2018 The underlying assumption is therefore that the two components have a direct effect on firm-level CSR provision but no direct effect on labour compensation shares, conditional on firm-level productivity, ownership form, production structure, and export and compliance status. The concept of Corporate Social Responsibility (CSR) underwent a overhaul in India for certain large, stable companies post the passing of the Companies Act, 2013. CSR, however, does not necessarily result in improved firm performance as documented in a recent meta-study by Margolis, Elfenbein, and Walsh (2009). One possible mechanism through which community-level CSR initiatives impacts on firm performance is through worker incentives (see hypothesis 3 in Section 2). In some definitions, CSR refers to firm activities that go beyond the law in incorporating social, environmental, ethical, and consumer concerns into their business operations to create shareholder and stakeholder value (Bénabou & Tirole, 2010; Crifo & Forget, 2015; McWilliams & Siegel, 2001). 7. Our measures may not perfectly reflect CSR behaviour and performance, as the nature of the data available to us is such that we can only use self-reported measures of CSR activities (Chatterji et al., 2009). It contains best practices, literature reviews and leading foresight thinking in the field of business and society. Unfortunately, this approach is likely to yield misleading results if CSR and productivity are correlated for reasons other than causality running from CSR to efficiency. Firms that are more reliant on the local economy (for example, firms sourcing inputs at the district level and having most customers within the local community) are more likely to engage in socially responsible actions at the local community-level. Twostep with the Windmeijer finite-sample correction for the two-step covariance matrix. from all over the world and contributes to a broad trans-disciplinary and intercultural discussion on the role of business in society. The results are presented in Table 4 where all relevant instrument tests are carefully documented. The GSO data are thoroughly described in Newman, Rand, and Tarp (2013, 2015). According to Porter and van der Linde (1995), certain environmental standards and regulations can push forward innovative ideas and subsequently reduce production costs, resulting in dynamic competitive advantages. : Constructing an index of CSR practices and CSR performance in 20 countries, Corporate social responsibility: An economic and financial framework. H2: There is positive relationship between CSR provision and firm-level productivity, but the effect diminishes with industry-level competition. H3: There is a negative relationship between CSR provision and labour compensation ratios (controlling for productivity differences). From a policy perspective understanding the relationship between firm performance and corporate governance in competitive and non-competitive industries, respectively, is important for designing appropriate industrial policy (Giroud & Mueller, 2010). Initially, social initiatives implemented at the firm level were partly introduced through trade-related codes of conduct and partly through increasing engagement by multinationals in Vietnam (Nguyen, 2007). Corporate Social Responsibility in a Com .... 3. 9. 4 From Table 1 we see that the average HHI1 value is 0.149, with the value of 0.021 for the most competitive quintile, and 0.429 in the least competitive quintile. A comprehensive set of environmental, social and governance (ESG) performance indicators are also provided by Thomson Reuters (ASSET4). According to Kitzmueller and Shimshack (2012), a valid CSR definition should not exclude the degree of ‘local content’ in the firm’s corporate behaviour. 5 Howick Place | London | SW1P 1WG. Columns 5 and 6: Jackknife instrumental variables estimation (JIVE) approach. t-statistics are reported in parentheses. The case of Paradisi Srl (Italy). These shifts for the greater good may prove to be impossible to roll back when the virus blows over. Do responsible employers attract responsible employees? Email email@example.com. We also considered measures computed at the 4-digit ISIC level when constructing the nationwide concentration index. First, we use the 2011–2014 Vietnam Enterprise Surveys (VES) collected by the General Statistics Office (GSO), which include the population of all registered manufacturing enterprises with 30 employees or more and a representative sample of the remaining smaller formally registered firms. (iii) Do firms use CSR strategically to offer lower labour compensation shares? Under a strict exogeneity assumption, a standard fixed effects model eliminates the unobserved time-invariant firm-specific effects. 5:2. 1:9. 2020 Shopify is providing its employees a $1,000 stipend to work from home. Strategic Management Journal, 35(1), 1 – 23. , [Web of Science ®], [Google Scholar] Crifo, P., & Forget, V. D. (2015). Second, an improved CSR strategy may increase employee motivation, retention, and recruitment. Moreover, CSR impacts are found to be stronger for firms in non-competitive industries. 1:10. The key here is authenticity. H2: There is positive relationship between CSR provision and firm-level productivity, but the effect diminishes with industry-level competition. Corporate Social Responsibility as an Obligation According to J. Ivancevich, P. Lorenzi, S. Skinner, and P. Crosby (1997), corporate social responsibility as a social obligation holds the view that a … Coffee (especially the Arabica variety) is one of the most severely affected crops. 2017 Since one of our main aims is to examine whether the adoption of a specific CSR strategy has differential effects on firms in competitive and non-competitive industries, we allow for heterogeneous CSR effects along the competitiveness dimension by estimating: (5) y i , t = β x i , t + δ 1 C S R i , t + δ 2 H H I i , t + δ 3 C S R ⋅ H H I i , t + c i , t + μ i + η i , t (5). 7. As within-firm variation in labour compensation shares over the short time period considered is relatively modest, we address in Table 5 possible endogeneity bias in OLS estimates (in columns 1 and 2) using a static system GMM approach (columns 3 and 4) and an IV approach (columns 5 and 6) inspired by Cheng et al. H1: There is a positive relationship between CSR provision and firm-level productivity. As highlighted in Crifo and Forget (2015) socially responsible actions by local firms may be reciprocated over time by support from local stakeholders (customers, suppliers, employees, and so forth). 2018 Notes: Dependent variable: Wage share (total labour compensation as a share of value added). Columns 3 and 4 in Table 3 look at the possible differential effects of different types of CSR (management and community). We are well aware of the oft-observed weak enforcement of existing regulation in developing country contexts and as recommended in the ISO 26000 and UN Global Compact guidelines (UN, 2004) and in accordance with Schwartz and Carroll (2003) we include a legal compliance control variable, which measures the degree to which firms respond to society’s legal expectations. Section 6 concludes. Mark Cuban, who created a plan to pay Dallas arena workers furloughed by COVID-19, put it best: “How companies respond ... is going to define their brand for decades.
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