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Are corporate social responsibility and advertising complements or substitutes in producing firm reputation?

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  • Patrick Lloyd-Smith
  • Henry An

Abstract

A firm’s reputation is one of the critical drivers of success, and two of the key levers firms use to influence their perceived reputation are corporate social responsibility (CSR) and advertising. The relationship between CSR and advertising is important because whether they are complements or substitutes has different implications for how firms use these activities. Using a unique panel dataset of US-listed companies between 2005 and 2014, we estimate flexible production functions to identify whether CSR and advertising act as complements or substitutes in the production of firm reputation. A secondary motivation of this paper is to examine whether the use of different stakeholder ratings of firm reputation matters. We find evidence consistent with advertising and CSR being substitutes toward the production of firm reputation. Our results also show that advertising, own-firm CSR activities, and industry-level CSR spillovers contribute positively to firm reputation. Lastly, we find that the effects of CSR and advertising vary across the stakeholder groups (general public, business executives, or CSR experts) used in the analysis.

Suggested Citation

  • Patrick Lloyd-Smith & Henry An, 2019. "Are corporate social responsibility and advertising complements or substitutes in producing firm reputation?," Applied Economics, Taylor & Francis Journals, vol. 51(21), pages 2275-2288, May.
  • Handle: RePEc:taf:applec:v:51:y:2019:i:21:p:2275-2288
    DOI: 10.1080/00036846.2018.1540858
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    Citations

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    Cited by:

    1. Manish Bansal, 2022. "Impact of mandatory CSR spending on strategic brand‐building levers: Evidence from a quasi‐natural experiment in India," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(8), pages 3620-3633, December.
    2. Fuzhen Liu & Kee-hung Lai & Wei Cai, 2021. "Responsible Production for Sustainability: Concept Analysis and Bibliometric Review," Sustainability, MDPI, vol. 13(3), pages 1-27, January.
    3. Jacob Cherian & Muhammad Umar & Phung Anh Thu & Thao Nguyen-Trang & Muhammad Safdar Sial & Nguyen Vinh Khuong, 2019. "Does Corporate Social Responsibility Affect the Financial Performance of the Manufacturing Sector? Evidence from an Emerging Economy," Sustainability, MDPI, vol. 11(4), pages 1-14, February.
    4. Monika Sipa & Malgorzata Smolarek & Tomasz Jalowiec & Piotr Masloch & Henryk Wojtaszek & Ireneusz Miciula & Grzegorz Masloch, 2021. "Diversity of Factors Determining Employee Satisfaction as an Area of CSR Activity in Companies of Different Scale," European Research Studies Journal, European Research Studies Journal, vol. 0(2), pages 507-522.
    5. Antonella Biscione & Raul Caruso & Annunziata de Felice, 2021. "Environmental innovation in European transition countries," Applied Economics, Taylor & Francis Journals, vol. 53(5), pages 521-535, January.
    6. Antonella Biscione & Dorothée Boccanfuso & Annunziata De Felice, 2021. "Regulations and Corporate Environmental Responsibility: evidence from a panel of firms in Transition economies," Applied Economics, Taylor & Francis Journals, vol. 53(54), pages 6286-6299, November.
    7. Mihai Andronie & Violeta-Elena Simion & Elena Gurgu & Adrian Dijmãrescu & Irina Dijmãrescu, 2019. "Social Responsibility of Firms and the Impact of Bio-Economy in Intelligent Use of Renewable Energy Source," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 21(52), pages 520-520, August.
    8. Le Thanh Tiep & Ngo Quang Huan & Tran Thi Thuy Hong, 2021. "Role of Corporate Social Responsibility in Sustainable Energy Development in Emerging Economy," International Journal of Energy Economics and Policy, Econjournals, vol. 11(2), pages 172-186.
    9. Charl de Villiers & Jing Jia & Zhongtian Li, 2022. "Corporate social responsibility: A review of empirical research using Thomson Reuters Asset4 data," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 62(4), pages 4523-4568, December.
    10. Dolores Gallardo-Vázquez & Luis Enrique Valdez-Juárez & Ángela María Castuera-Díaz, 2019. "Corporate Social Responsibility as an Antecedent of Innovation, Reputation, Performance, and Competitive Success: A Multiple Mediation Analysis," Sustainability, MDPI, vol. 11(20), pages 1-28, October.
    11. He-Boong Kwon & Jooh Lee & Laee Choi, 2023. "Dynamic interplay of environmental sustainability and corporate reputation: a combined parametric and nonparametric approach," Annals of Operations Research, Springer, vol. 324(1), pages 687-719, May.

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