Corporate social responsibility and Latin American firm performance

Abstract

Purpose-The purpose of this paper is to analyse the impact of Corporate Social Responsibility (CSR) on firm performance in six Latin American economies. Firm performance comprises the following five distinct dimensions: firm turnover, labour productivity, innovativeness, product differentiation and technological transfer. The countries under scrutiny are Argentina, Bolivia, Chile, Colombia, Ecuador and Mexico. Design/methodology/approach-Propensity Score Matching techniques are employed to identify the causal effect of CSR on firm performance. To this end, the World Bank Enterprise Survey (2006 wave) is employed. This dataset collects relevant firm-level data Findings-CSR has a positive impact on the outcome variables analysed, suggesting that corporate goals are compatible with conscious business operations. The results also vary across countries. Research limitations/implications-The pattern that emerges from the analysis seems to suggest that the positive effects of CSR depend on a country's stage of industrialisation. In particular, the less developed the economy, the wider the scope of CSR. Nonetheless, the relationship among conscious business operations, firm performance and countries' levels of development is not directly tested in the present work. Practical implications-The main practical implication of the study is that Latin American firms should adopt CSR. This is because corporate responsible practices either improve firm performance or are not shown to have a detrimental effect. Social implications-The major policy implication is that emerging countries' governments as well as international organisations should provide meaningful incentives for CSR adoption. Originality/value-The paper makes three major original contributions. First, it furnishes new descriptive evidence on CSR practices in Latin America. Second, it employs a broader and novel definition of firm performance intended to capture business dynamics in developing countries, as well as to overcome data limitations. Finally, it reassesses and extends the empirical evidence on the impact of CSR on firm performance.

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