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Corporate Social Responsibility along the Global Value Chain

Author

Listed:
  • Philipp Herkenhoff
  • Sebastian Krautheim
  • Finn Ole Semrau
  • Frauke Steglich

Abstract

Firms are under increasing pressure to meet stakeholders’ demand for Corporate Social Responsibility (CSR) along their global value chains. We study the incentives for and investments in CSR at different stages of the production process. We analyze a model of sequential production with incomplete contracts where CSR by independent suppliers differentiates the final product in the eyes of caring consumers. The model predicts an increasing CSR profile for suppliers along the value chain: from upstream suppliers with low CSR to downstream suppliers with higher CSR. We confirm this prediction using Indian firm-level data. We compute a firm’s value chain position combining product-level information in our data with the World Input-Output Database. We find that more downstream firms have higher CSR expenditures as measured by a combination of staff welfare spending and social community spending.

Suggested Citation

  • Philipp Herkenhoff & Sebastian Krautheim & Finn Ole Semrau & Frauke Steglich, 2021. "Corporate Social Responsibility along the Global Value Chain," CESifo Working Paper Series 9498, CESifo.
  • Handle: RePEc:ces:ceswps:_9498
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    Cited by:

    1. Pamina Koenig & Sebastian Krautheim & Claudius Löhnert & Thierry Verdier & Thierry Verdier, 2021. "Local Global Watchdogs: Trade, Sourcing and the Internationalization of Social Activism," CESifo Working Paper Series 9068, CESifo.
    2. Löhnert, Claudius, 2022. "Plausible deniability: Integration vs. outsourcing with heterogeneous firms and unethical suppliers," Passauer Diskussionspapiere, Volkswirtschaftliche Reihe V-88-22, University of Passau, Faculty of Business and Economics.

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    More about this item

    Keywords

    corporate social responsibility; global value chains; incomplete contracts; property rights theory; GVC positioning; India; emerging markets;
    All these keywords.

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F18 - International Economics - - Trade - - - Trade and Environment
    • F61 - International Economics - - Economic Impacts of Globalization - - - Microeconomic Impacts
    • F63 - International Economics - - Economic Impacts of Globalization - - - Economic Development
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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