Competition Laws, Ownership and Corporate Social Responsibility

45 Pages Posted: 10 Sep 2020

See all articles by Wenzhi Ding

Wenzhi Ding

The University of Hong Kong - Faculty of Business and Economics

Ross Levine

University of California, Berkeley - Haas School of Business; National Bureau of Economic Research (NBER)

Chen Lin

The University of Hong Kong - Faculty of Business and Economics

Wensi Xie

The Chinese University of Hong Kong (CUHK) - CUHK Business School

Date Written: September 7, 2020

Abstract

Theory offers differing perspectives and predictions about the impact of product market competition on corporate social responsibility (CSR). Using firm-level data on CSR from 2002 through 2015 and panel data on competition laws in 48 countries, we discover that intensifying competition induces firms to increase CSR activities as a strategy for strengthening relationships with workers, suppliers, and customers. The CSR-enhancing effects of competition depend on corporate ownership, with smaller effects among block-holders with shorter horizons (e.g., hedge funds) and among family-controlled firms. Furthermore, the competition-CSR effect is stronger (a) among less financially constrained firms that are better positioned to boost CSR activities and (b) in economies where social norms prioritize CSR activities, as this is where the relationship building effect of CSR are likely to be the greatest.

Keywords: Competition Laws, Antitrust, Corporate Social Responsibility, Ownership

JEL Classification: K21, L4, M14, G3, Z13

Suggested Citation

Ding, Wenzhi and Levine, Ross Eric and Lin, Chen and Xie, Wensi, Competition Laws, Ownership and Corporate Social Responsibility (September 7, 2020). Available at SSRN: https://ssrn.com/abstract=3688398 or http://dx.doi.org/10.2139/ssrn.3688398

Wenzhi Ding

The University of Hong Kong - Faculty of Business and Economics ( email )

Pokfulam Road
Hong Kong SAR
China

Ross Eric Levine (Contact Author)

University of California, Berkeley - Haas School of Business ( email )

545 Student Services Building, #1900
2220 Piedmont Avenue
Berkeley, CA 94720
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Chen Lin

The University of Hong Kong - Faculty of Business and Economics ( email )

Pokfulam Road
Hong Kong
China

Wensi Xie

The Chinese University of Hong Kong (CUHK) - CUHK Business School ( email )

Cheng Yu Tung Building
12 Chak Cheung Street
Shatin, N.T.
Hong Kong

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