Corporate Social Responsibility, Competition, and Firm Value

Abstract

In this paper, we examine the value-enhancing effect of corporate social responsibility (CSR) in the presence of product market competition. Using a comprehensive sample of 22,527 firm-year observations from 62 countries, we find that the value-enhancing effect of CSR is dominant in the non-competitive industries. We examine the channels through which firms earn positive benefits of CSR and document a strong positive link between firm profitability, productivity, total factor productivity, efficiency, and CSR in non-competitive industries. Our results withstand various robustness checks and endogeneity concerns.

Keywords: Corporate Social Responsibility, Product Market Competition, Financial Performance, Country-Level Determinants

JEL Classification: G10, G11, M14, D40