Corporate social responsibility spending as a building block for sustainable corporate ethical identity: Lessons from Indian business groups

Shantanu Dutta, Supriya Katti, B. V. Phani and Pengcheng Zhu

Managerial and Decision Economics, 2022, vol. 43, issue 3, 696-717

Abstract: We examine the cost implications of using corporate social responsibility (CSR) as a vehicle to build sustainable corporate ethical identity (CEI). CSR investment is recognized as one of the effective channels to promote a firm's CEI. However, excessive CSR could divert resources from other strategic projects, and shareholder may not favor such initiatives. We address this managerial dilemma with a unique Indian CSR regulatory environment. Our results show that firms with greater reputational concerns have a higher proclivity to meet the mandatory CSR investment level but are reluctant to exceed the mandatory CSR limit due to absence of incremental financial benefits.

Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:wly:mgtdec:v:43:y:2022:i:3:p:696-717

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