Corporate social responsibility as a signaling technology

This study proposes a production framework in which capital, labor, and corporate social responsibility (CSR) generate sales. Estimating a stochastic frontier on an international sample of large manufacturing firms reveals that CSR has asymmetric effects on efficiency. In a matched sample, the processes of high as compared to low CSR firms are affected less by a crisis shock. This can be largely attributed to the role of CSR as an insurance signal of processes sustainability, especially in market-based as compared to network-oriented contexts. Finally, results show that higher CSR helps firms to mitigate a crisis shock on real effects such as profitability and sales growth; this is mostly because these firms have a higher ability to adjust their operating margins and exhibit lower risk.