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Can corporate social responsibility mitigate the liability of newness? Evidence from China

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Listed:
  • Yan Zuo

    (Zhejiang University)

  • Shenyang Jiang

    (Zhejiang University)

  • Jiang Wei

    (Zhejiang University)

Abstract

This paper examines whether engagement in corporate social responsibility (CSR) activities mitigates the liability of newness (LoN) faced with new ventures and thus contributes to their financial performance. We theorize that investments in CSR are especially beneficial for young firms confronted with this liability. Undertaking CSR activities can serve as a balanced solution to both the internal and external contingencies associated with LoN without incurring considerable costs and thereby lead to the better performance of new ventures. In addition, we further investigate the boundary conditions of CSR in mitigating LoN and identify family ownership and firm age as two important determinants of the worth of CSR engagement. CSR is expected to create more value for family-owned or nascent new ventures. Taking Chinese private firms as our sample, we find supportive empirical evidence.

Suggested Citation

  • Yan Zuo & Shenyang Jiang & Jiang Wei, 2022. "Can corporate social responsibility mitigate the liability of newness? Evidence from China," Small Business Economics, Springer, vol. 59(2), pages 573-592, August.
    • Handle: RePEc:kap:sbusec:v:59:y:2022:i:2:d:10.1007_s11187-021-00551-z
    DOI: 10.1007/s11187-021-00551-z
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