Corporate Social Responsibility and Economic Stability: International Evidence

This study examines the association between the aggregate corporate social responsibility (CSR) investments of publicly listed firms domiciled in a country and the country’s economic stability. Using data from 40 countries from 2002 to 2017, we find that the aggregate CSR investments in a country positively affect its overall economic stability. We also find that a relatively high level of aggregate CSR investments can lead to a more stable supply of external capital and persistent investment decisions. Further analyses show that these findings are more pronounced for countries with less developed capital markets, low levels of societal trust, and strong stakeholder orientations. Moreover, we find that the implementation of mandatory CSR disclosure requirements weakens the positive effect of aggregate CSR investments on economic stability. These results collectively suggest that aggregate CSR investments in a country substantially foster that country’s overall economic development, contingent on its institutional context.