Social Heart and Business Sense: Translating Corporate Social Responsibility into Gross Margin Premium per Mandatory Corporate Social Responsibility Law in India

Abstract

This research assesses the impact of Indian government-mandated firms’ corporate social responsibility (CSR) related investments on gross margins. Using a multimethod approach, we show (a) a positive relationship between CSR investments and gross margin and (b) the moderating role of advertising investment. The contribution of our research is three-fold. First, our results suggest that mandating firms to spend on CSR can be a win-win situation for firms and governments, as opposed to the view of considering mandatory CSR as an additional burden. Second, our inquiry is one of the first to analytically and empirically show CSR contribution positively affects gross margin premium, which is based on price, important revenue-generating marketing, and operations construct. Third, we show the moderating role of advertising in achieving CSR-related gross margin premium. We discuss our study's implications for marketing and operations managers and policymakers.

Keywords

Corporate Social Responsibility Quasinatural Experiment CSR Law Causal Inference Multimethod

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