Social Capital and CSR Focus

Abstract

With the dramatic rise in interest in corporate social responsibility (CSR) activities among academicians, top executives, policymakers, and changing societal circumstances, there is an increased pressure on corporations today to include CSR in the company’s core mission. We investigate whether the levels of social capital in U.S. counties, as captured by trust, civic norms, and the density of social networks, are related to the CSR focus of corporations. Specifically, we find that firms headquartered in U.S. counties with higher levels of social capital place more emphasis on internally oriented CSR activities than on externally oriented CSR activities. The finding is robust when using an alternate proxy of social capital i.e., organ donation, and in different periods, including the financial crisis of 2007- 09.