The Impact of Corporate Social Responsibility on Firm Value: The Role of Customer Awareness

• Published in: Management science Vol. 59; no. 5; pp. 1045 - 1061
• Main Authors: Servaes, Henri, Tamayo, Ane
• Format: Journal Article
• Language: English
• Published: Linthicum INFORMS 01.05.2013; Institute for Operations Research and the Management Sciences
• Subjects: Advertising; Advertising expenditures; Advertising signs; Annual reports; Business reputation; Business structures; Community; Computer services industry; Consciousness; Consumer behavior; Consumers; Corporate responsibility; Corporate social responsibility; corporate social responsibiliy; customer awareness; Customers; Employees; Financial management; Firm value; Human rights; Impact analysis; Industrial management; Industrial marketing; Industrial products; Management science; reputation; Reputations; Social aspects; Social responsibility; Stakeholders; Studies; United States
• ISSN: 0025-1909; 1526-5501
• DOI: 10.1287/mnsc.1120.1630

This paper shows that corporate social responsibility (CSR) and firm value are positively related for firms with high customer awareness, as proxied by advertising expenditures. For firms with low customer awareness, the relation is either negative or insignificant. In addition, we find that the effect of awareness on the CSR-value relation is reversed for firms with a poor prior reputation as corporate citizens. This evidence is consistent with the view that CSR activities can add value to the firm but only under certain conditions. This paper was accepted by Bruno Cassiman, business strategy.