Monday, June 22, 2020
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, and Wensi Xie, The Chinese University of Hong Kong (CUHK) - CUHK Business School address Competition Laws, Norms and Corporate Social Responsibility. Worth downloading!
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 (1) intensifying competition induces firms to increase CSR activities, (2) the competition-CSR effect depends positively on society’s prioritization of the environment and treating others fairly, and (3) less financially-constrained firms boost CSR activities more in response to competition. The results are consistent with the stakeholder value maximization view that intensifying competition induces firms to invest in strengthening bonds with non-shareholder stakeholders (e.g., customers, workers, and suppliers).