The relationship between CSR and performance: Evidence in China

This study uses a system of simultaneous equations to investigate various hypotheses on the relationship between corporate social responsibility (CSR) and firm performance for state-owned enterprises (SOEs) and non-SOEs in China. The results show variations in market response to CSR engagement by firm ownership type. That is, the market responds favorably to CSR by market-oriented non-SOEs but neutrally to CSR by SOEs with substantial agency costs. The Chinese firms are able to link their CSR activities to firm performance over time, likely recognizing the long-term benefits of CSR. Our study demonstrates the important role of ownership in the dynamic CSR-performance relationship.