Publication Type

Journal Article

Version

submittedVersion

Publication Date

5-2024

Abstract

This study outlines two signaling mechanisms—trust and spillover—through which a potential partner’s corporate social responsibility (CSR) and corporate social irresponsibility (CSI) affect alliance formation. Extending a key insight in signaling theory that positive and negative signals are conceptually distinct, we propose that which mechanism is dominant in explaining alliance formation varies between CSR and CSI. Specifically, we argue that the dominant signaling mechanism for CSR is the trust mechanism, through which CSR signals the moral character of a potential partner, which is used by the focal firm to infer the partner’s trustworthiness. In contrast, CSI negatively affects alliance formation primarily through a spillover mechanism: CSI signals a potential partner’s moral character to a firm’s external stakeholders. Stakeholders’ negative assessments based on this signal might then spill over to the focal firm if it forms an alliance with that partner. We further identify two contingency factors—namely, proximity and media coverage—that help verify the dominant signaling roles of partner CSR and CSI. Using a sample of alliances formed by high-tech firms between 1995 and 2016, we find support for our predictions.

Keywords

corporate social responsibility, corporate social irresponsibility, alliance formation

Discipline

Business Law, Public Responsibility, and Ethics | Organizational Behavior and Theory | Strategic Management Policy

Research Areas

Strategy and Organisation

Publication

Academy of Management Journal

ISSN

0001-4273

Identifier

10.5465/amj.2022.0862

Publisher

Academy of Management

Embargo Period

5-30-2024

Copyright Owner and License

Authors

Additional URL

https://doi.org/10.5465/amj.2022.0862

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