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Stakeholder preference for corporate social responsibility strategies: A study of Indian firms

This paper investigates the role of stakeholder preference on corporate social responsibility (CSR) strategies. Using a staggered difference-in-differences approach, we show that Indian firms increase CSR expenses when trade restrictions (Antidumping) are initiated against competing Chinese exports from countries with a high stakeholder preference for CSR. However, when these shocks emanate from countries with a lower stakeholder preference, CSR expenses remain unchanged. Capital expenditure and R&D of Indian firms increase following trade shocks, irrespective of their country of origin. Finally, CSR spending provides these Indian firms with significant real option value only when the demand shocks originate from countries with a higher CSR preference. Collectively, we provide evidence for consumer-driven CSR strategies.