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Enhancer or stabilizer? Investigating the distinct impact of primary and secondary CSR on the level and variability of firm value

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  • Lu, Hao
  • Osiyevskyy, Oleksiy
  • Liu, Xiaoyu

Abstract

Prior research in CSR concentrates on its impact on the level of firm value, without considering the risk associated with such effect (i.e., reliability). Understanding the reliability of such an impact is important as it unpacks the risky nature of CSR investment. By classifying CSR activities as competitive-advantage-seeking and legitimacy-seeking, we develop a theoretical framework that provides a holistic understanding of CSR’s impact on firm value in terms of simultaneous implications for both level and reliability. Our results suggest that high performance in primary-stakeholder-oriented CSR increases firm value, but simultaneously increases the variability of the resulting value distribution. In contrast, secondary-stakeholder-oriented CSR does not significantly increase firm value but does reduce the variability of the resulting value distribution. That is, primary-stakeholder-oriented CSR activities demonstrate a “risky investment” property and function as a risky value enhancer, while secondary-stakeholder-oriented CSR activities demonstrate a “risk reduction” property and function as a value stabilizer.

Suggested Citation

  • Lu, Hao & Osiyevskyy, Oleksiy & Liu, Xiaoyu, 2023. "Enhancer or stabilizer? Investigating the distinct impact of primary and secondary CSR on the level and variability of firm value," Journal of Business Research, Elsevier, vol. 168(C).
    • Handle: RePEc:eee:jbrese:v:168:y:2023:i:c:s0148296323005696
    DOI: 10.1016/j.jbusres.2023.114210
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    Cited by:

    1. Zhou, Zhiyong & Wu, Yanhong & Xie, Qinghua, 2024. "Social responsibility, information technology, and high-quality development of mining enterprise using structural equation modeling (SEM)," Resources Policy, Elsevier, vol. 91(C).
    2. Anshul Mandliya & Jatin Pandey & Shrihari Suresh Sohani & Rayees Ahmad Sheikh, 2025. "From union clout to corporate couture: Unveiling the impact of trade unions on corporate social responsibility," PLOS ONE, Public Library of Science, vol. 20(1), pages 1-19, January.

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    More about this item

    Keywords

    Corporate social responsibility (CSR); Firm value; Reliability of impact; Primary CSR; Secondary CSR;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility

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