Contagion effect in the adoption of environmental corporate social responsibility

With increasingly social attention on environmental issues, more enterprises join in the environmental corporate social responsibility activities (thereafter as ECSR), however, there is an ongoing puzzle in practice whether contagion effect exists and how it spreads among enterprises. To examine this contagion effect, we collect 3486 firm-year data of 662 listed companies in China from 2006 to 2017, then use these data to assess empirically the contagion effect of ECSR under different governance and environmental regulations. We examine the impact of the average ECSR level of enterprises in the region and industry on the ECSR level of individual enterprises, then examine the role of chain executives as a transmission path, and finally we test the moderating effect of command-controlled and market-motivated environmental regulation on contagion effect. Our findings are as follows: There are contagion effects among enterprises in the same region and industry; interlocking executives promotes the transmission of ECSR behavior among interlocking enterprises; the command-controlled environmental regulation enhances the contagion effect of ECSR of enterprises in the region, while the government market-motivated environmental regulation weakens the contagion effect.