Does the Agenda-Setting Effect Always Work?: The Moderating Role of Institution Informatization

Introduction

The role of the media on corporate behavior has received significant attention from scholars (Deephouse, 2000). In stakeholder research, the media plays an important role in building trust between firms and external audiences (Bitektine, 2011). The media also serves as an essential intermediary in social information interaction (Bednar et al., 2013). Thus, stakeholders tend to evaluate firms through media messaging. This function has led to the media’s influential stakeholder position and influence over corporate reputation (Tang & Tang, 2012). Particularly, small-to-medium enterprises (SMEs) lean on media coverage to influence behavior (Weaver et al., 1999). Furthermore, in agenda-setting research, the media is seen as a secondary stakeholder, guiding the public and policy agenda so that stakeholders may intervene in corporate behavior (Tang & Tang, 2016).

The impact of media coverage on corporate social activities, such as corporate social responsibility, has received substantial attention (Chiu & Sharfman, 2011). However, the empirical results on this topic are mixed. For example, some studies have highlighted offsetting mechanisms for firms facing negative events (Muller & Kräussl, 2011), arguing that negative coverage results in firms being more likely to engage in social activities to gain legitimacy. Other scholars argue that negative coverage results in increased efficiency pressures on firms to reduce their investment in social activities (Jeong & Kim, 2019).

Firms do not accept the pressure from the media wholesale. Stakeholder (media) pressure on firm behavior can be countered and compromised (Tan, 2009). The media agenda-setting effect can be greatly diminished when the media’s calls do not lead to substantive action by other stakeholders (Tang & Tang, 2016). What factors influence the agenda-setting effect of the media? Limited research has investigated this question, including the location of mass media (Jia et al., 2016). In management research, the institutional environment is an important factor that drives firms to adopt social practices (Gao & Hafsi, 2015). Institutional informatization can influence the perceived environmental regulatory pressure on firms (Liu et al., 2021).

Meanwhile, numerous studies have highlighted the important role of digitalization on corporate development (Liu et al., 2022). However, there is limited research on whether the level of institution informatization also affects agenda-setting effects. Today, there is developed electronic media and increased public interaction in the media (Zhou et al., 2022). However, there is no sufficient theoretical and empirical evidence to test whether the agenda-setting effect of the media is significant. Thus, the core questions are:

• 1.

  Do different forms of media have a consistent impact on corporate environmental behavior?

• 2.

  Do agenda-setting effects differ across media in the same institutional setting?

This study conducts a framework with regional institution informatization to investigate the impact of the media agenda-setting effect on firm pollution behavior. In this framework, environmental activities are seen as responses to external stakeholder pressures on firms. The researchers argue that the media focus on environmental issues discipline corporate emissions. In addition, regional institution informatization will strengthen this relationship. Firms in regions with high institution are likely to perceive more stakeholder pressure on environmental issues. However, the study’s empirical result reveals that the moderating role of institution informatization is not significant on the relationship between paper media coverage and corporate environmental performance.