known about how institutional logics are internalized in CSR strategizing. Using Agency theory and Stakeholder theory, Behavioral Theory of the Firm, attention-based view, this paper conceptualizes resource conservation and relationship preservation, two distinct mechanisms in CSR strategizing informed by shareholder logic and stakeholder logic respectively. The use of CSR strategy is to complement the market-oriented strategies that firms’ attention and resources are drawn to. Under the condition of negative performance feedback, the master switch that intensifies firms’ market-oriented actions, this paper finds that firms reduce CSR consequentially. The motivation is to release resources for actions targeted to close the performance gap. Situational context also moderates firms’ prioritization of resource allocation. Bankruptcy risk intensifies the reduction in CSR as resource conservation becomes salient. While reputation risk attenuates the reduction in CSR as relationship preservation becomes salient. China offers a rich context to examine institutional complexity as CSR is mandated by the company act. Using 11,716 firm-year observations from 1,013 Chinese listed firms from the year 2007 to 2021, this paper found support for the theory.