Big Profits, Big Harm? Exploring the Link Between Firm Financial Performance and Human Rights Misbehavior. Issue 6 (July 2023)

• Record Type: Journal Article
• Authors: Giuliani, Elisa; Nieri, Federica; Vezzulli, Andrea
• Is Part Of: Business and society. Volume 62:Issue 6(2023)
• Page Start: 1248
• Page End: 1299
• Publication Date: 2023-07
• Subjects: corporate misbehavior -- developing countries -- financial performance -- human rights -- institutional pressure; Industries -- Social aspects -- Periodicals; Industrial sociology -- Periodicals; Business ethics -- Periodicals; 306.3
• DOI: 10.1177/00076503221144994
• Languages: English
• ISSNs: 0007-6503

Abstract

We examine whether, relative to their global peers, the financial performance of firms from developing countries leads to increases in human rights abuses. We also study the institutional conditions that qualify this relationship. Based on a combination of behavioral and neo-institutional theories, we suggest there is a positive relationship between financial performance and human rights misbehavior as home country liabilities motivate firms to misbehave to achieve their primary goal of economic leadership. We also suggest that strong regulatory and normative pressures attenuate the abovementioned positive relationship, as failure to comply with norms endangers such firms' secondary goal of achieving international legitimacy. Our analysis, based on a sample of 245 large companies from eight developing countries studied over a 20-year period, supports our hypotheses. Our empirical results suggest that such companies misbehave when they endeavor to strike a balance between maintaining their global economic leadership and sustaining their social legitimacy.