Investigating the Impact of Corporate Social Responsibility (CSR) on Risk Management Practices

Abstract

To date, the value of corporate social responsibility (CSR) activities has primarily been measured through the company’s reputation, with little attention given to exploring whether there are internal influences between CSR and other management practices. We argue that the efficacy of CSR extends beyond a company’s reputation for managing social and environmental concerns; in particular, it can influence other business practices such as risk management. Our results suggest that (a) overall, firms with better CSR performance are more likely to adopt integrated risk management practices and (b) CSR activities that target both primary stakeholders and secondary stakeholders are equally important in facilitating the adoption of such risk management practices. Theoretically, we contribute to the CSR literature by providing a possible mechanism for risk reduction and insurance-like effects of CSR. Practically, we provide managerial implications demonstrating that the efficacy of CSR should not be viewed in isolation of other business practices.