Does Similarity Matter? Heterogeneous Effects of CSR Dimensions on Suppliers’ Specific Investments

Previous studies have examined the impact of corporate social responsibility (CSR) on stakeholder trust and suggested CSR benefiting secondary stakeholders, such as the community, signal a firm’s altruistic tendencies more effectively than CSR benefiting primary stakeholders, like employees. However, these studies have assumed that the interpretation of CSR signals by recipients is uniform, disregarding the significance of the bilateral relationships between specific recipients and CSR beneficiaries. In this study, we aim to introduce the concept of situational similarity, which refers to the degree to which two sets of stakeholders experience similar power dynamics and functional structures in their interactions with the focal firm. Drawing on social cognition literature, we propose that situational similarity between the recipient and CSR beneficiary influences the recipient’s perception and, consequently, modifies the effectiveness of CSR signals in a manner contrary to the altruistic logic proposed in previous studies. We empirically test this hypothesis in the context of suppliers’ firm-specific investments (FSIs) and find that a firm’s CSR initiatives related to employees exert a stronger impact on suppliers’ FSIs compared to those related to communities. Moreover, we argue this disparity is more pronounced when suppliers face intense competition or the focal firm grapples with higher uncertainty.