Toning it down: How competition shapes CSR communication positivity amid external stakeholder pressures

Amid intensifying scrutiny of corporate environmental and social impacts, firms increasingly use positive CSR communication to shape stakeholder perceptions. However, its effectiveness varies across contexts. We develop an impression management risk perspective, arguing that heightened product market competition (PMC) increases the anticipated backlash risks associated with overly positive CSR communication. As PMC intensifies, firms anticipate that economically oriented stakeholders will interpret highly positive CSR tone as evidence of inefficient resource allocation and managerial distraction, leading firms to use less positive CSR tone. We further argue that unfavorable analyst recommendations strengthen this negative relationship by heightening concerns about firms’ financial prospects, whereas CSR-related shareholder proposals weaken it by increasing pressure for CSR performance improvement. Analysis of 1,529 U.S. manufacturing CSR reports supports these arguments. Our findings contribute to research on PMC and impression management by showing how competition influences CSR communication and how conflicting stakeholder pressures moderate this effect.