How does government drive the corporate social responsibility of firms that supply it with goods and services? This paper reviews relevant theory and practice to describe ways in which public procurement shapes corporate social responsibility, and it builds upon theory to develop testable propositions to describe these influences. Using the case of U.S. defense procurement, statistical analysis indicates a significant relationship between the extent to which firms engage in defense procurement and the corporate social responsibility orientations of their managers. The findings have application both for social responsibility theory and for public procurement policy and practice.
Noting that research in corporate social responsibility1 (CSR) tends to focus on CSR-related behaviors as independent variables that affect profitability (see, for example, Aupperle et al., 1985 and Berman et al., 1999), scholars have called for more study of these behaviors as dependent variables (Campbell, 2007 and Hiss, 2009). In particular, they call for increased attention to institutional factors (e.g., laws, rules, norms) that serve as drivers to influence and shape a firm's CSR (Williamson et al., 2006). While the effect of laws and regulations on CSR is often noted (see, for example, Goodpaster (1991), p. 2; Phillips et al. (2003), pp. 490–491), and while some research examines the role of governments in encouraging or enforcing CSR (Aaronson, 2005, McCrudden, 2006, McCrudden, 2007 and Moon, 2004), few have studied how, specifically, governmental actions might affect CSR activities or orientations.
The authors recognize the limitations of the conclusions in terms of external validity. Halpern’s sample consisted only of managers in defense firms—arguably a niche public procurement sector—and so the findings might not extend to other public procurement sectors. This paper extended Halpern’s analysis of defense firms through comparison of high and low defense involvement firms. Further study is needed to examine the CSR orientation of firms that deal mainly with state and local governments, as well as with non-defense federal agencies and other national governments. Case studies and manager interviews would aid in triangulation and in gaining insights into the extent to which each of the public procurement influences discussed earlier contributes to these orientations.
It is concluded that the relationships shown in Fig. 1 have merit in explaining how public procurement shapes a firm's CSR. Clearly, more study is needed to explicate and verify these relationships more completely. Studies like this one can inform policy-makers with insights into the influences of their decisions on firms that sell to the government, as well as the possible tradeoffs between implicit and explicit CSR in promoting the public good.
