Corporate Social Performance and Politics

E-ISSN： 2051-4700|2007|25|95-108

ISSN： 1470-5001

Source： The Journal of Corporate Citizenship, Vol.2007, Iss.25, 2007-03, pp. : 95-108

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Abstract

Corporate social responsibility (CSR) is increasingly recognised as a tool that firms can use to improve the bottom line. But how are the returns to such activities affected by the political climate? We depict CSR activities as redistributing funds from firms to the public, a task that is also performed by governments through taxations, laws and regulations. By influencing how corporate good deeds are directed, we propose that politicians can and will manipulate CSR for political ends. We review the evidence and test the hypothesis on US state-level data. We then show that firms in liberal stateswhere the political climate is traditionally in favour of greater redistributionwill tend to engage in more CSR activities than those in more conservative states. More concretely, we show that, in states where governments do more redistribution, firms also engage in more progressive CSR practices. We sketch what the strategic implications of this might be for CSR.