The role of corporate social responsibility and corporate social irresponsibility in shaping corporate reputation: An analysis of competitive action and innovation strategies

Abstract

AbstractThis study delves into the intricate interplay of Corporate Social Responsibility (CSR) and Corporate Social Irresponsibility (CSI) within the context of corporate reputation, further illuminated by the influential moderating effects of competitive action and innovation. It underscores that CSR positively influences firms' corporate reputation, aligning with established notions of ethical practices enhancing stakeholder trust and public perception. Conversely, CSI's adverse impact on corporate reputation serves as a cautionary tale against ethical negligence. To explore this link, the study analyzes a sample of top global automotive firms using dynamic panel data system Generalized Method of Moments (GMM) estimates. The investigation of secondary data from 132 global automotive firms over the period 2016–2022 finds evidence supporting the association between CSR, CSI, and reputation. Notably, competitive action emerges as a significant moderator in this equation. The study reveals that firms with high competitive action experience a more pronounced positive relationship between CSR and corporate reputation, while a parallel link exists between competitive action and the adverse influence of CSI on reputation. This underlines competition's role in intensifying reputational effects. Additionally, innovation assumes a similar role as a moderator. High innovation levels accentuate the positive CSR‐corporate reputation relationship, underscoring the potency of innovation in amplifying ethical impact. Conversely, innovation mitigates the negative CSI‐corporate reputation link, highlighting the potential of innovative practices to offset the repercussions of irresponsibility. In conclusion, this study provides a nuanced understanding of how CSR, CSI, competitive action, and innovation collectively shape corporate reputation. This intricate nexus unveils the intertwined dynamics of ethics, competition, and innovation that define modern corporate landscapes, casting light on their far‐reaching implications for organizations' reputational trajectories.