Institutional Investors and Corporate Social Responsibility (CSR): A Comprehensive Review of Theoretical Frameworks and Empirical Insights

Dan JR Yao; Shuo Wang

doi:10.54254/2754-1169/106/20241450

1. Introduction

In the intricate tapestry of Corporate Social Responsibility (CSR), two dominant threads emerge: the theoretical underpinnings that explain the relationship between institutional investors and CSR and the tangible mechanisms through which these investors exert their influence. This paper seeks to weave these threads together, offering a comprehensive exploration of the dynamic interplay between institutional investors and CSR, both from a theoretical and practical standpoint.

Central to the understanding is the Institutional Theory, which posits that societal norms and values significantly shape organizational behavior, including CSR initiatives [1,2]. This theory underscores the constraining and monitoring role of institutions in guiding corporate behavior toward socially responsible actions. Parallel to this is the Legitimacy Theory, suggesting that organizations continually align their operations with societal expectations to gain legitimacy [3,4]. Such alignment is evident in the emphasis institutional investors place on CSR initiatives, reflecting their quest for societal legitimacy.

However, the relationship is nuanced. The Agency Theory introduces potential conflicts between shareholders and management, emphasizing the role of institutional investors in bridging this gap [5]. Meanwhile, the Resource-Based View offers a perspective viewing CSR as a strategic asset, with institutional investors shaping this asset's trajectory [6,7].

Institutional investors, comprising pension funds, mutual funds, insurance companies, and other sizable investment entities, play a pivotal role in influencing the behavior and practices of corporations through their substantial financial holdings. This paper aims to elucidate the intricate interplay between institutional investors and CSR, shedding light on the pressures exerted by these influential stakeholders and the resultant outcomes on corporate behavior. Studies indicate that institutional investors have demonstrated effectiveness in enhancing the financial performance of firms. Additionally, they play a pivotal role in fostering and advocating for Corporate Social Responsibility (CSR) [8]. The emergence of CSR as a critical facet of modern corporate governance underscores the imperative for businesses to extend their commitment beyond mere financial performance. Furthermore, as institutions’ ownership has increased, their shareholder role has also evolved. Some institutional investors began to abandon their traditional passive shareholder role and become more active participants in the governance of their corporate holdings [9]. Shareholder activism has emerged as a potent tool, with investors wielding their influence through mechanisms such as proxy voting and engagement with corporate boards.

Businesses, as legal entities, are anticipated to conduct themselves in a socially responsible manner. This not only serves the betterment of society but also places the company on a trajectory towards enduring stability and prosperity, as it secures customer loyalty [10]. Additionally, such initiatives serve as a bulwark against reputational and operational risks associated with environmental and social controversies. Consequently, CSR is no longer viewed as a peripheral philanthropic endeavor but as an integral component of sustainable business models.

As the paper navigates this complex relationship, two pressing questions arise that this paper aims to address:

1. How do the theoretical frameworks of Institutional, Legitimacy, Agency, and Resource-Based View theories collectively shape the understanding of the role of institutional investors in CSR?

2. In what tangible ways do different types of institutional investors, with their unique objectives and strategies, influence and drive CSR practices in the corporate world?

In synthesizing these insights, this paper offers a balanced exploration of the theoretical foundations and the practical mechanisms that define the relationship between institutional investors and CSR. Drawing upon seminal works and empirical studies, it provides a holistic understanding, emphasizing the pivotal role of institutional investors in steering firms toward a more sustainable and responsible future.

2. Theoretical Background of the Relationship between Institutional Investor and CSR

2.1. Institutional theory

Institutional theory, a foundational framework in organizational studies, has been instrumental in elucidating the relationship between institutional investors and corporate social responsibility (CSR) practices. Central to this theory is the idea that institutions, characterized by norms, values, and practices, exert significant influence on organizational behavior, including their CSR initiatives [1,2].

A primary theme emerging from the literature in the context of institutional theory is the constraining and monitoring role of institutions on corporate behavior. Campbell and Young & Thyil underscore the influence of external entities, including NGOs, institutional investors, and the press, in monitoring and shaping corporate behavior toward socially responsible actions [11,12]. This monitoring mechanism is further emphasized by Graves & Waddock, and Alshammari, who highlight institutional investors' preference for firms with superior CSR performance [13,14]. Moreover, Harjoto et al. found that specific institutional contexts, especially the type of institutional investor, can significantly influence firms' CSR strategies nonlinearly [15]. Such studies collectively suggest that institutional investors, driven by societal norms and values, actively seek and promote robust CSR practices in their portfolio firms. Hong & Kacperczyk and Cahan et al. further exemplify this active engagement [16,17]. These researchers highlight the behavior of norm-constrained institutional investors who, guided by prevailing societal norms, may divest from firms with subpar CSR practices or actively advocate for enhanced CSR initiatives within their portfolio companies. Such actions underscore societal expectations' pivotal role in directing investor behavior and influencing corporate CSR outcomes.

Moreover, a nuanced perspective is introduced with the concept of myopic institutional theory, as discussed by Bushee and García‐Meca & Pucheta‐Martínez [18,19]. This subset of institutional theory suggests a potential divergence in priorities, where confident institutional investors might emphasize short-term financial gains over long-term CSR benefits. Specifically, such a perspective offers a counter-narrative, indicating that the influence of institutional investors on CSR is not uniformly positive but is shaped by broader institutional contexts and priorities.

In sum, applying institutional theory in understanding the interplay between institutional investors and CSR offers a multifaceted view. While the dominant narrative underscores the positive influence of institutional norms and values in promoting CSR, nuances within the theory provide a deeper understanding of the complexities involved in this relationship.

2.2. Legitimacy theory

A growing body of literature underscores the significance institutional investors place on CSR activities, reflecting the tenets of legitimacy theory. Legitimacy theory suggests that organizations consistently aim to align their operations with societal norms and values to establish, sustain, or regain legitimacy [20,21]. While direct applications of legitimacy theory in the context of institutional investors and CSR might be sparse, the philosophy of the theory is implicitly embedded in numerous studies, providing a robust framework to understand the dynamics at play.

Emerging literature accentuates institutional investors' pivotal role in CSR endeavors, mirroring the core principles of legitimacy theory. Several studies have illuminated the emphasis institutional investors place on CSR initiatives and the resulting improvement of legitimacy. For instance, Chen & Gavious dissect the varied value implications of CSR across shareholder spectra, emphasizing that in environments fortified with institutional safeguards, CSR initiatives amplify a firm's societal legitimacy, culminating in discernible financial advantages[22]. Fu et al. underscore the significance of reputation, positing that firms synchronize their actions with ‘perceived expectations’ to uphold their legitimacy [23]. Complementing this, Dai et al. underscore the positive correlation between a firm's CSR endeavors and its ensuing financial trajectory, suggesting that transparent CSR initiatives bolster its perceived legitimacy, making it an attractive prospect for institutional investors [24].

Furthermore, the proactive involvement of institutional investors in molding corporate CSR strategies resonates with the legitimacy theory, especially when considering the emphasis they place on a firm's societal legitimacy. Uysal and García‐Sánchez et al. highlight the burgeoning influence of institutional investors in steering corporate CSR directions, underscoring their commitment to ensuring corporate alignment with societal expectations [25,26]. Moreover, Guercio & Tran elucidate the active role of institutional investors in a firm's information disclosure mechanisms [27]. Their collaborative engagements with corporate hierarchies aim to amplify transparency, thereby augmenting the firm's societal legitimacy.

Li et al. offer a more granular exploration into the environmental facet of CSR, accentuating the instrumental role of institutional investors in championing superior environmental information dissemination [28]. They contend that such disclosures not only epitomize environmental stewardship but also diminish information disparities, thereby increasing the firm legitimacy. Further emphasizing the environmental, social, and governance (ESG) paradigm, Bai et al. and Liu et al. advocate that firms with a robust ESG framework are more likely to be perceived as legitimate societal entities [29,30]. In conclusion, the interplay between institutional investors and firm CSR performance is deeply rooted in the principles of legitimacy theory. As the corporate landscape evolves, the role of institutional investors in shaping and influencing CSR practices, grounded in the quest for legitimacy, becomes increasingly central.

2.3. Agency Theory

Agency theory, grounded in economic fundamentals, elucidates the relationship between principals (shareholders) and agents (management), highlighting the conflicts stemming from their divergent interests. This theory offers a framework for comprehending the interplay between influential shareholders and corporate executives within the CSR domain. Early proponents such as Friedman, Galaskiewicz, and Atkinson & Galaskiewicz posited that CSR could manifest as a managerial self-interest, potentially compromising shareholder value by diverting focus towards social and environmental commitments, possibly diminishing profits [31-33].

Subsequent research has further embodied or integrated agency theory into CSR discussions, emphasizing the pivotal role of institutional investors as a derivative of agency theory that can influence agency conflicts. Generally, these investors are perceived to alleviate agency conflicts, enhancing CSR performance. For instance, Zaid et al. and Waheed et al. contend that institutional investors, through rigorous governance, can bridge the gap between agents and shareholders by intensifying oversight of CSR decisions, ensuring optimal resource allocation to CSR endeavors and consequently bolstering both CSR and financial outcomes [34-35]. Conversely, Xiang et al. underscore the potential pitfalls of institutional investor inattention, suggesting it might curtail CSR initiatives due to lax managerial oversight [36]. Collectively, these studies leverage agency theory's intrinsic conflicts and information asymmetries to elucidate the nexus between institutional investors and firms' CSR performance. Furthermore, a nuanced examination of investor heterogeneity reveals distinct characteristics influencing agency conflict mitigation. Boubaker et al. and Fu et al. highlight the salience of institutional investors with long-term investment horizons, as they are inclined to bolster firm value, engage in rigorous monitoring, and fervently champion CSR [37].

While instrumental in understanding the dynamics between shareholders and managers, agency theory has limitations when applied to the intricate relationship between institutional investors and CSR. McWilliams and Siegel and McWilliams et al. contend that the theory's focus on agency conflicts might not encompass the multifaceted dimensions of CSR, which strategic considerations beyond mere agency dilemmas can influence [38,39]. Furthermore, the assumption of institutional investors as a uniform group is overly simplistic. In reality, there is a vast heterogeneity among these investors, each with distinct motivations and approaches to CSR. As Eisenhardt notes, agency theory offers a partial view, capturing only some facets of organizational complexity [40,41]. A more comprehensive theoretical approach is warranted to truly grasp the nuances of CSR and its interplay with institutional investors.

2.4. Resource-Based View

The Resource-Based View (RBV) posits that firms can achieve and sustain competitive advantage by leveraging their unique resources and capabilities [6]. In Corporate Social Responsibility (CSR), RBV provides a lens to understand how firms can use their CSR-related resources and capabilities as strategic assets to gain a competitive edge. Specifically, CSR can be regarded as an intangible asset and resource for the company from the RBV perspective, like reputation and goodwill. Several studies have suggested that firms’ CSR performance positively correlates with their financial performance, strengthening their competitiveness [42,43].

Within the academic discourse on CSR and institutional investors, the direct application of the Resource-Based View (RBV) remains relatively underexplored. However, many studies have underscored the significance of intangible resources, such as reputation and customer loyalty, in influencing a firm's competitiveness and financial performance [44-47]. Given that these intangible assets are intrinsically linked to CSR initiatives, one can postulate a potential application of RBV in investigating the relationship between institutional investors and firm CSR performance [48-51]. Specifically, institutional investors may emphasize and bolster these intangible resources in pursuing long-term value creation. For instance, Clark & Hebb suggest that institutional investors pay growing attention to companies' brand image and reputation to mitigate reputation risks and safeguard their investment value [52]. Luo et al. propose that institutional investors regard customer satisfaction as a significant factor affecting their investment decisions, which requires firms to promote their customer satisfaction [53]. Furthermore, Bajo et al. suggest that to reduce risks related to reputation, brand image, and earnings volatility, which protects long-term shareholder value, institutional investors will engage with companies to improve ESG standards and transparency [54]. This engagement is directly related to the firm's CSR performances, reinforcing that CSR initiatives can serve as valuable intangible assets that appeal to institutional investors. In conclusion, the RBV offers a compelling framework to understand the relationship between institutional investors and firm CSR. It underscores the strategic importance of CSR as a resource that firms can leverage to achieve competitive advantage. At the same time, it highlights the active role of institutional investors in shaping and influencing CSR practices, driven by their perceptions of CSR's value potential.

3. Institutional Investors and Their Role in CSR

3.1. Influence Mechanisms:

3.1.1. Direct engagement with firms on CSR matters

This refers to institutional investors actively interacting and communicating with companies on corporate social responsibility (CSR) initiatives and practices.

This participation can take many forms, including (1) Meetings and discussions: Institutional investors actively engage in conversations with corporate management to discuss CSR policies, practices, and performance and to propose improvements in environmental, social, and governance (ESG). (2) Active exercise of shareholder voting rights and proposals: Exercise their voting rights at general meetings, support or oppose policies related to CSR, and propose and support proposals related to CSR in order to promote the CSR process. (3) Feedback and supervision: To monitor the company's corporate social responsibility program and then require the company to provide timely and adequate feedback on the implementation of CSR. (4) Collaborative project: Socially responsible investing has been popular in some circles over the past few years, but now the mainstream investment community is also interested [55]. As a result, institutional investors are now more inclined to invest in companies with corporate social responsibility.

Engaging directly with companies on CSR matters is a proactive approach taken by stakeholders, including investors, NGOs, and advocacy groups, to encourage companies to operate in a socially responsible and sustainable manner. This engagement can be key in facilitating positive change and driving improvements in a company's CSR performance.

3.1.2. Voting and activism related to CSR initiatives

Voting and activism related to corporate social responsibility initiatives involve using one's voice and influence as a stakeholder or concerned citizen to promote and support social responsibility practices within a company. This can take several forms: (1). Shareholder voting: Shareholders of public companies have the right to vote on various matters, including matters related to corporate social responsibility. This can include voting on resolutions that address issues such as environmental sustainability, diversity and inclusion, or ethical supply chain practices. And it can put forward and support proposals related to CSR to promote the CSR process. (2) stakeholder voting CSR can be viewed as the responsibility of the business world to all stakeholders, not just financial stakeholders. The idea is not new [55]. Therefore, corporate social responsibility (CSR) must fully take into account the interests of stakeholders (there are many of them) and their voting rights. (3) Boycott and Consumer Activism: Consumers increasingly judge companies based on factors such as employee treatment, community engagement, and environmental concerns rather than traditional factors such as product quality, value for money, and financial performance [56]. Consumers can use their purchasing power to support companies that have strong corporate social responsibility initiatives and resist those that do not meet their ethical standards. Voting and activism associated with corporate social responsibility initiatives are powerful tools to drive change and hold companies accountable for their social and environmental responsibilities. They provide a way for individuals and groups to actively contribute to a more sustainable and socially responsible business environment.

3.1.3. Investment decisions based on CSR performance and ESG criteria

In fact, sovereign wealth funds and pension funds in Europe, including those in the UK, Sweden, and France, mandate companies to divulge information related to ESG (Environmental, Social, and Governance) factors. An analysis of more than 140 Australian non-financial businesses has found that environmentally oriented businesses have significantly higher profits and market share [57]. In addition, Hart and Ahuja reported a positive correlation with the ratio of assets (ROA) of S&P 500 companies [58]. Regarding social constituencies, most previous financial research shows that socially conscious companies perform better [59,60]. As a result, companies with strong CSR and ESG practices are often seen as quality investments with lower risk. Investors believe that companies with good CSR and ESG performance are more likely to create long-term value. They are considered to be better able to cope with environmental and social challenges, regulatory changes, and reputational risks. They are better able to adapt to changing market dynamics and changing stakeholder expectations. Institutional investors can reference third-party ratings and indices, such as the Dow Jones Sustainability Index or MSCI ESG ratings. Investors can make investment decisions by referring to third-party agencies and indices specializing in rating companies' CSR and ESG performance. Investment decisions based on corporate social responsibility performance and ESG criteria reflect a growing awareness of the broader social and environmental impact that companies have. This approach promotes sustainable and responsible business practices while seeking financial returns.

3.2. Varied Approaches by Investor Type

3.2.1. Pension Funds vs. Hedge Funds: Differences in CSR priorities and engagement methods

Both pension and hedge funds are investment funds, but they have different characteristics, objectives, and approaches to corporate social responsibility (CSR). From the perspective of primary objectives, the primary objective of a pension fund is to provide retirement benefits to its members or beneficiaries. They manage and invest funds on behalf of their employees, who contribute to the fund during their employment. Hedge funds aim to generate high returns for investors and typically focus on outperforming the market. They are not subject to the same regulatory and investment restrictions as pension funds.

The investment strategies and goals of public pension funds diverge notably from those of other institutional investors. To begin with, public pension funds are uniquely positioned to evaluate the CSR performance of the companies in their portfolios due to their extended investment timelines and substantial share of the overall stock market [61-62]. These funds are progressively leveraging their influence to drive constructive shifts in the corporate governance and Corporate Social Responsibility (CSR) endeavors of their companies. This encompasses the advocacy for favorable corporate conduct like environmental conservation and improved employment practices while also discouraging behaviors that Beneficiaries might perceive as ethically questionable. Specifically, numerous studies have established a favorable correlation between the ownership stakes of U.S. state pension funds and the CSR performance of the businesses within their portfolios [63-65].

Public pension funds may consider the social responsibility inclinations of their beneficiaries when making investment decisions. This is also because pension funds prefer stability to risk and attach importance to risk management, which makes pension funds prioritize stable and low-risk investments to ensure the long-term protection of retirement benefits. Sustainable and ethical investing makes them often very focused on sustainable and ethical investing because it aligns with their long-term goals and fiduciary responsibilities. Including the governance and transparency of the companies they invest in is also crucial, as they affect the long-term sustainability of returns.

Preliminary research finds some evidence that funds with socially responsible objectives provide higher returns than similar non-socially responsible funds, controlling for fund characteristics [66].

Why mutual funds incorporate corporate social responsibility strategies into their investment policies. One explanation is that there are non-financial attributes associated with socially responsible investing, such as social values or social preferences, the second explanation is that investment policies focused on corporate social responsibility can help mutual funds attract additional investment and thus increase capital flow, and the third explanation is that CSR investment policies provide risk mitigation benefits.

The main focus of hedge funds is to maximize returns for their investors. Although some hedge funds may consider CSR factors, their main goal is usually financial performance. However, when the CSR of an enterprise is in a very good state, it can also be seen as the company's future development potential and ability, so hedge funds will not completely choose financial performance as the main factor in investment decisions. While hedge funds pay more attention to risk control, hedge funds also give priority to financial market risks rather than broader ESG risks.

To conclude, while both pension funds and hedge funds may consider corporate social responsibility in their investment decisions, pension funds generally place more emphasis on long-term stability, ESG considerations, and active ownership, reflecting their fiduciary duty to provide services to retirees. Hedge funds, on the other hand, are more focused on maximizing returns and may pay more attention to the company's finances and financial market risks. Their approach to corporate social responsibility tends to be more flexible and can vary significantly from fund to fund.

3.2.2. Sovereign Wealth Funds: Their unique global influence on CSR

Sovereign wealth funds (SWFs) are state-owned investment funds that manage and invest a country's reserves, usually from commodity exports, trade surpluses, or foreign exchange reserves [67]. Five types of funds are identified according to the objectives of the fund, namely:

1. Stabilization Fund – Established with the purpose of safeguarding the budget and economy from the volatility of commodity prices and external economic disturbances. (such as the Chile’s Economic and Social Stabilization Fund)

2. Savings Fund – Establish a fund to share wealth across generations by converting non-renewable assets into diversified financial assets (such as the Abu Dhabi Investment Authority).

3. Development Fund – Establish a fund to ensure intergenerational wealth distribution by converting finite resources into a diversified portfolio of financial assets. (such as the Mubadala in the United Arab Emirates)

4. Pension Reserve Fund – Establish a fund to address future anticipated outflows from pension-related contingent liabilities on the government's financial records. (such as Malaysia’s KWAP).

5. Reserve Investment Corporations- Minimize the adverse carrying expenses associated with maintaining reserves or achieve enhanced returns from ample reserves, all the while keeping the assets in the fund classified as reserves. ( such as China, South Korea, and Singapore)

Many sovereign wealth funds adopt management principles that promote responsible ownership and engagement with investee companies. They may be actively involved in CSR issues for their companies, exercise their voting rights, and advocate for improved corporate social responsibility practices.

SWFS has unique financial clout, long-term investment horizons, and potential global reach. When they prioritize and actively participate in corporate social responsibility initiatives, they can significantly contribute to advancing responsible and sustainable business practices globally. Their actions and policies in this regard can set important precedents for other institutional investors and the broader financial community.

3.2.3. Insurance Companies: How their long-term horizons might shape CSR expectations

Insurance companies, by nature, have a long-term perspective and are uniquely positioned to influence and shape corporate social responsibility (CSR) expectations in several ways:

1. Long-term financial commitments: Insurance companies make long-term financial commitments to policyholders, often spanning decades. This long-term perspective aligns with the principles of corporate social responsibility, which also emphasize long-term sustainable and responsible business practices.

2. Risk mitigation and resilience: The core business of insurance involves managing risk and providing financial protection against unforeseen events. As a result, insurance companies are vested in promoting and supporting risk mitigation measures linked to environmental, social, and governance (ESG) factors. This can include initiatives related to climate resilience, disaster preparedness, and sustainable business practices.

3. Portfolio: An insurance company manages a large portfolio of investments to meet its policyholder obligations. Their investment decisions can influence CSR expectations by allocating funds to companies and projects that adhere to responsible and sustainable practices.

4. Transparency and reporting: Many insurance companies publish sustainability reports or disclose their ESG practices. This transparency sets expectations for their peers and stakeholders regarding responsible business conduct.

In general, long-term investment by insurance companies plays an important role in driving companies to implement CSR strategies and practices. By incorporating CSR into their investment and business decisions, insurance companies can have a positive impact in promoting corporate social responsibility, thereby promoting a more sustainable, socially responsible business environment.

4. Conclusion

This study underscores the pivotal role of institutional investors in shaping the CSR landscape through diverse theoretical lenses and practical results." Specifically, theoretical frameworks, including Institutional, Legitimacy, Agency, and Resource-Based View theories, elucidate that institutional investors significantly influence corporate behavior toward CSR. These theories highlight the role of societal norms, organizational alignment with societal values, shareholder-manager dynamics, and leveraging CSR as a strategic asset in shaping corporate CSR practices. Furthermore, different institutional investors, such as pension funds, hedge funds, sovereign wealth funds, and insurance companies, actively engage in CSR initiatives. Their unique objectives and strategies drive corporate behavior, with some emphasizing long-term stability and ESG considerations, while others prioritize financial performance, all influencing the CSR landscape.

Exploring the relationship between institutional investors and Corporate Social Responsibility (CSR) has illuminated significant implications for both governmental sectors and the investment community, highlighting pivotal areas for future research. For governments, the insights derived emphasize the importance of recognizing the influential role of institutional investors in steering CSR practices. By understanding this dynamic, policymakers can craft regulations and incentives that synergize with the CSR objectives of these investors. Such alignment can foster a corporate environment where sustainability and responsibility are encouraged and become integral to business ethos. Regulatory bodies might contemplate incentives for firms that resonate with the CSR inclinations of prominent institutional investors, thereby cultivating a culture of sustainability.

Institutional investors stand at a crossroads where their influence can shape the CSR trajectory. Recognizing their pivotal role, they can advocate for CSR not merely as an ethical choice but as a strategic imperative. The Resource-Based View suggests that CSR can be an invaluable intangible asset. Hence, investors might be inclined towards firms that embed CSR at the core of their strategy. Moreover, discerning the distinctions between various investor types can lead to bespoke and impactful CSR strategies, ensuring alignment with each investor's objectives.

Turning the gaze to future research, several promising avenues emerge. The observation that direct applications of both the Legitimacy Theory and the Resource-Based View (RBV) in the context of institutional investors and CSR are relatively sparse presents a compelling research opportunity. Delving deeper into these theories could unravel nuanced insights into how they can be more intricately applied to understand the institutional investor-CSR dynamic. For instance, while the Legitimacy Theory has been broadly applied in various contexts, its specific application in the realm of institutional investors remains an area ripe for exploration. Similarly, the RBV, emphasizing leveraging unique resources for competitive advantage, could be more intricately dissected to understand how CSR initiatives can be viewed as strategic assets by institutional investors.

Additionally, a deeper dive into the specific mechanisms through which different institutional investors influence CSR can offer more granular insights. While this review has provided an overview, there's potential to explore, for instance, how hedge funds, with their focus on short-term gains, reconcile with the long-term objectives of CSR. Secondly, as the corporate world becomes more globalized, understanding the cross-cultural implications of institutional investor influence on CSR can be invaluable. How do institutional investors in different cultural or regulatory environments prioritize and promote CSR? Lastly, with the increasing emphasis on ESG (Environmental, Social, and Governance) criteria, research could explore how these criteria are evolving and how institutional investors adapt.

In summation, this literature review has not only offered a comprehensive understanding of the institutional investor-CSR relationship but has also spotlighted areas for deeper inquiry. The intricate dance between theory and practice, interwoven with the roles of governments, businesses, and investors, presents a multifaceted narrative. Moreover, the commitment of institutional investors to shaping the CSR discourse remains both a profound responsibility and a beacon of promise, with the potential to sculpt the very fabric of the corporate realm.

Acknowledgement

Dan JR Yao and Shuo Wang contributed equally to this work and should be considered co-first authors.

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Cite this article

Yao,D.J.;Wang,S. (2024). Institutional Investors and Corporate Social Responsibility (CSR): A Comprehensive Review of Theoretical Frameworks and Empirical Insights. Advances in Economics, Management and Political Sciences,106,254-265.

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Volume title: Proceedings of the 3rd International Conference on Business and Policy Studies

ISBN：978-1-83558-541-2(Print) / 978-1-83558-542-9(Online)

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Conference date: 27 February 2024

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Volume number: Vol.106

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