International Corporate Responsibility Series

Volume 3, 2007

Controversies in International Corporate Responsibility

Social Responsibility, Social Capital, and Corporate Competitive Advantage in Transitional China

In this paper, we analyze the impact of interaction between corporate social responsibility (CSR) and corporate social capital on corporate competitive advantage in a transitional context. Using survey data of Chinese companies, we examine the theoretical relationship empirically. Results show that CSR has no direct association with corporate financial performance or organizational reputation. However, corporate social capital can very much magnify the impact of CSR in a transitional context. Specifically, the social responsibility of a firm with higher social capital is more positively related to organizational reputation than that of a firm with lower social capital, and this expands the theory of CSR. We present the strategic implication that the interaction between CSR and social capital improves corporate sustainable advantage.