Corporate Social Responsibility Investment Research Articles

Corporate social responsibility and labor investment efficiency: evidence from China

PurposeWe expect to provide a complete theoretical framework and large sample evidence on the impact of corporate social responsibility (CSR) on the efficiency of labor investment. We also hope to provide micro-evidence based on labor investment behavior for the two-sided impact of corporate CSR behavior.Design/methodology/approachThis paper measures labor investment efficiency by estimating the difference between actual and expected net hiring of enterprises. CSR is measured on the basis of the CSR score of Chinese listed companies published by Hexun.com. A regression model is constructed to analyze the relationship between CSR and labor investment efficiency. Possible endogeneity problems are controlled by lagging independent variables, propensity score matching method and difference-in-difference method.FindingsResults show that CSR can improve labor investment efficiency by reducing over-hiring and under-hiring in emerging markets. The existence of the mediating effect of agency cost, information disclosure quality and employment fluctuation confirms that CSR improves labor investment efficiency through two mechanisms of corporate governance and labor market friction. The improvement effect of CSR on labor investment efficiency is more significant in non-state-owned, high CEO shareholding ratio and high-average urban wage enterprises.Originality/valueIn conclusion, our study is an important supplement to the existing research on the factors affecting labor investment efficiency. Our research conclusions will be helpful for enterprises in developing countries or enterprises in labor-intensive industries to improve labor investment inefficiency. The conclusion of the mechanism analysis in this paper provides more complete and reliable microscopic evidence for accurately identifying the specific path of CSR's impact on labor investment efficiency. This paper verifies the positive impact of CSR from the perspective of labor investment efficiency in the context of a developing country, which provides evidence for the theoretical conflicts related to CSR based on the effectiveness of enterprise labor investment decisions.

HOW DOES CSR STRATEGY IMPACT CORPORATE CASH POLICY IN EMERGING MARKETS? EVIDENCE FROM THE COVID-19 OUTBREAK

This study investigates the impact of corporate social responsibility (CSR) strategy on corporate cash policy in emerging markets, with a specific focus on the COVID-19 pandemic period. By analysing data from 7,731 firm-years across 30 developing countries during the period 2002-2021, the study finds that CSR has a negative effect on cash holdings. In other words, firms with lower CSR investment tend to hold more cash. However, an interesting finding is that the negative impact of CSR on cash holdings lost its significance during the COVID-19pandemic. This suggests that during this unprecedented period of economic uncertainty and disruption caused by the pandemic, firms with higher CSR were more inclined to hoard cash as a precautionary measure. In contrast, in normal times, the dominant motive for holding cash appears to be related to agency concerns. Furthermore, the study identifies countryspecific variations in the relationship between CSR and cash holdings. For instance, firms in Brazil and Saudi Arabia tend to use cash retention as a response to higher CSR, while firms in Argentina, Malaysia, Mexico, Poland, Taiwan, and Turkiye exhibit the opposite behaviour, using higher CSR as a signal for reduced cash holdings. Additionally, the study sheds light on industry-specific differences in the relationship between CSR and cash holdings. Beverage, construction and material, industrial material, oil, gas, and coal, technology hardware and equipment, telecommunications service provider, and travel and leisure firms are more likely to use cash holdings as a substitute for CSR, while alternative energy and media firms show the opposite pattern, using higher CSR as a signal for reduced cash holdings.

Beauty premium: the impact of CEO facial attractiveness on corporate social responsibility

Purpose Face is the most intuitive and representative feature at the individual level. Many studies show that beautiful faces help individuals and enterprises obtain economic benefits and form a high economic premium, but the discussion of their potential social value is insufficient. This study aims to focus on the impact of the personal characteristics of executives. It mainly analyzes the impact mechanism of CEO facial attractiveness on corporate social responsibility (CSR) decision-making, clarifying the social value of beauty from the perspective of CSR. Design/methodology/approach The authors use the regression model to analyze the panel data set, which was conducted by a sample of Chinese publicly listed firms from 2016 to 2018. Findings The study found that CEOs with high facial attractiveness are more active in fulfilling CSR, which can usually bring higher social benefits. CEOs with beautiful faces are prone to overconfidence, are optimistic about their ability and the future development of the enterprise and are more willing to increase their investment in CSR. CEO duality can positively regulate the positive correlation between a CEO’s facial attractiveness and CSR. Originality/value Based on the perspective of upper echelons theory, this paper explores the mechanism of CEO facial attractiveness on CSR. This study enriches the perspective of the upper echelon’s theoretical research and has essential enlightenment for CEO selection and training practice.

Disclosing Corporate Social Responsibility Affects Company Value: Profitability as Moderating Variable

The goal of this research is to determine how company value is impacted by corporate social responsibility (CSR) and how profitability, as determined by the rate of return on assets (ROA), modifies this impact. The main reason is that businesses which can disclose their CSR will garner greater public attention. Purposive sampling was employed in this study, consisting of all businesses listed on the Indonesia Stock Exchange (IDX) during 2018 to 2022. Because relatively few organizations are prepared to participate in CSR due to the significant expenditures involved, the paper’s findings show that CSR Disclosure does not significantly affect company value. The second finding stated that profitability as defined by return on assets (ROAt) can enhance the interaction among CSR disclosure and company value because profitable businesses can afford to make larger investment in CSR, which can best serve stakeholders who are essential to the business’s longevity.

Do Hofstede’s cultural dimensions moderate the CSR-firm performance relationship before and during the COVID-19 crisis?

Purpose This study aims to evaluate the impact of varying cultural dimensions, according to Hofstede, on corporate social responsibility (CSR) performance before and during the COVID-19 crisis. Design/methodology/approach This study examines the moderating impact of Hofstede’s cultural dimensions on the relationship between CSR and firm performance. The database comprises 36,295 firm-year observations from 2,135 firms operating in civil law countries. Findings The findings confirm that CSR investments have a positive impact on firm performance both before and after the COVID-19 crisis. Furthermore, it becomes evident that cultural dimensions play a moderating role in the CSR–firm performance relationship. The crisis has generated a shift in perspective, emphasizing the advantages of CSR in terms of reputation and financial well-being in the post-crisis environment. Originality/value The significance of this study lies in its examination of the relationship between CSR and firm performance within the framework of Hofstede’s cultural dimension theory, before and during the COVID-19 crisis.

The Influence of Corporate Social and Environmental Responsibility and Information Technology Investment on Company Value with Corporate Innovation as a Moderation

This research aims to determine the influence of several variables, namely (1) CSER and (2) IT investment, on company value, which is moderated by the company innovation variable in mining sector companies listed on the BEI in 2018 - 2022. The population in this study is all mining companies, as many as 76 companies. Sampling used purposive sampling with certain criteria and obtained a sample of 9 companies multiplied by five years of observation to become 45 financial reports. The data collection technique used is a documentation study that analyses the financial reports of mining companies that meet the sample criteria according to the needs of the data to be processed. Data were analysed using the STATA application. The research results found that CSER and IT investment had no effect on company value; company innovation was not able to strengthen the influence of CSER on company value, while company innovation was able to strengthen the effect of IT investment on company value. This research was also conducted on mining companies, considering that the mining sector is closely related to the environment. According to the data previously presented, the value of companies in the mining sector experiences fluctuations, which decrease more frequently each year.  

Corporate Social Responsibility: Impact on Firm Performance for an Emerging Economy

Corporate Social Responsibility (CSR) was usually referred to as a concept where companies initiate voluntary action towards social and environmental concerns in the context of business operations related to the stakeholders of the company prior to the CSR Act 2013 in India. Post-2013, the voluntary initiative was replaced by regulatory guidelines to address social and environmental concerns. The CSR applicability–investment gap was used as a base concept in this study with instrumental theory; the study offers a strategic perspective of CSR and how organizations emphasized maximizing stakeholders’ value. In order to further investigate the effect of CSR on corporate financial performance (CFP) through the measure of shareholders’ value, i.e., the return on equity (ROE), the study used the sample from the National Stock Exchange (NSE)-Nifty-100 indexed companies of Emerging Economy—India for a span of fourteen years (2009–2023). The vast majority of research in this domain is conducted in developed countries; the research gap is filled by this study by considering India and drawing samples from multiple industries. The empirical model was developed by using panel data regression, where the dependent variable was ROE, and the independent variables were earning per share (EPS), log total income (LTI), CSR applicability/profit after tax (CRSAPPPAT), and CSR investment/profit after tax (CSRIPAT). The findings also highlighted the CSR applicability and investment of the firms during pre- and post-Sustainable Development Goal (SDG) periods. The same was also analyzed for the firms committed to CSR and not committed to CSR. The results indicated that there is no significant impact of the CSR/ESG initiatives (applicability and investment) on the ROE of the firms. The performance could be better if the companies minimize the CSR/ESG promise–performance gap through effective communication with stakeholders.

Too much of a good thing: the dual effect of executive equity incentives on corporate social responsibility performance

PurposeResearch on the effect of executive equity incentives is equivocal. Based on agency theory, some scholars take the convergence of interest logic to highlight the benefits of executive equity incentives. In contrast, others adopt the entrenchment logic to emphasize the increased agency costs. This study attempts to reconcile the debate on executive equity incentives and integrates the opposing views to unveil how executive equity incentives impact corporate social responsibility (CSR) performance.Design/methodology/approachUsing the panel dataset of Chinese A-share listed firms from 2006 to 2022, this study integrates the convergence of interest and entrenchment logic to examine how executive equity incentives affect CSR performance.FindingsWe find that the relationship between executive equity incentives and CSR performance follows an inverted U-shaped form. According to the convergence of interest logic, executive equity incentives reduce agency costs when allocating resources to engage in CSR activities and enable firms to increase their CSR investments, ultimately realizing increased CSR performance. After a threshold, however, the accumulation of extensive equity incentives causes the entrenchment effect, resulting in declined CSR performance. Our empirical results also shed new light on its contingent perspective – the inverted U-shaped relationship is attenuated when firms’ stock liquidity is high.Originality/valueThis study attempts to reconcile the debate on executive equity incentives and integrates the opposing views to unveil the inverted U-shaped relationship between executive equity incentives and CSR performance. Our study opens promising avenues for further research on corporate governance and CSR strategies.

The value of corporate social responsibility: evidence from the humidifier disinfectant scandal in Korea

ABSTRACT As a quasi-natural experiment, we examine the effects of corporate social responsibility (CSR) on firms’ stock performance amid a corporate scandal closely linked with environmental and social (ES) issues, the humidifier disinfectant scandal in Korea. We find that firms with higher ES ratings, especially those with higher social ratings, outperform firms with lower ES ratings during the product safety scandal. Our estimation shows that one standard deviation increase in a firm’s ES score translates into about 2.4% higher stock returns during the scandal period. Our findings reveal that ES performance is influential over a firm’s stock returns when investors pay high attention to CSR, suggesting that firms’ CSR investments mitigate their nonfinancial risk.

Trend of Corporate Social Responsibility Spending by Public Sector Organisations: Evidence from Water Supply and Sanitation Authority in Tanzania

Background: Corporate Social Responsibility (CSR) has gained prominence as organisations increasingly recognise their role in contributing to social and environmental well-being. This study focuses on the CSR spending trends of Public Water Supply and Sanitation Authorities (WSSAs) in Tanzania, shedding light on their commitment to sustainable development through social and environmental initiatives. Objective: The study aim was to assess the trends of CSR spending by WSSAs in Tanzania over a five-year period (2015-2019). Specifically, the study aims to identify areas of CSR investment and assess the distribution of financial resources among various CSR activities undertaken by WSSAs. Method: Secondary data from 114 WSSAs were analysed using descriptive methods, specifically the line graphs to show CSR spending trends, and paired t-tests gauged significant changes over the five years. Results: The study finding reveals a gradual increase in CSR spending by WSSAs in Tanzania from 2015 to 2019. This upward trend indicates a sustained dedication to fulfil social and environmental responsibilities, contributing to the broader goal of sustainable development. The study also indicates a preference for directing CSR resources towards social-oriented activities. Notably, the highest spending was observed in local educational programmes and health services, while the lowest spending was observed on sports and cultural festivals. Conclusion: The study emphasises fostering policies to encourage ongoing CSR spending by WSSAs, especially in impactful education and health areas. Collaborative frameworks with local communities can address social and environmental challenges, aligning initiatives with community needs for holistic regional development. Keywords: Corporate social responsibility spending, Public sector organisations, Tanzania

Corporate social responsibility and firm-level systematic risk: The moderating effect of economic policy uncertainty

This paper investigates the relationship between corporate social responsibility (CSR) performance, firm-level systematic risk, and variations in economic policy uncertainty (EPU) levels. We examine a dataset of Chinese listed firms, finding that higher CSR performance should reduce firms' systematic risk during periods with relatively high levels of EPU. Furthermore, better satisfaction of primary and secondary stakeholders can help firms reduce systematic risk and increase performance when EPU is high. This evidence supports the implication of stakeholder theory that CSR investment can create substantial relational wealth essential to firms' risk management. Our results also imply that the CSR-systematic risk relationship can be positive when EPU is relatively low. Our findings indicate that the risk-mitigation benefits of CSR are state-contingent and can be better realized during downturns.

Skeletons in the closet: How and when internal and external corporate social responsibility affect employees' internal whistleblowing behaviors

AbstractThe micro‐level corporate social responsibility (CSR) literature has underscored the economic benefits of an organization's CSR investments, such as bolstering employees' organizational commitment and improving work performance. Yet, research on the potential influence of CSR in fostering socially oriented outcomes among employees has been rather scarce. This study aims to investigate the influence of CSR on employees' internal whistleblowing behaviors and the underlying mechanisms. A three‐time‐point survey was distributed across the service, manufacturing, construction, and financial insurance industries in Chinese enterprises. The findings reveal that both internal and external CSR positively impact employees' internal whistleblowing behaviors through the mediating role of moral courage, with internal CSR demonstrating a stronger effect. Organizational loyalty positively moderates the mediating role of moral courage in the relationship between internal CSR/external CSR and internal whistleblowing behaviors. Theoretically, this study presents a pioneering endeavor in establishing the link between CSR and employees' internal whistleblowing behaviors, underscoring the significant role that employees' perceptions of CSR play in enhancing societal well‐being and ethical governance. Besides contributing to the micro‐level CSR literature, this study also provides practical insights for organizations seeking to leverage CSR as a tool for promoting employees' ethical conduct.

The Impact of Corporate Social Responsibility on Environmental Investment: The Mediating Effects of Information Transmission and Resource Acquisition

In recent years, more and more research has focused on the impact of corporate social responsibility (CSR) on business activities. Due to the existence of two different theoretical perspectives, shareholder value theory and managerial opportunism theory, the research on CSR has reached different conclusions. Meanwhile, the motivations for environmental investments in enterprises have received attention from scholars. However, there is a lack of empirical research on the relationship between CSR and environmental investment. Therefore, this study conducts a regression analysis on the external evaluation of CSR and enterprises’ environmental investment using data from Chinese listed companies. The empirical results show a significant positive relationship between the external evaluation of CSR and enterprises’ environmental investment. The mediating tests conducted based on information transmission and resource acquisition mechanisms explain the reasons for this promotion effect, supporting the shareholder value theory. Furthermore, our research finds that this promotion effect is more significant in non-state-owned enterprises, enterprises receiving fewer environmental subsidies, enterprises disclosing environmental philosophies, and enterprises identified as key pollution-monitoring units in reports. The research findings of this study are meaningful for clarifying the economic consequences of CSR and provide practical evidence for Chinese enterprises to understand the importance of environmental investment and the government’s advocacy for enterprises to proactively engage in environmental investment.

Entry accommodation strategies in a shipping supply chain with corporate social responsibility

Carriers often enter new shipping markets and undertake corporate social responsibility (CSR) activities to attract more shippers. CSR generally refers to the integration of social and environmental factors by a firm into its business decision-making. This paper constructs a shipping supply chain composed of one port, one carrier, and one potential entrant carrier, where both carriers are committed to CSR activities. Two possible channel structures of the incumbent supply chain are considered: centralization and decentralization. Under both structure settings, we study the entry strategy of the entrant, accommodation strategy of the port, and impacts of entry on consumer surplus and social welfare. Our results show that (i) the entry and accommodation strategies depend on the CSR levels of carriers; (ii) downstream entry improves social welfare under centralization but may decrease it under decentralization; (iii) the entrant has more incentive to enter under decentralization than under centralization when the incumbent carrier has a high CSR level. However, the port might have less incentive to accommodate entry under decentralization; (iv) channel decentralization may improve consumer surplus and social welfare when the port accommodates the entry, while hurts these when the port deters the entry. Additionally, we find that under the case of endogenous CSR level, the entry and accommodation strategies depend on the CSR investment cost coefficient; and the entrant has a stronger entering incentive under uniform pricing than under differentiated pricing if the incumbent carrier has a low CSR level.

The influential ambit of optimal corporate social responsibility investments on the cost of capital in Chinese private firms

AbstractPrivate firms in China are contributing immensely to the country's economic growth. However, increasing the capital cost of private firms in China is a big challenge that needs to be addressed. This study intends to examine the role of optimal corporate social responsibility (CSR) investment while lowering the cost of equity capital and debt capital in Chinese private firms. In addition, this research study reveals the moderating role of state‐owned shares in the association between CSR and private firms' capital costs. By taking a sample of Chinese private firms from 2011 to 2021, this study employs the CSR optimization method. The findings show that CSR optimization tends to reduce the cost of equity capital and debt capital in Chinese private firms. Further investigation shows that over‐investment in CSR increases the cost of capital. Moreover, an increase in state‐owned shares strengthens the negative relationship between the cost of debt capital and optimal CSR investments. The present study's findings are helpful for Chinese firms to undertake optimal CSR investment.

Corporate social performance: Does management quality matter?

We use common factor analysis on seven individual management quality measures to extract a management quality factor and examine its relationship with corporate social performance. Using managers’ draft risk during the Vietnam War as an instrumental variable for management quality, we find that firms with higher-quality managers score better in Corporate Social Responsibility (CSR). The cross-sectional results suggest that high-quality managers strategically invest in CSR when potential benefits outweigh the costs. Specifically, the positive relationship between management quality and CSR is more pronounced for firms under fierce product market competition when CSR is crucial for differentiating the firm from its competitors. Moreover, CSR becomes more sensitive to management quality when customer awareness and investor attention are high, increasing the likelihood that CSR enhances customer perception and investor trust. Finally, we find that CSR investment by high-quality managers creates more shareholder value, suggesting that higher-quality managers are more capable of “doing well by doing good.”

How Contingency Adjusts Corporate Social Responsibility (CSR) in the Tourism Industry: A Quasi-Experiment in China

Numerous organizational researchers have acknowledged that COVID-19 reduced the profit in the tourism industry. Some tourism firms decreased the cost by reducing the investment of CSR in order to increase the profit. However, the relevant literature remains scarce. The main purpose of this study is to explore the effect of COVID-19 on CSR investment in the tourism industry. This study fills the gap between stakeholder and cost stickiness theories. Based on a quasi-experiment of listed Chinese tourism companies from 2017 to 2021, the study finds that COVID-19 caused tourism firms to increase strategic CSR and decrease a responsive one. In addition, tourism firms that adopted cost leadership strategies trimmed responsive CSR more than strategic CSR. Tourism firms with differentiation leadership strategies increased strategic and decreased responsive CSR. Tourism firms with higher levels of political connections increased responsive CSR, while tourism firms with higher organizational resilience increased strategic CSR. At the theoretical level, this study reveals the theoretical mechanism of COVID-19 on tourism firms’ adjustment of CSR from the perspective of cost stickiness. On a practical level, it helps inform tourism firms’ decision-making regarding CSR adjustments for sustainable development when they face widespread crisis scenarios.

Generous to a fault: Differential impact of CSR investments on financial gains in Indian market multinationals

To date, the extant Corporate Social Responsibility (CSR) literature has overlooked the performance consequences of different forms of CSR investments made by Emerging Market Multinational Corporations (EMNCs). Addressing this knowledge gap, and drawing on legitimacy theory, we examine the impact of external CSR investments (e.g., social and community philanthropic support activities) and internal CSR investments (e.g., working conditions, employee rights and equal employment opportunities) on financial performance of EMNCs, while also accounting for the moderating effects of internationalization location choices. We test our hypotheses on a panel consisting of 1513 unique Indian EMNCs, in the 2014–2019 time-period. On applying various estimation techniques, the findings reveal that both external and internal CSR investments are positively associated with financial performance of EMNCs, while the destination location of foreign investments and home-host geographic and institutional distance moderate these relationships. This study offers new empirical evidence on the financial implications of different types of CSR investments available to EMNCs and advances legitimacy theory by expanding its dimensional and contextual scope.

A thematic analysis of the links between multinational enterprises’ corporate social responsibility and the Sustainable Development Goals in Myanmar

AbstractAdopting textual analysis, we examine the links between corporate social responsibility (CSR) and the Sustainable Development Goals (SDGs) for 30 foreign subsidiaries in Myanmar, a Country of Concern (CoC). The analysis covers the period from 2001 up to 2020. Our work contributes to the literature on SDGs and CSR in a CoC. We find that although multinational enterprises (MNEs) address community issues via philanthropy unrelated to their principal business, in some cases CSR is related to their core capability. Despite some diversity in CSR processes, we find that MNEs tackle limited CSR issues. Furthermore, MNEs’ CSR generates positive externalities rather than reduce negative externalities. This finding confirms the discourse in international business policy suggesting MNEs focus on only positive externalities and ignoring negative externalities, and this neglect of negative externalities could result in a net-negative impact from their CSR. Nevertheless, we observe that CSR activities map onto all but one SDG, thus demonstrating the potential for further investment in CSR in Myanmar. Our study highlights that given a CoC is all about institutional weakness, MNEs’ CSR must focus on strengthening institutions to bring about systemic changes in these contexts, as opposed to short-term ‘bandage’ approaches, otherwise, gains to SDGs will be short-lived.

The use of corporate social responsibility in response to product‐harm crisis: How do stock market reactions matter?

AbstractThe initial stock market reaction to a product‐harm crisis is an important factor motivating firms to engage in corporate social responsibility (CSR). By analyzing event data on product‐harm crises in Chinese listed companies spanning from 2009 to 2019, we uncover evidence that crisis‐related abnormal returns have a significant negative association with the subsequent growth of CSR. Importantly, we find that this negative relationship is especially pronounced for firms that have a greater need to restore moral legitimacy, such as those receiving high levels of media favorability and positive analyst recommendations. These findings offer novel insights into the motivations behind firms' increased investment in CSR following product‐harm crises from a legitimacy perspective.