From the Abstract:
This paper studies how firms allocate their Corporate Social Responsibility (CSR) spending to shed light on the potential social effects of corporate contributions to public goods. We do so using a novel dataset covering the universe of the CSR expenditures of Indian firms over the period 2015-2019, which includes detailed information on the projects and social causes firms invest in. Using textual analysis methods, we construct an index of the technological proximity of firms’ industries to social causes to capture the extent to which firms use their production processes for CSR projects. Results suggest that firms do spend more on causes they have a comparative advantage in, in line with the theoretical literature on the desirability of CSR (Besley and Ghatak, 2007; Hart and Zingales, 2017). However, firms tend to spend in geographic areas where social returns are relatively low.
