This study examines the relationship between institutional investment (II) and corporate social performance (CSP) of public listed companies (PLCs) in Bangladesh using cross‐sectional data. The sample includes 152 firms as listed in Dhaka Stock Exchange (DSE). Structured questionnaires, annual reports, CSR reports, websites, regulatory notifications, and newspaper articles were used for data collection.The results of the study indicate that CSP has a positive but insignificant relationship with institutional investment in Bangladesh. This would also improve the investment climate by encouraging the institutional investors to make their investment decisions based on long‐term sustainability. To the best of our knowledge, the paper investigates, for the first time, the linkage between institutional investment and CSP in the context of a developing country like Bangladesh. In the process, this paper attempts to develop the first known comprehensive CSP Index in the context of Bangladesh. Copyright © 2012 John Wiley & Sons, Ltd and ERP Environment