Does Corporate Social Responsibility Pay Off? Exploring the Link from a Corporate Sustainability Perspective

Abstract

This study examines whether investments in corporate social responsibility are financially rewarded in times of systemic stress by linking firm performance in the COVID-19 pandemic to corporate sustainability. Based on panel data of 823 publicly traded companies in seven industries over the period 2018-2022, the article employs difference-in-differences estimation with propensity score matching in order to determine the impact of pre-pandemic Corporate Social Responsibility (CSR) investments on pandemic financial resilience. The study finds that firms with greater pre-crisis CSR involvement had significantly more muted revenue downturns and quicker recovery rates compared to low-CSR firms, with findings robust to a wide range of specification tests and instrumental variable methods of confronting endogeneity issues. Environmental CSR is found to have the greatest cushioning impacts in supply chain disruption, and social CSR generates significant value through labor force stability and loyalty to the surrounding community. The results illustrate that CSR acts as organizational resilience infrastructure that yields tangible financial value under times of systemic hardship, substantiating the sustainability hypothesis that responsible business practices create adaptive capacity necessary for long-term existence within turbulent environments.