Formal and Informal Institutional Drivers of Corporate Social Responsibility: Theoretical Perspective

Abstract

Drawing on institutional theory this article presents theoretical perspective of formal and informal institutional drivers of corporate social responsibility (CSR). It tries to enlarge the understanding of the drivers of CSR activities and how it varies among corporate operating in various contexts. Corporations engaged in corporate social responsibility because of formal and informal pressures. Formal institutional drivers are rule based such as political system, law enforcement and labor system. While, informal institutional drivers are societal-level norms and values including socioeconomic need, social organization, and national culture. Formal and informal institutional pressures are interacting to construct a vibrant pressure for the practice of CSR. Thus, understanding institutional context is a key to comprehensively realize the drivers of CSR as institutions determine the decisions and strategies of companies towards corporate social responsibility. Thus, corporate social responsibility is context specific and its conceptualization and practice varies among the globe depending on differences in institutional context.

Keywords: Corporate Social Responsibility, Formal and Informal Institutional Drivers, Institutional Theory

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