Does digitization drive corporate social responsibility?

Abstract

This study investigates the effect of firm-level digitization on corporate social responsibility (CSR) performance. Using a sample of Chinese A-share listed companies from 2010 to 2020 and a textual data mining approach, we find that digitization is positively associated with CSR performance with multiple tests suggesting that this relationship is causal. The study also finds that firm-level digitization promotes CSR by improving innovation inputs and outputs, stimulating innovation, and improving innovation capacity. The findings are more prominent for firms with lower financing constraints, larger sizes, and higher asset cash recovery rates.