The impact of a firm's corporate social responsibility on firm–supplier relationships: The effect of secondary stakeholder CSR on inventory days

DOI

10.1002/csr.2319

Document Type

Journal Article

Publication Date

9-1-2022

Publication Title

Corporate Social Responsibility and Environmental Management

Volume

29

Issue

5

First Page

1689

Last Page

1705

ISSN

15353958

Keywords

business environment, CSR, inventory efficiency, stakeholder engagement, supply chain, trust

Abstract

Well-known benefits of corporate social responsibility (CSR) are goodwill and trust. Typically, research states that if a firm engages in CSR activities that benefit stakeholder X, then stakeholder X will reciprocate with higher levels of trust. We advance this line of research by examining whether CSR activities directed to stakeholder X increase the levels of trust between the firm and a different stakeholder, Y. Specifically, we examine the consequences of CSR actions that a firm directs toward non-supplier stakeholders on the firm-supplier relationship. We argue that a firm's secondary stakeholder CSR (e.g., community and environment) creates trust and goodwill with third parties (i.e., suppliers) that manifests in reduced inventory days. We use a data set comprising 27,551 firm-year observations and find that secondary CSR is associated with decreased inventory days in more complex (more heterogenous and competitive), munificent (growing), dynamic (unpredictable), and socially irresponsible (e.g., gambling and tobacco) business environments.

Open Access

Hybrid_Gold

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