Corporate Social Responsibility as a Signaling Technology
Review of Managerial Science, Forthcoming
37 Pages Posted: 18 May 2021
Date Written: April 23, 2021
This study proposes a production framework in which capital, labor, and corporate social responsibility (CSR) generate sales. Estimating a stochastic frontier on an international sample of large manufacturing firms reveals that CSR has asymmetric effects on efficiency. In a matched sample, the processes of high as compared to low CSR firms are affected less by a crisis shock. This can be largely attributed to the role of CSR as an insurance signal of processes sustainability, especially in market-based as compared to network-oriented contexts. Finally, results show that higher CSR helps firms to mitigate a crisis shock on real effects such as profitability and sales growth; this is mostly because these firms have a higher ability to adjust their operating margins and exhibit lower risk.
Keywords: corporate social responsibility, efficiency, crisis, profitability, signaling
JEL Classification: M1, M14, M21, M41
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