"Doing Well by Doing Good" - A Mantra that Holds During Times of Crisis?: A quantitative study about the effect of employee- and consumer-related CSR investments on company financial performance
Abstract: The Covid-19 crisis led to employees shifting to a work-from-home environment and consumers reducing their overall consumption, changes which had overall negative implications on firms and their financial performance. Previous research suggests firms investing in employee- and consumer-related CSR should gain advantages, such as having more skilled and hard-working employees and higher consumer loyalty, both of which would be expected to be financially beneficial during these crisis times. Opposing studies propose that these CSR investments could instead generate disadvantages, such as an increase in employee disengagement and a decline in consumer demand. Against this backdrop, this paper studies the relation between companies' employee- and consumer-related CSR investments and financial performance during the Covid-19 crisis. Using a sample of 317 public Nordic companies and conducting both cross-sectional and difference-in-differences regressions, no strong evidence for either a positive or negative relation is found. Despite the results indicating a positive association they are overall insignificant such that no clear conclusion can be drawn. An additional analysis is provided in the paper to further explore the research question. The findings affirm the positive pattern of the main analysis and suggest that firms have benefited from consumer- and employee-related CSR investments. However, to establish a definite, clear link between stakeholder-related CSR investments and their effect on financial performance in a crisis context further research has to be conducted.
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