Cheap vs. Substantive CSR Talk among Global Retailers: An Abstract

The current study proposes an empirical test of Wickert et al.\u2019s (2016) model, suggesting that from a cost perspective, it is more advantageous for large firms to engage in CSR \u201ctalk\u201d and for small firms to do the CSR \u201cwalk.\u201d Instead, we do a more granular test of the relationship between firm size and cheap talk vs. substantive talk. First, if the linear relationship between firm size and CSR talk is true, we should be able to observe it among large companies as well as they exhibit variation in the number of employees. Second, due to the complexity of big enterprises, CSR needs may vary between departments and regions making it impractical and unnecessary to implement all practices throughout all departments and regions. Thus, we focus on degrees of CSR \u201ctalk.\u201d We construct a continuum from stand-alone CSR reports (cheap talk) through UN Global Compact engagement to GRI reporting (substantive talk) for top global retailers. Third, we concentrate on one industry in order to understand better the empirical power of the model. The sample consists of the top 250 retailers in 2015 that are traced back to 1999\u2014the year when GRI and UNGC are inaugurated. The results do not quite comply with the logic of Wickert et al. (2016). We observe mostly inverted-U relationships between size and the likelihood of engagement in any kind of CSR talk. Moreover, the employee measure of size exhibits positive (albeit borderline significant) relationship with the likelihood of substantive talk, which goes against the prediction of Wickert et al.\u2019s model. On the other hand, the very big companies do not appear to be more likely to engage in cheap talk either. Thus, the dichotomy of small vs. large companies\u2019 \u201ccommunication gap\u201d does not seem to be applicable when we zoom in onto types of communications. Our results indicate that the biggest companies even in the same industry display sufficient variation in CSR talk, and it would not be right to put them under the common denominator \u201clarge companies.\u201d We still need to get a better understanding of the motivations behind CSR talk and the fact that by the end of our observation period, 57% of the top global retailers did not publish any type of CSR report. Overall, we observe that talk is not just talk, and we need to delve even deeper to see if big companies might be engaging in strategic silence