Firm Size and Corporate Social Performance

Abstract

Previous research suggests that large firms are more committed to corporate social performance (CSP), because the society exerts heavier pressure on large firms for socially responsible activities, and firms correspondingly conform to the pressure. This seemingly plausible argument, however, ignores the internal process how the response occurs in firms. In this study, the authors propose that the relationship between firm size and CSP is mediated by outside director representation in the board. The authors tested the mediating effect using a data set of 180 Korean firms and found empirical support for the argument. The result indicates that a firm’s social performance is more directly influenced by internal responses, such as appointing more outside directors in this study, rather than firm size. This study advances the institutional theory perspective in the size–CSP linkage by introducing the mediation internal mechanism.