Institutional pressure and an organization’s strategic response in Corporate Social Action engagement: The role of ownership and media attention

Abstract

This study investigates the relationship between institutional pressure and a firm’s strategic behavior in the context of Corporate Social Action. We posit that as an organization’s susceptibility to institutional pressure increases, its proclivity to conform to and alleviate environmental concerns and pressures to establish or maintain its legitimacy increases. To explain variation in a firm’s strategic response to institutional pressures and its engagement in Corporate Social Action, we focus on two factors: public ownership and media attention. Analysis of the largest publicly traded German firms indicates that greater public ownership reduces a firm’s propensity to engage in Corporate Social Action, while firms with less public ownership are more proactive in social engagement. However, when confronting greater media attention, firms with greater public ownership are more reactive in pursuing conforming strategies and increasing Corporate Social Action engagement.