Environmental uncertainty and corporate social responsibility

Abstract

This study examines the impact of environmental uncertainty on corporate social responsibility (CSR). Using a 23-year panel sample with 3,053 unique US firms and 23,742 firm-year observations, we test the ethics view and risk management view of corporate social responsibility. We find a significant and negative relationship between environmental uncertainty and corporate social responsibility, suggesting that firms are less likely to engage in corporate social responsibility activities when faced with an uncertain environment. Our results support the ethics view of corporate social responsibility. These insights should interest policymakers who implement guidelines on CSR and firms that are considering adjusting their CSR levels. Our results should also provide practitioners with useful insights regarding which specific determinants are associated with a company's level of CSR activities, and interest firms that attempt to incorporate CSR in their business systems.