This study examined why and under which circumstances firms invest in corporate sustainability. In contrast to other studies that only examine why firms engage in corporate sustainability, this study goes one step further by analyzing corporate sustainability investment drivers for: standardized reporting firms versus non standardized reporting firms, developed country firms versus developing country firms, and retailers versus manufacturers. Institutional Theory, Transaction Cost Analysis, and the Business Case perspective are used to explain why firms invest in corporate sustainability. Firms invest in corporate sustainability due to the institutional pressures to conform to norms and maintain legitimacy. Firms will invest in corporate sustainability when they are financially healthy and have the capacity to invest. Generalized linear mixed modeling is used to test the propositions. The sample included retailers and food manufacturers from the United States, Europe, and Africa. The results indicate that when we do not take context into account, corporate sustainability investment is driven by regulatory pressure, mimetic pressure, normative pressure, profitability, and firm value. However, when we take into account the context in which firms are embedded or nested there is variation in the effects of drivers of corporate sustainability investment. This is due to differences in the CS reporting context, regional context, and industry context. The results from this study indicate that mimetic pressure and normative pressure are the key determinants of corporate sustainability investment for firms in developed and developing countries. Furthermore, normative pressure influences corporate sustainability investment for non-standardized reporting firms. In contrast, mimetic pressure and profitability are the key drivers of corporate sustainability investment for standardized reporting firms. We find that while corporate sustainability investment for retailers is driven by regulatory and normative pressure, corporate sustainability investment for manufacturers is driven by mimetic pressure, normative pressure, profitability, and firm value. Based on the findings we conclude that a one-size-fits-all approach is not appropriate for analyzing drivers of corporate sustainability investment for different contexts. Therefore, managers and policy makers should take into account the context of the firm when developing corporate sustainability investment strategies.
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