Corporate social responsibility as an entrenchment strategy, with a focus on the implications of family ownership Jennifer Martínez-Ferrero a, * ,L  azaro Rodríguez-Ariza b , Isabel-María García-S  anchez a a Multidisciplinary Institute for Enterprise (IME), University of Salamanca, Campus Miguel de Unamuno, FES, 37007, Salamanca, Spain b Facultad de Ciencias Econ omicas y Empresariales, Departamento de economía financiera y contabilidad, Universidad de Granada, Spain article info Article history: Received 17 May 2015 Received in revised form 30 April 2016 Accepted 21 June 2016 Available online 28 June 2016 Keywords: Corporate social responsibility Entrenchment strategy Managerial discretion Family firms abstract Taking as its basis the classical agency conflict between owners and managers, this article investigates issues of managerial discretion, entrenchment and corporate social responsibility (CSR) in family firms. Using an international sample, its purpose is to examine the promotion of CSR as a strategic shield against the costs of managerial discretion and to determine whether this use of CSR is moderated by family ownership. The results obtained support the argument that CSR may provide managers who manipulate earnings, as a discretionary practice, with the opportunity to entrench themselves. This would be an outcome of the decrease in activism and surveillance by stakeholders whose social and environmental demands are satisfied by the exercise of CSR. Thus, by satisfying stakeholders' demands, managers can use a socially responsible strategy as a mechanism for self-defence. Moreover, our results show that CSR is moderated by the ownership structure of family firms. Family owners serve as active monitors of managers, thus alleviating the classical agency problem and decreasing both the risks associated with managerial discretion and the use of CSR as entrenchment. © 2016 Elsevier Ltd. All rights reserved. 1. Introduction From the perspective of the agency conflict between owners and managers (Shleifer and Vishny, 1989), this paper examines the possible existence of an entrenchment mechanism based on ac- tions of corporate social responsibility (hereinafter CSR); CSR has been defined as the “corporate integrated responsibilities encom- passing the economic, legal, ethical and discretionary expectations that the society has of organizations” (Carroll, 1979). The rationale for this study is the separation between property and control that is the basis for the agency theory; according to this theory, a shareholder (the principal) delegates the management of the firm to a manager (the agent). The latter acts for the former. However, because of their conflict of interests between the prin- cipal and the agent and the differences in their access to informa- tion, and because it is difficult for the principal to check on the manager's activities (Jensen and Meckling, 1976), the central assumption of this paper is that the self-interest of the agent results in opportunistic and/or discretionary behaviour. This behaviour arises from an excessive autonomy in decision-making processes that gives managers the opportunity to pursue their own self- interest (Eisenhardt, 1989) rather than the corporate benefit. By exploring this discretionary behaviour and the agency cost for CSR, we hypothesise that managers could over-invest in social and environmental concessions as a self-defence strategy (Rowley and Berman, 2000; Schneper and Guill en, 2004). Their aim is to ensure their job security, to strengthen their position, to avoid stakeholders' reactions, and, overall, to pre-empt the costs of managerial discretion. Thus, as a hedging strategy to avoid stake- holders' negative reactions, for example through costly boycotts and lobbying, media campaigns, or greater activism and scrutiny (Pagano and Volpin, 2005; Surroca and Trib o, 2008), managers could satisfy stakeholders' demands by following CSR practices and, in this way, expropriating shareholder wealth (Cespa and Cestone, 2007; Prior et al., 2008; Surroca and Trib o, 2008). In addition to addressing the possibility that CSR practices may mask practices of managerial discretion and facilitate entrench- ment (the expropriation of wealth from shareholders), this study makes a contribution with its focus on family ownership as a possible control mechanism that underlies the relationship mentioned above (La Porta et al., 1998). It has been suggested that the presence of blockholders may constitute a mechanism that * Corresponding author. E-mail addresses: jenny_marfe@usal.es (J. Martínez-Ferrero), lazaro@ugr.es (L. Rodríguez-Ariza), lajefa@usal.es (I.-M. García-S anchez). Contents lists available at ScienceDirect Journal of Cleaner Production journal homepage: www.elsevier.com/locate/jclepro http://dx.doi.org/10.1016/j.jclepro.2016.06.133 0959-6526/© 2016 Elsevier Ltd. All rights reserved. Journal of Cleaner Production 135 (2016) 760e770