Corporate Social Responsibility as a Defense against Knowledge Spillovers: Evidence from the Inevitable Disclosure Doctrine
63 Pages Posted: 18 Sep 2015 Last revised: 21 Sep 2018
Date Written: September 8, 2018
We examine whether companies respond to the threat of knowledge spillovers by strategically increasing their engagement in corporate social responsibility (CSR). To obtain exogenous variation in the threat of knowledge spillovers, we exploit a natural experiment provided by the rejection of the inevitable disclosure doctrine (IDD) by several U.S. states. Using a difference-in-differences methodology we find that, following the rejection of the IDD, companies significantly increase their CSR. Our proposed rationale is that CSR helps mitigate knowledge spillovers by i) reducing employees' propensity to join a rival firm, and ii) reducing employees' propensity to disclose the firm's valuable knowledge even if they join a rival firm. Evidence from a laboratory experiment, an online experiment, and a survey of knowledge workers is supportive of these arguments.
Keywords: knowledge spillovers, corporate social responsibility, inevitable disclosure doctrine, difference-in-differences
JEL Classification: M1, M5
Suggested Citation: Suggested Citation