Corporate Social Responsibility as a Signaling Technology

Review of Managerial Science, Forthcoming

37 Pages Posted: 18 May 2021

See all articles by Mircea Epure

Mircea Epure

Universitat Pompeu Fabra - Department of Economics and Business; Barcelona Graduate School of Economics (Barcelona GSE)

Date Written: April 23, 2021

Abstract

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

Suggested Citation

Epure, Mircea, Corporate Social Responsibility as a Signaling Technology (April 23, 2021). Review of Managerial Science, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3848377

Mircea Epure (Contact Author)

Universitat Pompeu Fabra - Department of Economics and Business ( email )

Ramon Trias Fargas 25-27
Barcelona, 08005
Spain

HOME PAGE: http://mirceaepure.com

Barcelona Graduate School of Economics (Barcelona GSE)

Ramon Trias Fargas, 25-27
Barcelona, Barcelona 08005
Spain

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