Culture and institutions: How economic freedom and long-term orientation interactively influence corporate social responsibility

Studies of international differences in firm behavior tend to consider either institutional or cultural factors. Focusing on corporate social responsibility (CSR), we conjecture that not only both institutions and culture need to be taken into account, but also the interaction between these two sets of factors. We theorize that the institutions associated with economic freedom in combination with the cultural trait long-term orientation positively influences CSR practices. Panel data of 5023 companies from 41 countries confirm this expectation. This finding pertains both to long-term orientation at the level of the society and at the level of the company. Our findings support calls for more attention to interactive effects of cultures and institutions.