Tax decisions and Corporate Social Responsibility: Evidence from a hybrid organization

Ghio Alessandro, Verona Roberto

The growing firm’s commitment towards society inevitably leads to enquiry about the related impact on companies’ decision making process. A particular source of tension could arise on choices related to taxation. In fact, Corporate Social Responsibility (CSR) and corporate tax decisions may be aligned, meaning that firms continuously take consistently ethical and responsible decisions, or they may be decoupled, leading CSR to be used to justify tax misconducts. These tensions are particularly vivid in hybrid organizations, where multiple different institutional logics shape the decision-making process. We perform an in-depth case study on an Italian Cooperative Credit Bank to understand first the relationship between CSR and corporate tax decisions and then, its historical contingency. Through a holistic representation of the firm, we observe that tax and CSR decisions appear driven by a sedimentation of community and market logics. This bundle of logics is the result of a long and complex embedment into the firm, mainly due to a process of local anchorage. However, we observe a sudden change in field-level institutional logics: the long-standing situation of cooperative dialectic equilibrium is moving towards the dominance of corporation logics. This form of change is driven by external actors, i.e., regulators and policy makers, and external events, i.e., the financial crisis and induced acquisitions. This paper contributes to the understanding of organizational responses to situations of complexity linking ethics to business decisions. We believe that these results are also informative to policy makers in their recent attempts to regulate hybrid organizations, such as Credit Cooperative Banks and social enterprises.

Key-Words: Ethics and Social Responsability, CSR, taxation, institutional logics, hybrid organization