The corporate social responsibility literature recognizes that firms’ existing CSR reputation can serve as a safeguard from the impact of reputation-damaging events on a firm’s social legitimacy. However, the literature has yet to focus on the extent to which CSR activities can help mitigate such damage, post-event. This article examines how a firm’s social actions following a product recall facilitate the recovery of its diminished social legitimacy. We test our predictions using a sample of 197 product recalls involving 168 publicly (...) traded corporations from 1999 to 2009 and demonstrate that the speed of the CSR response, the frequency of CSR activities, and the intensity of CSR activities have a significant effect on firm recovery following crisis. The effects were most pronounced in instances where the magnitude of the recall was most severe. The visibility of the recall has a limited impact on post-event recovery. We discuss our contributions to research on strategic CSR and recovery. (shrink)

We examine the impact of corporate culture on environmental performance using a sample of 7199 firm-year observations over the period of 2002–2018. We find that stronger corporate culture improves environmental performance, measured by the amount of toxic chemical release (TCR). Our result is both statistically and economically significant. We also show that cultural norms of innovation, quality and teamwork as well as a technology-oriented corporate culture have a greater impact on enhancing environmental performance. Further analyses show that managerial competence and (...) strong institutional ownership moderate the relationship between corporate culture and environmental performance. We introduce the decomposition of expected and unexpected components of TCR and document that firms with a strong corporate culture implement strategies to reduce the unexpected component of TCR in addition to the expected component of TCR. Finally, we document that strong corporate culture and environmental performance improve firms’ financial performance. Our results are robust to several sensitivity tests and procedures to mitigate endogeneity and self-selection problems. From a practical point of view, our findings suggest that a firm’s culture can determine its environmental sustainability and ethical practices. (shrink)