Abstract
Corporate social responsibility (CSR) and sustainability are important to corporations for several reasons. This study applied a novel institutional framework to answer the question of why firms in developing and emerging economies undertake CSR issues. We explored the role of the state, financial markets, human capital, social capital, corporate governance and financial performance in shaping CSR based on a sample of 108 firms from 26 countries representing Asian, African, Latin American, East European and Middle Eastern regions for the period 2016 to 2020. By employing a dynamic linear model (GMM), we found support for propositions that underdeveloped financial markets can facilitate firms' relationships with external stakeholders while weak labour rights and CSR are inversely related. We also found a statistically significant positive coefficient of CSR with corporate governance. The results showed an insignificant relationship for other propositions on the roles of financial performance, social capital and government ownership in shaping CSR. We found significant positive relationship of CSR with size while insignificant with leverage.