Institutional complementarity between corporate governance and Corporate Social Responsibility: a comparative institutional analysis of three capitalisms

The question of why and how firms’ approach to Corporate Social Responsibility (CSR) differs across countries is one that can only be adequately addressed by giving a strong theoretical underpinning to research on comparative CSR. To this end, drawing on institutional theory and the institutionalist arguments of the comparative capitalism literature, we identify the mechanism by which national institutional arrangements influence CSR. We do this by (a) separating CSR from corporate governance, and identifying corporate governance as the missing link between the broader institutional arrangements that govern finance and labour and CSR, and (b) using the concept of institutional complementarity (a process of mutual reinforcement that enhances the value of both institutions) to specify the nature of the relationship between corporate governance and CSR. We refer to three models of capitalism—liberal market economies (LMEs, e.g. the USA and the UK), coordinated market economies (CMEs, e.g. Germany and Japan) and state-led market economies (SLMEs, e.g. France and South Korea)—as empirical sites for exploration of these ideas. We argue that CSR complements corporate governance systems by a logic of similarity (a link based on similar properties) and that, as change in the broader institutional arrangements and corporate governance occurs, CSR reflects and facilities this change.