From Social Ties to Social Responsibility: How Social Capital Shapes CSR Practices Around the World

Abstract

This paper uses data from 61 countries to document the relationship between country-level social capital and corporate social responsibility (CSR) during the period between 2007 and 2023. We find that firms headquartered in countries with higher levels of social capital exhibit higher CSR engagement than firms headquartered in countries with lower levels of social capital. This association remains robust across a wide range of estimation approaches and sensitivity checks. Additional analyses explore the mechanisms through which social capital affects CSR by disentangling its underlying dimensions. Finally, we show that the economic value of CSR (as measured through its association with Tobin’s Q, sales growth, stock return volatility, and financial distress risk) varies with the level of social capital, with CSR playing a more prominent value-enhancing role in low-social-capital settings.