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Mitigating endogeneity in corporate social responsibility research: An investigation using a neoclassical production function

Derek Kruse, Kristie Briggs and Eric J. Neuman

Managerial and Decision Economics, 2022, vol. 43, issue 1, 3-15

Abstract: This paper investigates the growing need to control for endogeneity in corporate social responsibility (CSR) research. We modify the theoretical constructs of a neoclassical production function to include CSR and in doing so provide theoretical evidence of endogeneity in the estimation equation. We find that failure to empirically control for endogeneity leads to results that suggest CSR has a negative impact on firm production. However, when controlling for endogeneity through a two‐stage approach, the negative impact disappears. Moreover, we demonstrate the efficacy of using a proven theoretical estimation technique to include CSR and, therefore, mitigate endogeneity concerns.

Date: 2022
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