Despite the long history of corporate social responsibility (CSR) research, few studies have focused on CSR activities related to business partners in supply chains. In this regard, we investigate whether internal (or backward) CSR enhances firm value. Using an index from the Korea Commission for Corporate Partnership, which indicates whether a firm shares its profits with business partner companies, we find that firm value increases as this backward CSR increases. Further, after controlling for internal CSR, firms engaged only in external CSR have lower firm value than non-CSR firms. Interestingly, we find that firms involved in both internal and external CSR have higher value. Overall, by showing that internal CSR is a core activity that enhances firm value, our study provides policy implications for the regulatory bodies of different countries.
Keywords
Internal CSR
External CSR
Firm value
Supply chain
Shared growth
JEL classification
M14
M48
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Peer review under responsibility of Borsa İstanbul Anonim Şirketi.