Inconsistency in Corporate Social Responsibility and Corporate Risk.

This paper reconciles extant theory on how firms' (in)consistency in environmental, social, and governance practices may affect corporate risk. Drawing on the resource-based view of the firm (RBV), we hypothesize that the association between corporate social inconsistency (CSI), defined as a firm's variability in social responsibility initiatives across different issues at one point in time, and corporate risk is U-shaped. A moderate level of CSI is found to be inversely related with corporate risk up to a point, through more efficient resource allocation, more effective management, and the generation of intangible resources. Beyond that point, though, CSI becomes extremely costly because of increasing pressure from other stakeholder groups, which results in an increase of risk at high levels of CSI. In addition, we test several theory-based contingency factors of this curvilinear relationship between CSI and risk. Drawing on a sample of 863 firms in a longitudinal study design (2008-2012), we examine how the relationship between CSI and risk varies under different conditions (at firm, industry, and institutional levels). Our results suggest that greater R&D and strong regulatory control mitigate the harmful risk effects of CSI. [ABSTRACT FROM AUTHOR]