Summary:
Purpose
The purpose of this paper is to compare the sustainability practices of Islamic and conventional banks, with the aim of evaluating whether their Corporate Social Responsibility (CSR) strategies converge or diverge in response to formal and informal institutions in an emerging country.
Design/methodology/approach
Drawing on institutional theory, this study contextualizes the competitive scenario through the National Business System (NBS) framework, and showcases the CSR strategies employed by large conventional and Islamic banks in Turkey. CSR patterns are examined from different angles such as motivations, strategy, actions and institutional results.
Findings
Within the same institutional environment, Islamic and non-Islamic banks combine convergent and divergent models to accommodate institutional realities in their CSR policies. Islamic banks exhibit an implicit commitment to CSR that is mostly based on informal institutions, whereas conventional banks use explicit CSR strategies as a means to fill the voids in formal institutions. In addition, philanthropy-oriented CSR prevails in Islamic banks, as opposed to the CSR actions associated with core business that are followed by conventional banks.
Social implications
An increased focus on formal institutions and explicit CSR actions by Islamic banks may further contribute to social well-being in emerging countries.
Originality/value
This study contributes to the paucity of research, from an institutional perspective, related to CSR practices amongst Islamic and conventional banks in emerging countries.
Keywords: CSR, Institutional theory, Emerging markets, Banks/other depository institutions, Comparative business systems, Financial and industrial structure
JCR Impact Factor and WoS quartile: 1,022 - Q3 (2019); 2,700 - Q1 (2023)
DOI reference:
https://doi.org/10.1108/IJOEM-12-2017-0533
Published on paper: September 2019.
Published on-line: March 2019.
Citation:
E. Aracil, Corporate social responsibility of Islamic and conventional banks: the influence of institutions in emerging countries. International Journal of Emerging Markets. Vol. 14, nº. 4, pp. 582 - 600, September 2019. [Online: March 2019]
