Socially Responsible Corporate Networks

Abstract

Research Question/Issue This study investigates the importance of firm networks in the transmission of corporate social responsibility (CSR) policies among socially connected firms. Drawing on an integrated framework that combines Resource Dependence Theory and Social Network Theory, we argue that social ties both create the external dependencies that motivate CSR adoption and provide the conduits through which CSR‐related norms, expectations, and knowledge diffuse. Research Findings/Insights We find that firms are significantly influenced by the CSR policies of their connected peers, with effects strongest for central network positions and CEO‐driven ties. Importantly, these spillovers are distinct from geographic or industry similarities, with over half originating from nonlocal connections. Leveraging quasi‐natural experiments of CEO turnover and the death of board members, we show that exogenous network disruptions weaken CSR transmission, providing evidence consistent with a causal role of social ties. Theoretical/Academic Implications These findings underscore the pivotal role of interfirm networks in shaping CSR policies and provide new insights into the mechanisms of CSR policy diffusion, with critical implications for corporate strategy, governance, and sustainability initiatives. Practitioner/Policy Implications This study provides insight for both internal and external stakeholders of the firm into the importance of connections among firms in setting and shaping CSR policies.