THE RELATIONSHIP BETWEEN ORGANIZATIONAL SLACK AND CORPORATE SOCIAL RESPONSIBILITY: The moderating effect of CEO-duality

Abstract

Over the last 3 decades, the pressure on firms` engagement in corporate social responsibility (CSR) has increased globally in both developed and developing countries. Considering the existing research and current situation in Mongolia, research regarding Mongolian companies` social responsibility behavior is missing and there is a necessity to conduct empirical research why CSR is beneficial and what factor influence to CSR investment. Therefore, this study examines the potential impact of organizational slack on the firm`s engagement in corporate social responsibility (CSR) in the context of 154 sample companies listed on the Mongolian Stock Exchange at the year of 2012. Also I investigate the CEO-duality, applying the perspectives of agency theory and stewardship theory, as a moderator of this relationship. As I predicted, I have found that organizational unabsorbed slack

measured by debt-to-equity ratio, will have positive impact on CSR, but statistically insignificant. The study indicates that in the Mongolian context, mining companies engage more in CSR activities and 25% of total sample companies have CEO-duality. Furthermore, in consistence with the stewardship theory proposes, CEO-duality moderates the relationship between organizational unabsorbed slack and CSR positively. Therefore, from this study, it can be concluded that the models that are proposed from developed countries could work in the developing countries, such as Mongolia.