Amini, C., & Dal Bianco, S. (2017)

Corporate Governance: The International Journal of Business in Society
Corporate Social Responsibility and Latin American firm performance

Chiara Amini, Silvia Dal Bianco,
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Chiara Amini, Silvia Dal Bianco, (2017) "Corporate Social Responsibility and Latin American firm performance", Corporate
Governance: The International Journal of Business in Society, Vol. 17 Issue: 3,pp. -, doi: 10.1108/CG-03-2016-0060
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1
REF: Corporate Social Responsibility and Latin American firm performance
1. Introduction
In the past decade, both business practitioners and policy makers have paid increasing
attention to firms’ socially responsible practices because these are of interest not only to firms
but also to society as a whole (McWilliams and Siegel, 2000; Margolis and Walsh, 2003;
Orlitzky et al 2003). Visser (2008) defines Corporate Social Responsibility (henceforth CSR)
as "the formal and informal ways in which business makes a contribution to improving the
governance, social, ethical, labour and environmental conditions of the developing countries
in which they operate, while remaining sensitive to prevailing religious, historical and
cultural contexts". One of the main issues in this context concerns the "global credibility" of
CSR and, thus, the integration of socially and environmentally conscientious practices into
the ordinary business of developing countries’ firms (see, for example, Adeyeye, 2011;
Berliner and Prakash, 2014; and Moratis, 2015)
To date, the main research efforts on CSR have concentrated on developed countries
(Orlitzky et al, 2003; Jamali, 2008; Bird et. al., 2007). This is primarily because CSR
originated in Western companies and information on such firms’ practices is mainly available
in advanced economies. However, the pressures to adopt socially responsible practices have
dramatically increased in emerging markets (Visser, 2008). On the one hand, this is due to the
effects that developing countries' industrialisation is likely to have on their environments
(Grossman and Krueger, 1995; Dasguptaet. al, 2002) as well as on their social norms (Lall,
2002). On the other, it is due to the fact that CSR is now considered to be intertwined with
poverty alleviation and sustainable development (Blowfield, 2005 and Moon, 2007).
Historically, firms in both developed and developing countries have had a mixed reaction to
2
the increasing popularity of CSR. While some firms have devoted more resources to social
and environmental activities, others have resisted the trend because of the concern that
growing expenditure in this area may negatively affect the economic viability of the business.
It is therefore crucial to assess how CSR affects firm performance in laggard economies and
whether the goals of private enterprises can be aligned with those of conscientious business
as well as with sustainable development. Empirical research on developed countries has
analysed the impact of CSR on firms’ performance, but the results have been mixed. The
conflicting empirical findings may be the consequences of using different proxies for CSR or
different samples. However, with the sole exception of Cheng and Shan (2009), the great
majority of studies have failed to consider that CSR is likely to be endogenous. That is, firms
with better performances or with certain characteristics are systematically more likely to
adopt CSR practices. Hence any empirical exercise that does not tackle the endogeneity issue
provides non-consistent results.
The aim of this paper is to investigate the causal effect of CSR on firm performance in six
Latin American middle-income economies, taking into account the likely endogeneity of
CSR as well as the peculiarities of business dynamics in developing countries.
More in detail, we take advantage of the 2006 World Bank Enterprise Surveys (WEBS) on
Bolivia, Argentina, Chile, Colombia, Mexico and Ecuador, and we employ Propensity Score
Matching techniques (henceforth PSM) to conduct a consistent assessment of the CSR/firm
performance nexus. 1 In particular, PSM enable us to adjust for observable differences in
1
In employing the term “developing countries” we follow the World Bank’s definition according to which the
set of developing countries encompasses all Low and Middle income economies. In particular, in 2006, three of
our sampled countries were classified as Lower Middle Income (i.e. Bolivia, Colombia and Ecuador) while the
rest were Upper Middle Income (i.e. Argentina, Chile and Mexico).
3
characteristics between firms that adopt CSR practices and those that do not, thus making an
adequate ‘like-for-like’ comparison possible.
Our intention to study CSR in the Latin American context is motivated by the observation
that, although Latin America is the developing region least covered in terms of CSR research,
there is an increasing trend of CSR adoption by Latin American firms (Visser, 2008). Hence
a better understanding of the impact that CSR has on firm performance appears extremely
important.
This study makes three main contributions. First, we provide new descriptive evidence on
CSR in Latin America. Second, we move beyond the narrow definition of firm performance
as financial success. In particular, in order to highlight the peculiarities of business dynamics
in developing countries, as well as to overcome data limitations, we formulate five distinct
theoretical hypotheses on the CSR/performance link, and we examine the causal effects of
socially responsible practices on firm turnover, labour productivity, innovativeness, product
differentiation and technological transfer. Third, overall, our work reassesses and extends the
empirical evidence on the impact of CSR on firm performance.
Turning to the results, our descriptive analysis shows that the majority of firms engage in
CSR; and that environmental practices, such as water optimisation programmes, are the most
common, followed by those aimed at supporting communities as well as workers. Moreover,
we document that firms engage in more than one type of CSR simultaneously: that is, the
majority of the firms that have environmental programmes also have labour or community
supportive policies. Finally, we highlight that CSR adopters have distinct intrinsic
characteristics. In particular, such firms tend to be large, well-established, engaged in
Research and Development, and foreign owned.
In regard to the matching exercise, overall our results provide supportive evidence for the
theoretical hypotheses that we have formulated. They thus show that corporate goals are
4
compatible with conscious operations in developing countries. However, it should also be
noted that our findings exhibit great variability across countries. In particular, we find that
poorer countries, such as Bolivia and Colombia, display the highest numbers of links between
CSR and the outcome variables analysed, while in the richer ones, such as Mexico and
Argentina, CSR has a sizeable effect only on innovativeness. Finally, no effect is found in
Chile, the most developed country in our sample. Hence, it seems advisable for governments
and international organisations to provide meaningful incentives for CSR adoption, especially
in least developed economies.

The remainder of the paper is organised as follows. Section 2 briefly reviews the relevant
literature. Section 3 discusses the methodology. The fourth part presents the data employed
and provides a preliminary analysis by considering some descriptive statistics. Finally we
discuss the results of the matching exercise, and we conclude with final remarks and policy
implications.
2. Literature Review
In this section we first consider the literature on CSR practices in developing countries. We
then explore current theory on the relationship between CSR and firm performance, and we
assess the available empirical evidence based on the experiences of advanced economies.
Finally, we discuss the hypotheses to be tested in the remainder of the paper in light of the
relevant theoretical literature.
2.1 CSR in developing regions: coverage and evidence

5
Most of the literature on CSR and firm performance in developing countries is qualitative in
nature, and it is often based on case studies.
In terms of regional coverage, a large part of the literature has focused on Asia (Visser,
2008).2 A comparative analysis by Welford (2005) shows, perhaps unsurprisingly, that Asian
countries, such as Hong Kong, Malaysia and Thailand, consistently underperform developed
countries on several aspects of CSR. However, it is important to note that there is some
regional variation in CSR reporting: 75% of large Indian companies have some CSR policies
compared to only 32% of firms in Malaysia and 30% in the Philippines. Finally, Luken and
Stares (2005) use the United Nations information on 22 small and medium enterprises in four
developing Asian countries to show that environmental and social practices are correlated
with financial savings, environmental, social and product improvement.
Turning to studies investigating CSR practices in Africa, the majority of them concentrate on
South Africa and Nigeria. Moreover, most of the studies focus on critical sectors such as
agriculture (e.g. Blowfield, 2003), mining (e.g. Kapelus, 2002) and petrochemicals (e.g.
Acutt et al., 2004). Finally, CSR debates in the region have been centred on ethical issues
related to apartheid, colonialism and corruption.
For what concerns Latin America, which is the continent of interest for our study, Visser
(2008) points out that, among all developing regions, Latin America is the one least covered
in terms of CSR research. Moreover, the available evidence is concentrated on Argentina (e.g.
Newell and Muro, 2006), Brazil (e.g. Vivarta and Canela, 2006) and Mexico (e.g. Weyzig,
2006). Nevertheless, the most recent literature reports that CSR is increasing in the region.
For example, Araya (2006) documents that 34% of large companies publish a report on
sustainability. Further, Vives (2006) provides insights on the importance of specific CSR
2
For instance, Zhuang and Wheale (2004) on China, Blowfiel?d (2004) on Indonesia, Lund-Thomsen (2004)
on Pakistan, and Kaufmann et al. (2004) on Thailand.

6
practices in small and medium enterprises (SMEs) in eight Latin American countries. He
finds that most CSR by SMEs is focused on internal activities, such as employee welfare,
whereas philanthropic and environmental activities are less common. Finally, Amini and Dal
Bianco (2015) show that Latin American firms which engage in environmental or community
projects are no less efficient than firms that do not adopt such practices. They thus suggest
that corporate goals, such as productivity, are compatible with conscious operations.
2.2 CSR and firm performance: theoretical background and evidence from developed
countries
Research on CSR is mainly focused on developed countries, or on the activities of Western
multinational companies (MNC) in emerging markets (Muller and Kolk, 2008).
The theoretical literature has formulated two competing hypotheses concerning the effect of
CSR on firm performance. The first is called the "social impact hypothesis"; the second one
the "shift of focus view". While the former claims that CSR has a positive effect on firms’
financial performance, the latter suggests the opposite.
According to the social impact hypothesis, three channels may explain the positive
relationship between CSR and firm performance. They are: improving employee productivity
by providing a better working environment (Turban and Greening, 1997); increasing
managerial know-how and thus enhancing organizational efficiency (Orlitzky et al., 2003);
increasing social reputation, trust (Bowman and Haire, 1975), brand image and product
competitiveness (Porter and Van derLinde, 1995). This last channel works principally
through the media, which make firms responsible to stockholders and consumers (Chen and
Shang, 2009).
7
The shift of focus view instead argues that activities such as building employee and
community relationships and providing environmental protection cause a shift of focus from
the traditional corporate goals to the interests of a wider set of stakeholders which increases
firms’ costs (Becchetti, Ciciretti and Hasan, 2007). Moreover, some studies also argue that
corporations engaged in CSR activities have lower market competitiveness and worse
performance because they may use resources inefficiently (Friedman, 1970), limit product
developments (Bragdon and Marlin, 1972) and push unprofitable social activities (Aupperle
et al., 1985; Vance, 1975; Ullmann, 1985).

Turning to the empirical literature, the bulk of existing studies examine the relationship
between some measure of CSR and the long-term firm performance, which is proxied by
accounting or financial measures of profitability. Typically, these studies estimate the effect
of CSR by regressing firm performance on corporate social performance and various control
variables. Firm performance is usually associated with firm financial performance. It is
consequently measured in terms of price per share, return on assets or on equity (Orlitzky et
al., 2003). Four common ways to measure CSR are: (a) disclosures, such as annual reports,
letters to shareholders and other corporate disclosures to the public; (b) reputation ratings; (c)
social audits; and (d) managerial principles and values (Orlitzky et al., 2003).
Existing empirical studies on the CSR/firm performance nexus in advanced economies report
mixed results. For example, Newgren et al. (1985) and Brammer et al. (2005a) find that firms
that engage in environment protection and community relationships have significantly lower
stock returns. In contrast, Cochran and Wood (1984), Waddock and Graves (1997), and
Tsoutsourz (2004) find that the CSR reputation index positively affects firms’ performance.
Further, Orlitzky et al (2003) conduct a meta-analysis of 52 studies and show that social
responsibility, and to a lesser extent environmental responsibility, is likely to have a positive
effect on firm performance.

8
Finally, the empirical evidence on CSR and firm financial performance remains inconclusive
even when the likely endogeneity of CSR practices is taken into account, as in the recent
work by Cheng and Shang (2009). In particular, these authors employ propensity score
matching to tackle the endogeneity issues, and they investigate the relationship between CSR
and financial performance by using Taiwanese firms' quarterly data from 2005 to 2006. In
this instance, CSR is measured by the reputation rating given by the Global View Monthly,
which is a leading commercial magazine in Taiwan. Firm financial performance, instead, is
proxied by the return on investment and equity, pre-tax income to net sales, gross profit to net
sales and earnings per share. Cheng and Shang’s (2009) results show that firms engaging in
CSR activities obtain significantly higher values of pre-tax income and profit margin, but
there is no significant difference between returns on investment and earnings per share.
Although admitting that this non-univocal result may be due to the matching exercise, Chen
and Shang’s (2009) interpretation is that CSR is not detrimental to firm performance, in the
sense that it never has a significant and negative effect.
2.3 Broadening the concept of firm performance and testable hypotheses
So far our literature review has highlighted two main facts. First, the bulk of the research on
the relationship between CSR and firm performance is focused on developed economies’
experiences. Second, the available evidence on that link is inconclusive because the empirical
results have been mixed. Since our goal is to shed light on the impact of CSR on aspects of
the firm that are crucial for the process of development, this paper moves beyond the narrow
definition of firm performance as financial success. Thus, in order to take developing
countries’ business dynamics into account, as well as to deal with current data limitations, we
explore five dimensions of firm performance: firm turnover, labour productivity,

9
innovativeness, product differentiation, and technological transfer. For each dimension, we
formulate five distinct theoretical hypotheses which can shed some light on how CSR affects
the performance of firms in developing countries.
Starting with firm turnover, this variable is measured by firms’ revenues. Our consideration
of firm turnover as a firm performance indicator has a twofold rationale. First, we assume
that firms’ managements aim to maximise profits (Jensen, 1988) but, as we lack data on
standard financial performance indicators, we rely on sales data3. Finally, a possible (positive)
relationship between CSR and revenues can be justified in light of the traditional demand and
supply model of McWilliams and Siegel (2001). On the demand side, the consumers and
other stakeholders demand CSR and its attributes. On the supply side, firms that are willing
to satisfy such a demand must devote resources to CSR. Eventually, such firms will
experience an increase in revenues, as prediceted by Jones (1995) or McWilliams and Siegel
(2010). These considerations lead to the following hypothesis:
Hypothesis 1: CSR has a positive impact on firms’ revenues.
Turning to labour productivity, this variable is defined as the sales per employee ratio. This
measure has been extensively used in the literature (see the recent review by Sanchez and
Benito-Hernandez, 2013). Following the arguments put forward by Stuebs and Sun (2010),
we presume that CSR improves business reputation and that good business reputation can
enhance labour productivity, for example because socially responsible firms attract and retain
more skilled employees (Lado and Wilson, 1994; Turban and Greening, 1997) or because
CSR practices are often directly related to promoting employee empowerment (McWilliams
et al., 2006). Another possible channel through which CSR can boost labour productivity is
3
This approach is similar to Baumol (1962) and McGuire et al. (1962)
10
the one related to social capital building and lower employee turnover (Russo and Perrini,
2010).
Thus, our next hypothesis is:
Hypothesis 2: CSR has a positive impact on firms’ labour productivity.
In regard to firm innovativeness, according to Moore (2005), CSR and ethical practices can
be drivers of innovation because they favour the formation of innovation networks, as well as
confidence in cooperative processes. More recently, Brodhag (2013) has intertwined CSR
practices with the classic debate on innovation driving forces (i.e. "market pull" versus
"technology push"). His review highlights that responsible practices can boost innovation
from both the pull perspective, as in the case of sustainability-oriented innovations (Hansen et
al., 2009), and from the push one, as when innovation is regulation-induced (Porter and Van
derLinde, 1995; Ashford and Hall, 2011). Thus, our third hypothesis is:
Hypothesis 3: CSR is a driving force for innovation; hence it has a positive effect on firms'
innovative activities.
Before turning to the next hypothesis, we point out that we measure firm innovativeness with
a dummy variable taking the value of one if the firm invests in Research and Development
(henceforth RnD) within the establishment or through a third party. The inclusion of Outdoor
RnD is motivated by the nature of technological progress in developing countries, which is
characterised by the innovation-imitation dynamic (DalBianco, 2010; 2015). This point will
be fully clarified in the discussion of Hypothesis (5).

11
We then explore the relationship between CSR and product differentiation or RnD intensity,
which is measured as the ratio of RnD expenditures to sales. This is motivated by the
argument of McWilliams and Siegel (2001) that CSR features embedded in firm products can
be conceived as new products. Thus, our testable hypothesis is:
Hypothesis 4: CSR has a positive impact on the level of product differentiation.
Finally, we explicitly assume that technological advances in developing countries are related
to the transfer of ideas from the technological leaders (see Nelson and Phelps (1966) and
Baumol (1986) for seminal contributions). In particular, drawing on Griliches (1979) and on
the results of Griffith et al. (2006), we envisage a link between firm innovative activities and
outdoor RnD. Then, as in the discussion related to Hypotheses (3) and (4), we assess the
relationship between CSR and technological transfer, measured as the third party-RnD
expenditures to sales ratio. Hence, our last hypothesis is:
Hypothesis 5: CSR has a positive effect on technological transfer, that is, the third-party RnD
to sales ratio
3. Methodology
3.1 The causal effect of CSR on firm performance: estimable equations and
methodological issues
The primary goal of our analysis is to evaluate the causal effect of CSR adoption on different
measures of firm performance by using observational data (i.e. non-experimental data).

12
Following Becerril and Abdulai (2010), we employ an empirical specification that captures
the firm’s decision to adopt socially responsible practices. In particular, we assume that firm
performance is a linear function of the firm’s characteristics as well as CSR, and that the
4
decision to adopt CSR depends on the firm’s characteristics. Two inter-related
methodological issues arise in a non-experimental causal analysis like the current one (see for
reviews Blundell and Costas Dias, 2000; 2002). First, we do not observe the counterfactual.
This means that we have information on firm performance of CSR adopters and non-adopters
only, but there is no information on the counterfactual (i.e. CSR adopters’ performance in the
case of non-adoption and vice-versa). The second problem is that the decision to adopt CSR
(i.e. the treatment assignment) may depend on firms' characteristics and thus it is non-random.
In other words, the group of adopters can be systematically different from non-adopters. This,
3. We assume that the data generating process can be described by two relations. The first, Equation (1)
below, is an extended production function which describes the linear relationship between the i-th
firm’s performance (i.e. yi) and the firm’s characteristics (i.e. Xi) as well as CSR and a normally
distributed idiosyncratic error term. Equation (2) is instead an index function that models CSR
adoption as a function of firms’ characteristics. Formally:
ln y i = β 0 + β 1 ln( X i ) + β 2 CRS i + µ i (1)
CSR * i = γX i + ε i
(2)
In particular, CSR* is a latent variable representing the difference in utility between CSR adoption and
non-adoption, where the difference is estimated by the term. Although we will not estimate Equations
(1) and (2) in our empirical exercise, clarifying the specific characteristics of the data-generating
process is of fundamental importance in order to adopt the right econometric techniques.
4. Referring to the notation employed in the previous footnote, the selection bias arises when the error
terms of the production function (i.e. µ in Equation 1) and the CSR choice (i.e. ε in Equation 2) are
correlated.
13
in turn, implies a causality issue in the specific form of a selection bias, in the case that some
unobservable factors influence both firm performance and the choice of engaging in CSR.5
The traditional methodologies employed to control for the selection bias have been the
Instrumental Variables (IV) approach and the Heckman two-steps estimator (Heckman, 1979).
However, both approaches present some drawbacks. The main challenge of the IV approach
is finding suitable identifying instruments that are correlated with the selection variable (i.e.
CSR) but not with the outcome (i.e. firm performance). Moreover, IV procedures imply that
the coefficients of the control variables are similar for adopters and non-adopters, an
assumption which is unlikely to be satisfied since their coefficient may differ (Jalan and
Ravallion, 2003). The main problem with the Heckman-two steps method, instead, is that it
relies on the restrictive assumption of normally distributed errors (Becerril and Abdulai,
2010).
In order to investigate the causal relationship between CSR and firm performance, we adopt
the Propensity Score Matching (PSM) approach. Unlike the aforementioned parametric
methods, PSM has the advantage of not imposing any specific requirements on the functional
form specifying the relationship between outcomes and predictors of outcomes6. Moreover,
this paper employs survey-data, hence the problem of measurement error may arise as well.
3.2 Propensity Score Matching
PSM entails forming matched sets of treated and untreated subjects who share a similar value
of the propensity score (Rosembaum and Rubin, 1983a, 1985). Following Rosembaum and
Rubin (1983), the propensity score is defined as the probability of treatment assignment
5. For a full derivation of the ATT, the interested reader can refer to Becerril and Abdulai (2010), p.1026.
14
conditional on observed baseline covariates. Formally: ei = Pr(Zi = 1|Xi). The propensity
score is a balancing score: conditional on the propensity score, the distribution of measured
baseline covariates is similar between treated and untreated subjects. Thus, in a set of subjects
all of whom have the same propensity score, the distribution of observed baseline covariates
will be the same between the treated and untreated subjects. In particular, PSM summarizes
the pre-treatment characteristics of each subject into a single index variable, and then uses the
propensity score to match similar individuals (Rosenbaum and Rubin, 1983a). Hence, PSM
makes it possible to estimate the Average Treatment Effect for the Treated (henceforth ATT)
(Imbens, 2004). The ATT is the average effect of treatment on those subjects who ultimately
received the treatment. Formally, the ATT can be written as: E[Yi(1) − Yi(0) |Z = 1].7
The crucial assumption that underlies propensity score analyses is that the assignment to the
treatment has been properly modelled or, as Rosenbaum and Rubin (1983a) put it, that the
treatment assignment is "strongly ignorable". In particular, Rosenbaum and Rubin (1983a)
demonstrate that if treatment assignment is strongly ignorable, conditioning on the propensity
score allows one to obtain unbiased estimates of the ATT. Two assumptions are needed for a
strongly ignorable treatment effect. The first is the Conditional Independence Assumption
(CIA). CIA implies that selection into the treatment group is based solely on observable
characteristics (selection on observables). Thus there are no unmeasured confounders that can
affect the probability of treatment assignment. The second condition states that every subject
has a non-zero probability of receiving or non-receiving the treatment. This hypothesis is
called the "common support" or "overlap condition" because the common support is the area
where the balancing score has positive density for both treatment and control units (Caliendo
and Kopeinig, 2005).
6. For a full derivation of the ATT, the interested reader can refer to Becerril and Abdulai (2010), p.1026.
15
The main drawback of PSM is that the CIA may be non-satisfied. As rightly noted by Smith
and Todd (2005), there may be systematic differences in the treatment assignment between
treated and untreated because of unmeasured confounders. However, Jalan and Ravallion
(2003) convincingly argue that the assumption of selection on observables is no more
restrictive than assuming away problems of weak instruments, when the Heckman two-steps
estimator or the IV approach are employed in cross-sectional data analysis. Thus, with these
caveats in mind, we rely on PSM for our exercise.

3.3 Calculation of the propensity score, matching algorithms and ATT interpretation
In order to choose the covariates to be included in the calculation of the propensity score, we
draw on the existing literature on firm performance (e.g. Raiser, Allan and Steves, 2008;
Johnson, McMillan and Woodruff, 1999; Carlin, Schaffer and Seabright, 2004). Moreover,
we take into account the trade-off between omitted factors and over-parameterisation. If, on
the one hand, omitting important factors can increase the selection bias (Heckman et al.,
1998), on the other hand, over-parameterized models reduce the likelihood of finding a
common support (Bryon et al., 2002). Thus, in order to ensure that the common support
condition is satisfied, we follow Dehejia and Wahba (2002) and Diprete and Gangl (2004)
and we include only a limited number of covariates. In light of these considerations, we
calculate the propensity score by employing the level of inputs used (labour and capital) and
some selected firms characteristics, such as ownership, export intensity, size and RnD.
Once the propensity score has been calculated, different matching techniques can be
employed to build the artificial and non-observed counterfactual.
There are several matching methods available. Asymptotically, all matching algorithms
should generate the same results, although there are trade-offs in terms of bias and efficiency
16
involved with each algorithm (Caliendo and Kopeining, 2005). In this paper we compare
estimates of three different types of matching: kernel matching, nearest neighbour matching,
and radius matching.
The kernel matching method is one of the most commonly used matching approaches. In
particular, it is a non-parametric matching estimator that uses weighted averages of all
individuals in the control group to construct the counterfactual. The weight assigned to each
control observation depends on how close it is, in terms of propensity score, to a treated
individual (Caliendo and Kopeinig, 2008).

The second matching method employed here is the Radius Matching with Calliper. A
common issue with PSM is that matching may be of poor quality if the distance between
controls and treated observations is large. The calliper imposes a maximum propensity score
distance requirement. Calliper is often used with radius matching so that the algorithm uses
the nearest neighbour for all the comparison members within the calliper, but it allows for
larger distances when good matches are not available (Caliendo and Kopeinig, 2008).
The last matching method is the Nearest Neighbour Matching, also known to be one of the
most straightforward methods. Matching between control and treated firms is done on the
basis of the closest propensity score. The k-nearest neighbour matching allows the use of k
units in the control group as matching partners for a treated individual. In this paper we set k
equal to 3. Thus we use just the three nearest neighbours.
Having formed the matched sample, the treatment effect can be estimated. This paper
identifies the ATT of social and environmentally-oriented policies on selected measures of
firms’ performance. In particular, if the outcome variable is continuous (e.g. firms' turnover),
the treatment effect can be interpreted as the average effect of treatment on those subjects
who ultimately received the treatment (i.e. the increase or decrease in firms' sales due to CSR
adoption). If, instead, the outcome variable is dichotomous (e.g. engaging or not in RnD), the
17
effect of the treatment can be estimated as the difference between the proportion of subjects
experiencing the event in each of the two groups (treated vs. untreated) in the matched
sample. With binary outcomes, the effect of the treatment can also be described using the
relative risk or the Number Needed to Treat (Rosenbaum and Rubin, 1983a).8
Finally, we point out that all the estimations reported here have been performed in STATA
12.0 using the software provided by Leuven and Sianesi (2004).
4. Data and Descriptive Statistics

4.1 CSR adoption, range of activities and perceived impact
The data employed in this paper are drawn from the World Bank Enterprise Surveys (WEBS).
WEBS is a firm-level survey conducted by experts on behalf of the World Bank. The survey
is answered by top mangers of mainly service and manufacturing companies, and it covers a
wide range of topics including characteristics of managers, perception of institutional
constraints, and some basic financial information. 9 These surveys have been used to
investigate firms’ performances by many well-known scholars (e.g. Djankov et al, 2008 and
Beck et al. 2005). However, to the best of our knowledge, no one has made use of the
information on CSR. The data are available for domestic and foreign-owned firms in
Argentina, Bolivia, Chile, Colombia, Ecuador and Mexico.
The 2006 round of WBES contains 10 questions on CSR which give information on the
following: whether the firm has any CSR-related practice; how CSR affects the establishment;
if the firm has any energy, recycling or water optimisation programme; if the firm has a
community support group; if the firm receives pressure to be socially responsible; if the firm
6. The number needed to treat (NNT) is an epidemiological measure used to communicate the effectiveness of a
health-care intervention, typically a treatment with medication.
9
Further details are available from http://www.enterprisesurveys.org.
18
has any explicit policy on hiring women or handicapped persons or supporting the balance
between family and work.
The 10 questions allow exploring three different dimensions of CSR, i.e. the environmental,
social and labour ones. The survey also contains information on firms' turnover, size, sector
of activity, export intensity, ownership and Research and Development (RnD) activities. This
section analyses CSR practices across the six countries analysed, as well as the characteristics
of firms engaged in CSR.
Table 1 summarises the WBES questions related to CSR for the six countries analysed. The
table contains the percentage of firms that responded positively to the questions reported in
the first column. The results are grouped according to the three CSR dimensions analysed, i.e.
Environmental CSR (4 questions in WBES survey); Community CSR (1 question), and
Labour CSR (2 questions).
The first row of Table 1 shows that between 44.38% and 78.59% of the firms surveyed have
some oral or written CSR policies, with Mexico being the country with the lowest share and
Ecuador the highest.
In regard to environmental practices, the survey contains 4 different questions (i.e. on the
adoption of energy or water optimisation, recycling, and water/air pollution control). In order
to summarize the information on Environmental CSR, we have generated a dummy variable,
"CSR Environment", that is equal to 1 if the establishment adopts at least of one these
practices. The fifth row in Table 1 shows that the majority of the firms have some
environment-related practices. The minimum value of "CSR Environment" is 67% in
Argentina, and the maximum is 87% in Ecuador.
WBES 2006 provides one question on the adoption of community support programmes. Thus,
we can investigate the prevalence of CSR in the social dimension. In all countries the
frequency of community projects seems lower than that of environmental practices. Ecuador
19
again has the highest share of firms adopting community programmes, with 55%, while
Mexico has the lowest share with 22.54%.
The questions related to the labour dimension of CSR provide information on two aspects:
first, whether firms have explicit policies on hiring women or handicapped persons; second,
whether they have programmes supporting the balance between family and work. We have
repeated the same exercise done for Environmental CSR and built a dummy variable called
"CSR Labour". The tenth row of Table 1 shows that, in all countries, the prevalence of
labour-related practices is even lower than the adoption of community programmes. In

particular, Argentina has the lowest share of firms engaged in Labour CSR (14.29 %) while
Ecuador is again the best performing country (37.2%).
Overall, the data show that, in all the Latin American countries surveyed, there is a high share
of firms engaged in some type of CSR. This is in line with Visser’s (2008), which documents
a trend of increasing CSR for Latin American countries. However, our data show that there is
large variation in terms of the prevalence of various types of CSR. Environmental practices
are the most common, while social and labour practices are less frequent. This finding is in
consistent with Baskin’s (2006) analysis, which notes that emerging markets lag behind the
OECD for business ethics and equal opportunities, but are roughly on a par for environmental
reporting.
For what concerns the prevalence of CSR in the countries analysed, Ecuador is the country
with the highest share of firms engaged in CSR, for all the CSR dimensions analysed.
Perhaps surprisingly, richer countries, such as Chile, Mexico and Argentina, perform poorly
in relative terms. For instance, Mexico has the lowest share of firms engaged in CSR, in
particular as regards community support projects (22%). Ecuador, Colombia and Bolivia
outperform Argentina, Mexico and Chile in terms of the share of firms engaged in
environmental and labour CSR. This points to a weak correlation between a country’s level
20
of development (i.e. GNI per capita) and firm behaviour.10 Existing research shows that the
adoption of CSR is contingent on the industry (Bansal and Roth, 2000; Strike, Gao and
Bansal, 2006), societal culture (Waldam et al., 2006), and institutions (Frynas, 2005;
Amaeshiet al., 2006). For instance, Ite (2005) identifies corruption, poor governance, and the
lack of accountability to be the main hindrances to adopting CSR practices in Nigeria. Hence,
an in-depth comparative legal and institutional analysis can help in identifying the drivers of
the observed cross-counties differences. Because such analysis falls outside the scope of this
paper, future research can shed light on this aspect.

Finally, the last two rows of Table 1 highlight that external pressures to adopt CSR practices
are extremely low in all countries. Only 5% of Mexican firms receive pressure to be
socially/environmentally responsible, while the share is around one quarter in both Ecuador
and Bolivia (25% and 23% respectively). However, in all countries, the majority of the firms
agree that CSR has a positive impact on competitiveness. As much as 87% of Mexican firms
believe that being socially responsible has a positive effect on the firm’s competitiveness.
Overall, the descriptive statistics presented in Table 1 show that most companies do engage
in some CSR activities, although there is a higher share of firms that adopt environmental
programmes rather than labour practices or community projects. However, WBES data allow
identifying only the type of CSR activities but not firms' expenditures on CSR performance.
**Insert table 1 here**
4.2 Simultaneous CSR practices
7. According to World Bank World Development Indicators, the three richest countries among the ones sampled
are Chile, Argentina and Mexico, which have a GNI per capita in current US dollars equal to 15,245, 14,680 and
9,818, respectively. The poorest are Bolivia, Ecuador and Colombia, with a GNI per capita equal to 2,576, 5,425
and 7,763 dollars respectively.

21
As Muller and Kolk (2008) note, it is important to assess not only the prevalence of the
various CSR practices but also the extent to which companies engage in them simultaneously.
Table 2 shows the share of firms engaged in more than one type of CSR. In particular, it
shows the pair-wise correlation between CSR-Environment, which is taken as the reference
category, and CSR-Labour as well as CSR-Social, one at a time. The data shows that firms
tend to adopt one or more aspect of CSR simultaneously. So, for example, the majority of
firms that have environmental programmes also have labour policies or community projects.
For instance, in Argentina only 10% of firms that have a community project do not have any
environmental programme, while 24.36% of firms that adopt some labour standards fail to
engage in environmental practices. Similarly in Colombia 89.88% of firms with CSR-Labour
also has CSR-Environment, while 91.36% of firms with CSR-Social also have CSR-
Environment. This pattern holds for all the countries examined.
4.3 CSR adoption and firms' characteristics
We now explore the characteristics of the firms that adopt some CSR practices. Table 3
reports the descriptions of all the variables employed in this paper, while Table 4 summarises,
for each country analysed, relevant firms' characteristics for two groups of establishments:
CSR adopters and non-adopters, where CSR adopters are defined as firms that adopt at least
one of the social, environmental or labour practices (see subsection 4.1 for details). Table 4
also reports the difference between the two groups of firms and the significance of such
discrepancy. In particular, to assess the difference in the mean for adopters and non-adopters,
we use the t-test for continuous variables and proportion test for dummy variables (in both
cases the null hypothesis is that there is no statistically significant difference between the two
groups analysed).
22
Table 4 shows the differences in both the performance indicators related to our hypothesis
and other key firm characteristics. In regard to the performance indicators, the data show that,
in most countries, firms engaged in CSR tend to have higher sales and sales per employee,
and this difference although small is significant. Moreover, there is a significantly higher
share of firms engaged in RnD in the CSR adopters group compared to the non-adopters.
Also CSR firms have significantly higher proportions of RnD expenditure to third parties
compared to their counterparts. However, the ratio of total RnD expenditure to sales is not
significantly different in the two groups. Interestingly, we also observe systematic differences
in firms’ characteristics between two groups of firms, at least on average. Within the CSR
group there is a higher percentage of foreign, larger and older firms. For instance, in
Argentina 12% of CSR firms are foreign-owned against 2% of foreign firms. Ownership does
not appear to be significantly different in Colombia, Ecuador and Bolivia. Export intensity is
usually higher for CSR firms; again this characteristic is not significantly different for Bolivia
and Colombia. In regard to firm’s size, small firms are more likely not to engage in CSR. In
line with this observation, CSR firms have greater capital and a larger number of employees
(labour), and such differences are significant. The prevalence of social and environmental
practices also varies across sectors. This is not surprising since the pressures on companies to
take up CSR depend on the social and economic impact of the economic activities carried out
by the firm. Our data show that CSR practices are more common in the food and chemical
sector, less common in clothing and textiles. This difference may be partly due to the fact that
both the chemical and food industry are likely to have a strong impact on the environment.
One factor that possibly explains the higher adoption of CSR practices in the food sector is
that bargaining power often rests with large foreign processors and retailers, with the
consequence that suppliers in developing countries are at a disadvantage (Jones et al., 2005;
Maloni and Brown, 2006). However, the prevalence of CSR across sectors is again likely to
23
be linked to firms’ characteristics. In our sample, firms operating in the chemical sector are
mainly foreign-owned, and establishments in the food sector are mainly large firms. By
contrast, clothing and textile firms are mainly small and domestic-owned.
Besides the analysis of CSR adopters and non-adopters, Table 5 presents the correlation
between our CSR index and some of the key covariates of interest. In line with the previous
discussion, the table shows that the adoption of socially responsible practices is positively
correlated with firms’ size and experience, although the correlation is small. Moreover, firms
that export, innovate and operate in the food and chemical sectors are also associated with
greater CSR.
It should now be clear that, because of the observed differences, it is not possible to attribute
the better performance of CSR firms to the their engagement in philanthropic activities. As
our descriptive analysis seems to suggest, it may be that more productive firms are more
likely to engage in such activities because, for example, they have more resources available.
Hence, we adopted PSM in order to take these issues into account and thus obtain a purer
identifiable effect of firms’ socially responsible behaviour on their performance.
5. Results
The results of our PSM exercise are reported in Tables 6, 7 and 8. The first column of each
table reports the country under analysis as well as the matching procedure employed (i.e.
Kernel, three nearest neighbours, or Radius). The second column shows the ATT which
summarises the effect of the treatment (i.e. CSR adoption) on the treated. The third column
24
shows the value of the t-statistics associated with the ATT.8 The last two columns report the
firms pertaining respectively to the groups of CSR adopters (i.e. Treated) and non-adopters
(i.e. Control) in the matched sample.
Table 6 presents the results on Hypothesis 1 and Hypothesis 2, which are related respectively
to the impact of CSR on firms’ revenues and labour productivity.
According to our first hypothesis, CSR should have a positive impact on firms' turnover
(Jones, 1995; McWilliams and Siegel 2010). Panel A shows the causal impact of CSR on
firms’ revenues, expressed in thousands of current US dollars, where the matching exercise
has been based on firms’ ownership, age, export intensity, RnD, capital and employment. Our
results show that in Bolivia, Colombia and Ecuador the ATT is positive and significant. For
instance, in 2006, in Bolivia, sales by CSR adopters were almost 2 million dollars higher than
those by non-adopters, while in Ecuador the difference amounted to only 650 dollars. In
Colombia the ATT is significant only with three nearest neighbours matching, in which case
it is 1 million 277 thousand dollars. The ATT is negative but not significant for Argentina
and Chile, while in Mexico it is positive but not significant. Hence there seems to be some
support for Hypothesis 1, although there is great variation in terms of ATT across the
countries analysed.
Panel B in Table 6 reports the effect of CSR on sales per employee, expressed in current US
dollars. According to our second hypothesis we expect CSR to have a positive impact on
labour productivity because it promotes business reputation and employee empowerment.
Similarly to what is reported in panel A, we find that the ATT is positive and significant for
Bolivia and Colombia. For the former country, this effect is estimated at between $19,308
and $19,808, while for the latter the ATT is around $20,107 and $20,597.
8
It might be useful to recall the critical values associated with Student’s T, in a two tails test: 1.645 for 10%
significance; 1.96 for 5% and 2.576 for 1%.

25
** Insert table 6 here**

Table 7 analyses the impact of CSR on innovation, as defined by the presence of investments
in RnD, either within the establishment or through a third party. Because the outcome
variable is a dichotomous one, the ATT should be interpreted as the difference between the
proportion of firms that engage in RnD in each of the two groups (CSR vs. non-CSR firms) in
the matched sample. According to our third hypothesis, we should expect CSR to have a
positive impact on innovation. This is because social and environmental practices may
promote innovation networks, which may be linked to sustainability-oriented and/or

regulation-induced innovations. In this instance there seems to be less variability across
countries. In particular, the share of firms that engage in RnD activities is always higher for
adopters of CSR than it is for non-adopters. The effect is significant in Argentina, Bolivia,
Colombia and Mexico. It is the highest for Colombia, at around 32%-34%, and the lowest for
Bolivia, at around 20%-23%. In Chile and Ecuador the ATT is again positive although not
significant.
In Table 8, we explore the link between CSR product differentiation (i.e. RnD to sales ratio)
as well as CSR and technological transfer (i.e. RnD through a third party to sales ratio).
Panel A in Table 8 shows the results of the matching exercise when the outcome variable is
RnD to sales ratio. Because CSR features embedded in firm products can be conceived as
new products and thus constitute a form of technological advancement, we can expect a
positive impact of CSR on product differentiation. Our results confirm this prediction, as the
effect of CSR on product differentiation is positive in all countries. However, the effect is
only significant in Mexico, where the share of RnD to sales is about 3.5 % higher for CSR
adopters. But we should note that the control group in all the matching exercises reported in
Panel A of Table 8 is very small, and this is likely to have affected our results.
26
Moving to Panel B, we analyse the impact of CSR activities on technological transfer.
Interestingly, we find a positive and significant effect in Argentina and Bolivia. In the former
country, the share of RnD to third party to sales is 0.2% higher in the adopters group, while
for the latter country the effect is around 1.1%. Our results thus show that CSR can boost
technological transfer to developing countries, so that our fifth hypothesis seems to be
supported. We should note that, in Colombia, Ecuador and Mexico, we fail to find any
significant effect in both panel A and B. However, the control groups are very small and this
is likely to have affected our results.

We now summarise our results by country. In Argentina, CSR has a positive and significant
impact on firms’ innovativeness and technological transfer. In Bolivia, we find a positive
effect on firms' turnover, labour productivity, innovativeness, as well as technological
transfer. In Chile, we do not find any significant effect on any of the variables analysed. In
Colombia, CSR has a positive and significant impact on both labour productivity and
innovation activities. In Ecuador, CSR firms have significantly higher turnover but there is no
discernible effect on innovation activities. In Mexico, we only find a significant effect on
firms' innovativeness and product differentiation.
Overall, our empirical analysis provides support for the hypotheses formulated in Section two,
but with great variability across countries. Interestingly, poorer countries, such as Bolivia and
Colombia, display the highest numbers of links between CSR and the outcome variables
analysed. Here we find scope for a sizeable effect of CSR on firms' innovativeness, turnover,
as well as labour productivity. Moreover, the strongest relationship between conscious
business operation and innovation is found in the two largest countries analysed: Mexico and
Argentina.
27
Thus, our matching exercise shows that firms that engage in environmental or community
projects never underperform firms that do not adopt such practices. The advocates of CSR
claim that responsible firms’ behaviour, towards both shareholders and stakeholders, is
essential to compete in the global market. Our results suggest that corporate goals, such as
productivity, sales and innovation, are compatible with conscious operations.
6. Diagnostic Tests
We can conjecture that, in many instances, insignificant results are driven by the small
samples created in the matching process. In order to assess whether the quality of the
matching is poor, and therefore whether the results are biased, we conducted two common
diagnostic tests in the context of PSM.
The first test is known as the balancing propensity (of matched firms, in this specific case).
In particular, following Rosenbaum and Rubin (1985), we employed the t-test to assess the
equality of the mean of each covariate between the treatment and comparison groups. This
diagnostic test therefore enabled us to check whether the observations with the same
propensity scores had the same distribution of observable covariates or, more technically,
whether the propensity score was an adequate balancing score. The results reported in Tables
A1-A3 (in the Appendix) show that, after matching, in 91% of cases the covariates of the
treated and untreated groups were similar, indicating that the quality of the matching was
good. Thus, we are confident that our exercise ensured an adequate "like-for-like
comparison".
The second diagnostic test is the propensity score histogram (of the treated and untreated
firms, in this specific case) developed by Yang and Mallik (2010). This graph helps in
assessing the quantity of matched and unmatched firms within a given number of intervals of
28
the propensity score range. Thus, this diagnostic is useful for testing the common support
hypothesis. Figures A1-E6 (in the Appendix) show that most of the observations in the
treated group could find matched firms in the untreated group with a similar propensity score.
Table A4 summarises the number of observations on and off support for each matching
exercise and country. This robustness check shows that for what concerns sales, sales per
employee and RnD (measured as a dummy variable), Ecuador has the highest share of off-
support observations, respectively 39% and 44%. The results for total RnD to sales and RnD
to third party show that both Ecuador and Colombia have high shares of off-support
observations. For conciseness, we only report this check for the Kernel matching, but the use
of other algorithms leads to similar results. It is not surprising that when we have a high share
of off-support observations, the matching exercise yields insignificant results.
To sum up, the t-test of covariate balancing after matching and propensity score histogram
analysis demonstrates that the quality of matching is efficient.
7. Conclusions
Attention to the social and environmental roles of firms is not new. However, in the past
decade there has been renewed interest in such issues. In the context of globalisation, firms
are increasingly expected to play a positive role in society and thus contribute to sustainable
development (Kolk and Tolder, 2010; Lozano, 2011). The empirical evidence on the link
between responsible behaviour and firms’ performance shows mixed results. Moreover,
existing research on CSR remains focused on developed economies, and there is scant
evidence on the extent and the type of CSR practices adopted in emerging markets.
In this paper, we have employed the firm-level data collected by the 2006 World Bank
Enterprise Surveys (WEBS) on Bolivia, Argentina, Chile, Colombia, Mexico and Ecuador,
and we have adopted PSM techniques to assess the causal relationship between CSR and firm
performance. In particular, in order to highlight the peculiarities of business dynamics in

29
developing countries, as well as to overcome data limitations, we have formulated five
distinct theoretical hypotheses on the CSR/performance link, and we have examined the
causal effects of socially responsible practices on firm turnover, labour productivity,
innovativeness, product differentiation, and technological transfer.
Overall, our results provide supportive evidence for the theoretical hypotheses that we have
formulated. They thus suggest that corporate goals are compatible with conscious operations
in developing countries. However, the results tend to vary across countries and an interesting
pattern emerges from our analysis: the strongest relationship between conscious business
operations and innovativeness is found in the two largest middle-income countries analysed,
namely Mexico and Argentina. In poorer countries, such as Bolivia and Colombia, we find
that CSR has a positive and significant impact on firms’ turnover, labour productivity, as well
as innovativeness. Finally, no effect is found in Chile, the most developed country in our
sample.
We can speculate that the positive effects of CSR depend on the country’s stage of
industrialisation. In particular, our analysis suggests that the less industrialised the economy,
the wider the scope of CSR as a development booster. This may be related to the lower costs
associated with imitation rather than innovation, as well as to the greater efficiency of more
recent vintages of capital. As countries industrialise and begin to close the technological gap
with technologically advanced economies, CSR fosters innovative activities and, most
probably, it directs such technological advancement towards high international standards.
Finally, once the country has industrialised, the developmental advantages of backwardness
related to CSR disappear, although CSR can still play a very important role, in particular as a
strategic factor.
The relationship among conscious business operations, firms’ performance, and the country’s
level of development has not been directly tested in this paper. However, this opens up an
30
interesting line of research. Further, it would be of extreme importance to assess the role that
national policies play in shaping the relationship between CSR and firm performance (see for
instance: Sobczak and Coelho Martins, 2010; Midttun et al. 2006). Narrative evidence
suggests that the extent to which Latin American governments have actively promoted CSR
varies across countries and sectors. In the majority of the cases, only few industries, such as
the extractive one, and big companies have been targeted. Last but not the least, more
research is required on what is meant by CSR in developing countries and what is its most
suitable categorization (McIntyre et al. 2015, Schmidheiny, 2006 and Moir 2001).
As for this study, its policy implications are of great relevance. In particular, it seems
advisable that firms in least developed economies adopt CSR practices. Consequently,
governments in emerging countries as well as international organisations should provide
meaningful incentives for CSR adoption.
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Table 1: CSR adoption, range of activities and perceived impact
Argentina Bolivia Chile Colombia Ecuador Mexico

CSR Adoption
The firm has 65.83 77.84 75.12 63.69 78.59 44.38
written/oral CSR
policies
Observations 641 361 623 633 355 1105
Environmental CSR
The firm has an energy 39.07 47.53 47.32 45.81 63.16 56.94
use optimization program
The firm has an water 33.75 52.88 39.81 50.4 64.54 48.38
use optimization program
The firm has recycling 33.28 38.95 43.06 63.03 59.62 36.47
program
Use any standardized 53.2 46.69 48.89 40.63 63.97 39.43
water and air pollution

control system?
CSR Environment* 67.45 77.26 73.23 79.78 87.26 70.15
Community CSR
The firm has a community 46.39 53.95 45.37 39.65 55.52 22.54
support program
Labour CSR
Have explicit policy 6.34 13.7 7.13 6.8 18.01 12.71
about hiring women or
handicapped persons
Have programs supporting 11.2 23.22 15.61 20.48 28.89 11.32
balance between family
and work
CSR Labour** 14.29 29.32 18.82 24.13 37.22 20.49
External Pressures and Perceived impact
Receive pressure to be 13.34 23.16 18.08 11.85 25.14 5.7
socially/environmentally
responsible
Being socially 59.95 78.21 67.9 81.33 81.72 86.34
responsible has a
positive effect on the
firm competitiveness
*CSR Environment takes value 1 if the firm engages in one of the environmental practices surveyed.
** CSR Labour takes value 1 if the firm has answered yes to one of the two questions on labour
practices.
Table 2: Simultaneous CSR Practices
Argentina Bolivia
CSR-Labour CSR-Social CSR-Labour CSR-Social
CSR-Environment 0 1 0 1 0 1 0 1
0 142 57 4 6 45 22 12 4
% 45.81% 24.36% 13.33% 10% 33.58% 17.89% 35.29% 5.56%
1 168 177 26 54 89 101 22 68
% 54.19% 75.64% 86.67% 90% 66.42% 82.11% 64.71% 94.44%
Tot 310 234 30 60 134 123 34 72
Observations
Chile Colombia
0 112 40 7 9 92 17 9 7
% 37.58% 19.51% 16.28% 12% 29.77% 10.12% 12.86% 8.64%
1 186 165 36 66 217 151 61 74
% 62.42% 80.49% 83.72% 88% 70.23 89.88% 87.14 91.36%
Tot 298 205 43 75 309 168 70 81
Observations
Ecuador Mexico
0 18 17 7 3 261 16 36 3
% 14.88% 16.19% 17.95% 3.16% 38.33% 9.58% 25.35% 3.90%
1 103 88 32 92 420 151 106 74
% 85.12% 83.81% 82.05% 96.84% 61.67% 90.42% 74.65% 96.10%
Tot 121 105 39 95 681 167 142 77
Observations
Notes: See Table 1 for the definitions of CSR-Environment and CSR-Labour. CSR-Social takes value
1 if the firm has a community support project.
Table 3: Variables' description
Variable Description
Sales Last complete fiscal year’s total annual sales
CSR Dummy variable equal to 1 if the firm engages in AT LEAST one CSR practice
Foreign Dummy variable equal to 1 if the foreign ownership is greater than 10%
Export % of sales exported directly and indirectly
RnD Dummy variable equal to 1 if the firm invested in RnD within the
establishment or through a third party
RnDSales Share of total RnD to sales
RnDExternal Share of RnD through a third party to sales
Age firm age in 2006

Size1 Dummy variable equal to 1 for small size firms (5-19 employees)
Size2 Dummy variable equal to 1 for medium size firms (20-99 employees)
Size3 Dummy variable equal to 1 for large size firms (>99 employees)
Female owners Dummy variable equal to 1 if any of the principal owners are female
Skilled/Unskilled Ratio of skilled to unskilled workers
L
Capital Net book Value of machinery, vehicles and equipment
Labour Number of full-time permanent workers at the end of last fiscal year
Industry dummies Equal to 1 if the firm pertains to a certain industry (i.e. Food, Clothes,
Textiles, Machinery, Chemicals and Other Manufacturing)
CSR Dummy variable equal to 1 if the firm engages at least in one CSR activity
(i.e. Environmental, labour or social).
CSR Environment Dummy variable equal to 1 if the firm engages in one of the environmental
practices surveyed.
CSR Labour Dummy variable equal to 1 if the firm has answered yes to one of the two
questions on labour practices.
CSR Social Dummy variable equal to 1 if the firm has a community support project.
Table 4: Firms' characteristics: CSR adopters and non-adopters
Argentina Bolivia Chile
CSR No Proporti CSR No Proporti CSR No Proporti
CSR on/t- CSR on/t- CSR on/t-
test (p- test (p- test (p-
value) value) value)
Sales per 11.65 11.4 .0479 11.2 10. .096 16.88 16.62 .072
employee 6 6 86
Sales 15551 1236 .022 2384 218 .0821 117863 14426 .647
777 229 038 412 3728 476
Foreign .123 .028 .001 .102 .08 .776 .091 .017 .008
8
Export 14.6 6.68 .002 11.6 16. .239 10.39 3.919 .005
5 82
RnD .561 .288 .000 .476 .17 .002 .365 .205 .001
7
RnDSales .0074 .002 0.086 .013 .00 0.537 .0046 .0058 .719
09 73 638
RnDExternal .0288 .020 0.086 .036 .07 0.055 .3561 .0247 .710
50 53 949
Age 33.74 26.0 .001 22.6 15. .010 30.55 25.9 .036
2 1 86
Size1 .361 .605 .000 .496 .6 .195 .257 .482 .000
Size2 .416 .336 .279 .347 .33 .848 .465 .428 .474
3
Size3 .222 .028 .000 .155 .06 .113 .276 .089 .000
6
Capital 58605 2073 .079 1997 284 .342 814671 32058 .272
64 98 100 829 6 8
Labor 192 26.3 .0320 54.5 22. .071 136.33 37.95 .013
1 64
Female .341 .366 .586 .436 .51 .347 .375 .432 .276
owners 1
Skilled/uns 2.46 2.12 .74 1.57 1.8 .616 1.40 2.11 .032
killed L 0
Food .303 .077 .000 .354 .2 .040 .261 .187 .100
Clothes .138 .33 .000 .282 .66 .000 .099 .169 .031
6
Textile .174 .204 .4182 .180 .02 .006 .059 .160 .003
2
Machinery .178 .225 .2084 .059 .02 .308 .055 .035 .395
2
Chemical .109 .007 .0001 .124 .08 .494 .129 .053 .022
8
Other .0952 .154 .043 n/a n/a n/a n/a n/a n/a
Manufacturi 9
ng
Colombia Ecuador Mexico
CSR No Proporti CSR No Proporti CSR No Proporti
CSR on/t- CSR on/t- CSR on/t-
test (p- test (p- test (p-
value) value) value)
Sales per 17.57 17.2 .003 10.2 9.3 .0026 12.38 12.04 .001
employee 4 8 4
Sales 36126 4277 .087 226 16 .092 312865 77652 .052
62 59 80 8
Foreign .0241 .010 .425 .125 .16 .608 .104 .026 .001
6
Export 9.24 8.68 .806 8.57 1.1 .077 8.42 .498 .000
1
RnD .4935 .164 .000 .504 .22 .019 .268 .022 .000
8 2
RnDSales .0075 .000 0.308 .006 .00 0.695 .006 .001 .709
57 1 01
RnDExternal .0286 .035 0.655 .028 .02 0.736 .0424 .007 .689
03 8 07
Age 19.13 11.3 .000 24.3 17. .069 20.8 15.5 .000
8 9 94
Size1 .491 .663 .002 .402 .66 .026 .408 .716 .000
6
Size2 .402 .293 .047 .277 .34 .579 .326 .237 .006
1
Size3 .105 .043 .061 .256 .05 .053 .264 .045 .000
5
Capital 17195 2100 .279 61 11 .320 255981 69120 .041
08 68 1 0
Labor 69.48 18.4 .057 80.7 20. .126 125 23 .000
7 5 94
Female .532 .510 .824 .342 .27 .573 .248 .235 .663
owners 7
Skilled/uns 1.35 1.20 .700 1.69 1.1 .555 442 103 .056
killed L 9
Food .257 .163 .050 .294 .22 .510 .135 .145 .689
2
Clothes .256 .358 .040 .072 .05 .781 .120 .210 .003
5
Textile .207 .358 .001 .064 .05 .884 .135 .157 .338
5
Machinery .276 .119 .001 .005 0 .745 .230 .149 .005
Chemical .001 0 .679 .274 .11 .127 .180 .065 .000
1
Other n/a n/a n/a .5 .26 .030 n/a n/a n/a
Manufacturi 5
ng
Table 5: Correlation Between CSR and Firms Characteristics
CSR Argentina Bolivia Chile Colombia Equador Mexico

Sales per employee
0.0936 0.0928 0.0197 0.0592 0.0848 0.0234
Sales
0.0911 0.1659 0.0705 0.1087 0.1784 0.1528
Foreign
0.1334 0.0436 0.1102 0.0373 0.0061 0.1256
Export
0.1502 -0.066 0.1191 0.0015 0.0931 0.1646
RnD
0.2316 0.1531 0.1375 0.2389 0.1584 0.2751
Age 0.1258 0.1118 0.077 0.1658 0.0915 0.1494
Size1 -0.2061 -0.0896 -0.1732 -0.1161 -0.1464 -0.2677
Size2 0.0393 0.0115 0.0051 0.0758 0.0565 0.0664
Size3 0.2142 0.112 0.1784 0.0717 0.1054 0.2521
Skilled/unskilled L
0.0182 -0.0851 -0.1073 0.0297 0.0105 0.1262
Capital 0.2891 0.0979 0.1681 0.1057 0.1386 0.1955
Labor 0.0862 0.1135 0.1055 0.0786 0.0912 0.1415
Food
0.2132 0.1451 0.0799 0.0808 0.0546 -0.0112
Clothes
-0.1976 -0.3234 -0.1116 -0.0767 -0.0084 -0.096
Chemical
0.1533 0.1672 0.0987 0.1288 0.0901 0.156
Machinery
-0.0513 0.0698 0.0395 . 0.0204 0.0862
Other Manufacturing
-0.0736 0.0193 -0.0148 . -0.075 .

Table 6 PSM: CSR, Sales Revenue and Sales per Employees
Panel A: CSR & Sales Revenue Panel B: CSR &Sales per employees
Matching ATT t- Treated Control ATT t- Treated Control
Estimator ratio ratio
ATT ATT
Argentina
Kernel -415.65 -0.64 313 75 -467.45 -0.08 313 75
3 Nearest -575.30 -0.84 313 75 -342.77 -0.06 313 75
Neighbours
Radius -331.92 -0.54 313 75 -9.50 -0.00 313 75
Bolivia
Kernel 1764.08 2.43 199 27 19808.16 3.60 199 27
3 Nearest 1706.84 2.35 199 27 19691.11 3.57 199 27
Neighbours
Radius 1783.06 2.46 199 27 19308.91 3.58 199 27
Chile
Kernel -17390.56 -0.70 335 59 - -0.75 335 59
665048.08
3 Nearest -34575.47 -1.25 335 59 - -1.29 335 59
Neighbours 1276064.3
Radius -18786.60 -0.8 335 59 - -0.86 335 59
722818.44
Colombia
Kernel 860.85 1.02 182 17 20196.92 2.18 182 17
3 Nearest 1277.56 2.03 182 17 20487.94 2.49 182 17

Neighbours
Radius 1354.09 1.80 182 17 20597.08 2.34 182 17
Ecuador
Kernel 0.657 2.03 230 10 8.37 1.46 230 10
3 Nearest 0.635 1.95 230 10 8.28 1.40 230 10
Neighbours
Radius 0.673 2.08 230 10 8.03 1.45 230 10
Mexico
Kernel 689.97 1.49 536 187 11130.93 1.34 536 187
3 Nearest 740.72 1.56 536 187 12110.10 1.4 536 187
Neighbours
Radius 700.67 1.54 536 187 11580.43 1.45 536 187
In panel A the outcome variable is 2006 US dollar in thousands. Matching based on
ownership, age, export intensity, RnD, capital and employment. In Panel B the outcome
variable is sales per employees in 2006 US dollar. Matching is based on ownership,
age, export intensity, RnD, capital and employment.
Table 7 PSM: CSR and RnD
Matching ATT t-ratio Treated Control

Estimator ATT
Argentina
Kernel .2220 3.22 315 76
3 Nearest .2585 3.29 315 76
Neighbours
Radius .2202 3.35 315 76
Bolivia
Kernel .2030 2.39 202 32
3 Nearest .2362 2.58 202 32
Neighbours
Radius .2070 2.5 202 32
Chile
Kernel .0040 0.06 339 60
3 Nearest .0208 0.28 339 60
Neighbours
Radius .0424 0.66 339 60
Colombia
Kernel 3417 3.61 182 17
3 Nearest .3285 3.21 182 17
Neighbours
Radius .3379 3.61 182 17
Ecuador
Kernel .20489 1.55 232 11

3 Nearest .1827 1.32 232 11
Neighbours
Radius .22947 1.77 232 11
Mexico
Kernel .2309 9.47 548 191
3 Nearest .2270 8.80 548 191
Neighbours
Radius .2319 9.71 548 191
The outcome variable RnD is a dummy variable which takes value 1 if Firm Invested in
RND, within the establishment or through a third party. Matching is based on firm age,
export orientation, capital and employment.
Table 8 PSM: CSR and Total RnD to sales ratio and RnD to Third party to sales ratio.
Panel A: CSR and RnD Panel B: CSR and RnD to third Party
Matching ATT t- Treated Control ATT t-ratio Treated Control
Estimator ratio ATT
ATT
Argentina
Kernel .03153 1.36 151 19 .00281 2.73 160 20
3 Nearest .03153 1.22 151 19 .00284 2.66 160 20
Neighbours
Radius .03153 0.98 151 19 .00754 2.72 160 20
Bolivia
Kernel .04883 1.06 88 11 .01181 2.91 90 5
3 Nearest .04883 1.15 88 11 .01181 2.91 90 5
Neighbours
Radius .04883 1.08 88 11 .01181 2.91 90 5
Chile
Kernel .86167 1.00 89 10 -.0069 -0.84 107 13
3 Nearest .8616 0.99 89 10 -.0074 -0.85 107 13
Neighbours
Radius .86167 1.00 89 10 -.0059 -0.73 107 13
Colombia
Kernel .03460 -0.01 90 2 .0152 1.03 90 2
3 Nearest .03460 -0.01 90 2 .0152 1.03 90 2
Neighbours
Radius .0346 -0.01 90 2 .01523 1.03 90 2

Ecuador
Kernel .0412 1.73 123 3 .0175 1.16 113 2
3 Nearest .0412 1.74 123 3 .0175 1.16 113 2
Neighbours
Radius .0412 1.74 123 3 .0175 1.16 113 2
Mexico
Kernel .03584 1.85 91 3 .00402 1.54 101 3
3 Nearest .03584 2.53 91 3 .00684 1.74 101 3
Neighbours
Radius .03584 2.53 91 3 .00684 1.74 101 3
The outcome variable in panel A is the share of total RnD to sales. The outcome
variable in panel B is the share to RnD to third Party to Sales. In both panels
matching is based on firm age, export orientation, capital and employment.
CSR and Firm Performance in Developing Countries
Appendix
Table A1- Balancing Propensities of Matched Firms- CSR, Sales and Sales per Employees
Sales Sales per Employees
Variables Mean Mean t-test t t-test Mean Mean t-test t-test
Treated Untreated p>|t| Treated Untreated t p>|t|
Argentina- Kernel
Foreign .04186 .05602 -0.68 .497 .05149 .05602 -.68 .497
Age 30.842 30.379 .018 .856 30.748 30.379 .18 .856
Export 12.428 12.051 .16 .871 12.428 12.051 .16 .871
RND .49767 .46067 .77 .444 .49767 .46067 .77 .444
Size1 .42791 .43678 -.19 .853 42791 .43678 -.19 .853
Size2 .52093 .47401 .97 .332 .52093 .47401 .97 .332
Log 12.252 12.048 1.39 .167 12.252 12.048 1.39 .167
Capital
Log Labor 3.223 3.2727 -.49 .627 3.223 3.2727 -.49 .627
Argentina-3neig.
Foreign .04186 0.07287 -1.38 0.168 .04186 .07287 -1.38 .168
Age 30.842 32.836 -.75 0.452 38.842 32.836 -0.75 .452
Export 12.428 12.56 -.06 0.954 12.428 12.56 -0.06 .954
RND .49767 .44496 1.09 0.275 .49767 .44496 1.09 .275

Size1 .42791 .42326 .1 0.923 .42791 .42326 .10 .923
Size2 .52093 .48527 .74 0.461 .52093 .48527 .74 .461
Log 12.252 12.055 1.33 0.184 12.252 12.055 1.33 .184
Capital
Log Labor 3.223 3.3062 -0.81 0.418 3.223 3.3062 -0.81 .418
Argentina- Radius
Foreign .4186 .04388 -0.1 0.918 .04186 .07287 -1.38 .168
Age 30.842 28.982 .77 0.441 38.842 32.836 -0.75 .452
Export 12.428 12.694 -.11 0.910 12.428 12.56 -0.06 .954
RND .49767 .46015 .78 0.437 .49767 .44496 1.09 .275
Size1 .42791 .47042 -.88 0.377 .42791 .42326 .10 .923
Size2 .52093 .44418 1.59 0.112 .52093 .48527 .74 .461
Log 12.252 11.989 1.79 0.075 12.252 12.055 1.33 .184
Capital
Log Labor 3.223 3.175 0.47 0.637 3.223 3.3062 -0.81 .418
Bolivia-Kernel
Foreign .10204 .12624 -0.84 0.401 .07874 .05445 .77 .440
Age 20.208 20.612 -0.34 0.736 20.331 20.15 .12 .903
Export 11.327 13.753 -0.99 0.321 10.827 11.677 -.27 .784
RND .46122 .4591 0.06 0.962 .40945 .41495 -.09 .929
Size1 .49388 .63792 -3.24 0.001 .51969 .53638 -.27 .791
Size2 .37143 .27479 2.29 0.022 .35433 .33284 .36 .720
Log 13.131 12.521 2.90 0.004 14.308 14.32 -.05 .958
Capital
Log Labor 3.1324 2.6654 4.84 0.000 3.0837 3.0564 .23 .821
Bolivia-3 nei.
Foreign 0.08805 .10063 -.38 0.702 .07813 .05208 .84 .400
Age 19.597 18.325 .92 0.357 20.242 21.667 -.99 .321
Export 12.138 13.325 -.39 0.693 11.523 12.581 -.33 .723
RND .37107 .3543 .31 0.757 .40625 .46875 -1.01 .315
Size1 .55346 .61635 -1.14 0.256 .51563 .51042 .08 .934
Size2 .33333 .30398 .56 0.576 .35938 .32813 .52 .600
Log 12.901 12.815 .36 0.720 14.275 14.418 -.64 .520
Capital
Log Labor 2.93 2.8557 .68 0.498 3.0776 3.116 -.31 .755
Bolivia-Radius
Foreign .0885 .10799 -.60 0.551 .7813 .05208 .84 .400
Age 19.597 18.39 .88 0.378 20.242 21.667 -.99 .321
Export 12.138 14.418 -.73 0.465 11.523 12.581 -.33 .743
RND .37107 .37201 -.02 0.986 .40625 .46875 -1.01 .315
Size1 .55346 .59344 -.72 0.473 .51563 .51042 .08 .934
Size2 .33333 .29314 .77 0.441 .35938 .32813 .52 .600
Log 12.901 12.735 .69 0.489 14.275 14.418 -.64 .520
Capital
Log Labor 2.93 2.8761 .48 0.632 3.0776 3.116 -.31 .755
Chile-Kernel
Foreign 0.05147 .0124 0.01 .990 .04018 .04488 -0.25 .806
Age 29.25 27.027 1.56 .119 28.304 27.037 .82 .412
Export 2.6985 2.9253 -.37 .710 2.5491 2.4558 .14 .887
RND .3125 .33214 -.50 .620 .29018 .29549 -.12 .902
Size1 .30515 .29797 0.18 .856 .3125 .31225 .01 .996
Size2 .50368 .51247 -.20 .838 .51339 .54478 -.66 .507
Log 17.973 17.844 0.79 .427 18.869 18.627 1.20 .232
Capital
Log Labor 3.5578 3.5126 0.53 .599 3.4836 3.4354 .54 .590
Chile-3. neig
Foreign .05147 .09681 -2.02 0.044 .04018 .04613 -.31 .757
Age 29.25 26.904 1.62 0.106 28.304 28.339 -.01 .983
Export 2.6985 2.1875 .88 0.377 2.5491 2.2039 .54 .591
RND .3125 .27328 1.00 0.316 .29018 .30506 -.34 .731
Size1 .30515 .28431 0.53 0.595 .3125 .30208 .24 .812
Size2 .50368 .54534 -.97 0.331 .51339 .54464 -.66 .509
Log 17.973 17.947 .17 0.868 18.869 18.73 .86 .393
Capital
Log Labor 3.5578 3.5083 .58 0.559 3.4836 3.4467 .41 .683
Chile-Radius
Foreign .05147 .03104 1.20 0.232 .04018 .04613 -.31 .757
Age 29.25 26.646 1.84 0.067 28.304 28.339 -.02 .983
Export 2.6985 1.8984 1.50 0.135 2.5491 2.2039 .54 .591
RND .3125 .29475 0.45 0.653 .29018 .30506 -.34 .731
Size1 .3015 .32444 -0.48 0.629 .3125 .30208 .24 .812
Size2 .50368 .56024 -1.38 0.187 .51339 .54464 -.66 .509
Log 17.973 17.7 1.68 0.094 18.869 18.73 .86 .393
Capital
Log Labor 3.5578 3.3673 2.33 0.020 3.4836 3.4467 .41 .683
Colombia-Kernel
Foreign .04425 0 2.28 0.024 .04386 0 2.28 .024
Age 19.611 17.939 1.14 0.257 20.114 22.021 -1.06 .291
Export 8.4602 8.5979 -0.06 0.955 8.886 7.0419 .78 .438
RND .22124 .21765 0.06 0.948 .24561 .21932 .47 .640
Size1 .54867 .55567 -0.11 0.916 .51754 .56916 -.78 .436
Size2 .32743 .33793 -0.17 0.868 .32456 .32823 -.06 .953
Log 19.784 19.869 -0.51 0.607 19.865 .19.994 -.72 .470
Capital
Log Labor 2.9732 2.9679 -0.3 0.974 3.0909 2.9863 .63 .528
Colombia-3 nei.
Foreign .04425 0 2.28 0.024 .04386 0 2.28 .024
Age 19.611 17.496 1.46 0.146 20.114 21.006 -.49 .624
Export 8.4602 8.8171 -0.15 0.881 8.886 6.0526 1.22 .223
RND .22124 .19469 0.49 0.625 .24561 .23392 .21 .837
Size1 .54867 .52507 0.35 0.723 .51754 .60234 -1.29 .199
Size2 .32743 .38643 -0.92 0.357 .32456 .31579 .14 .888
Log 19.784 19.915 -0.80 0.426 19.865 19.966 -.57 .571
Capital
Log Labor 2.9732 2.9718 0.01 0.993 3.0909 2.9147 1.07 .285
Colombia-Radius
Foreign .04425 0 2.28 0.024 .04386 0 2.28 0.024
Age 19.611 18.963 0.42 0.674 20.114 21.006 -.49 .624
Export 8.4602 6.17 0.98 0.327 8.886 6.0526 1.22 .223
RND .22124 .16447 1.08 0.281 .24561 .23392 .21 .837
Size1 .54867 .66761 -1.84 0.068 .51754 .60234 -1.29 .199
Size2 .32743 .25591 1.18 0.239 .32456 .31579 .14 .888
Log 19.784 19.5 1.7 0.090 19.865 19.966 -.57 .571
Capital
Log Labor 2.9732 2.7771 1.28 0.202 3.0909 2.9147 1.07 .285
Ecuador-Kernel
Foreign .09412 .09176 0.05 0.958 .12299 .08311 1.27 .206
Age 17.141 15.8 0.77 0.441 20.342 19.759 .51 .609
Export 1.6824 1.6942 -0.02 0.988 2.4973 2.4185 .14 .892
RND .18824 .13829 0.88 0.381 .45455 .42995 .48 .633
Size1 .68235 .64836 0.47 0.641 .43316 .46727 -.66 .509
Size2 .31765 .35164 -0.47 0.641 .37433 .34921 .50 .614
Log 11.175 11.248 0.23 0.817 12.056 11.811 1.08 .279
Capital
Log Labor 2.8567 2.8231 0.29 0.771 3.3067 3.2874 .18 .857
Ecuador-3 Nei
Foreign .09412 .09176 0.05 0.958 .12299 .04813 2.60 .010
Age 17.141 15.8 0.77 0.441 20.342 19.683 .58 .561
Export 1.6824 1.6942 -0.02 0.988 2.4973 2.4421 .10 .924
RND .18824 .13829 0.88 0.381 .45455 .41355 .80 .425
Size1 .68235 .64836 0.47 0.641 .43316 .43672 -.07 .945
Size2 .31765 .35164 -0.47 0.641 .37433 .38503 -.21 .832
Log 11.175 11.248 0.23 0.817 12.056 11.899 .71 .479
Capital
Log Labor 2.8567 2.8231 0.29 0.771 3.3067 3.3398 -.31 .756
Ecuador- Radius
Foreign .09412 .15601 -1.22 0.225 .12299 .04813 2.60 .010
Age 17.141 16.028 0.64 0.524 20.342 19.683 .58 .561
Export 1.6824 1.6655 0.02 0.983 2.4973 2.4421 .10 .924
RND .18824 .16213 0.45 0.657 .45455 .41355 .80 .425
Size1 .68235 .65864 0.333 0.744 .43316 .43672 -.07 .945
Size2 .31765 .34136 -0.33 0.744 .37433 .38503 -.21 .832
Log 11.175 11.031 0.47 0.640 12.056 11.899 -.71 .479
Capital
Log Labor 2.8567 2.759 0.54 0.590 3.3067 3.3398 -.31 .756
Mexico-Kernel
Foreign .07407 .04099 2.09 0.037 .11778 .04871 3.70 .000
Age 19.595 19.985 -0.32 0.747 19.686 19.051 .57 .570
Export 3.4352 2.9417 0.63 0.528 7.7113 4.3549 2.49 .013
RND .20602 .17802 1.04 0.297 .2194 .23416 -.52 .605
Size1 .44213 .4133 0.86 0.392 .40647 .3986 .24 .814
Size2 .41204 .41373 -0.05 0.960 .40878 .42195 -.39 .694
Log 14.59 14.548 0.30 0.762 14.736 14.855 -.81 .404
Capital
Log Labor 3.2123 3.3225 -1.43 0.152 3.3745 3.3528 .27 .789
Mexico-3 neig.
2
Foreign .07407 .01543 4.21 0.000 .11778 .02309 5.53 .000
Age 19.595 21.427 -1.51 0.131 19.686 19.46 .22 .827
Export 3.4352 3.3603 0.09 0.925 7.7113 .54042 1.62 .105
RND .20602 .18364 0.83 0.407 .2194 .24557 -.91 .363
Size1 .44213 .4267 0.46 0.648 .40647 .40724 -0.02 .982
Size2 .41204 .41358 -0.05 0.963 .40878 .44111 -.96 .336
Log 14.59 14.428 1.16 0.246 14.736 14.808 -.49 .622
Capital
Log Labor 3.2123 3.3074 -1.23 0.219 3.3745 3.3505 .30 .766
Mexico-Radius
Foreign .07407 .05254 1.30 0.194 .11778 .11778 5.53 .000
Age 19.595 19.632 -0.03 0.975 19.686 19.686 .22 .827
Export 3.4352 3.2282 0.26 0.794 7.7113 7.7113 1.62 .105
RND .20602 .11614 3.62 0.000 .2194 .2194 -.91 .363
Size1 .44213 .395 1.40 0.161 .40647 .40647 -.01 .982
Size2 .41204 .41625 -0.13 0.900 .40878 .40878 -.96 .336
Log 14.59 14.595 -0.04 0.972 14.736 14.736 -.49 .622
Capital
Log Labor 3.2123 3.3621 -1.92 0.055 3.3745 3.3745 -.30 .766
Table A2 - Balancing Propensities of Matched Firms- CSR and RnD (dummy variable)
RnD
Variables Mean Mean t-test t t-test
Treated Untreated p>|t|
Argentina- Kernel
Age 30.376 28.997 .62 .536
Export 12.151 13.58 -.66 .510
Log Labor 3.333 3.3272 .06 .951
Log Capital 12.335 12.19 1.02 .307
Argentina-3neig.
Age 30.376 27.446 1.38 .167
Export 12.151 12.842 -.32 .749
Log Labor 3.333 3.4054 -.70 .485
Log Capital 12.335 12.209 .89 .375
Argentina- Radius
Age 30,376 29.58 .36 .721
Export 12.151 11.711 .21 .833
Log Labor 3.333 3.2273 1.11 .268
Log Capital 12.335 12.065 1.97 .050
Bolivia-Kernel
Age 20.242 21.667 -.99 .321
Export 11.5623 12.581 -.33 .743
Log Labor 3.0776 3.116 -.31 .755
Log Capital 14.275 12.418 -.64 .520
Bolivia-3 nei.
Age 21 20.58 .27 .789
Export 11.153 16.176 -1.45 .149
Log Labor 3.0509 3.1586 -.89 .376
Log Capital 14.218 14.22 -.01 .991
Bolivia-Radius
Age 21 20.11 .58 .565
Export 11.153 13.227 -.65 .515
Log Labor 3.0509 2.928 1.06 .290
Log Capital 14.218 14.158 .28 .782
Chile-Kernel
Age 28.185 26.982 .81 .417
Export 3.084 2.6844 .59 .556
Log Labor 3.5257 3.5079 .21 .834
Log Capital 18.968 18.708 1.57 .116
Chile-3. neig
Age 28.185 27.713 .31 .754
Export 3.804 2.5532 .78 .438
Log Labor 3.5257 3.5863 -.72 .474
Log Capital 18.968 18.736 1.41 .160
Chile-Radius
Age 28.185 25.257 2.05 .041
Export 3.084 2.2557 1.29 .199
Log Labor 3.5257 3.3435 2.18 .030
Log Capital 18.968 18.619 2.10 .036
Colombia-Kernel
Age 18.797 18.689 .09 .927
3
Export 8.7991 8.2899 .23 .816
Log Labor 3.0082 2.8705 1.11 .266
Log Capital 19.696 19.614 .56 .573
Colombia-3 nei.
Age 18.797 19.326 -.44 .644
Export 8.7991 10.459 -.75 .452
Log Labor 3.0082 2.9595 .38 .702
Log Capital 19.696 19.938 -1.74 .084
Colombia-Radius
Age 18.797 18.641 0.14 .893
Export 8.7991 7.899 .41 .679
Log Labor 3.0082 2.7936 1.74 .082
Log Capital 19.696 19.541 1.09 .277
Ecuador-Kernel
Age 17.468 16.943 .46 .646
Export 1.3269 1.4972 -.38 .705
Log Labor 3.0571 2.911 1.54 .123
Log Capital 11.722 11.463 1.29 .197
Ecuador-3 Nei
Age 17.468 17.261 .18 .859
Export 1.3269 1.7308 -.88 .382
Log Labor 3.0571 2.925 1.39 .165
Log Capital 11.722 11.415 1.55 .123

Ecuador- Radius
Age 17.468 15.982 1.30 .193
Export 1.3269 1.2889 .09 .931
Log Labor 3.0571 2.8448 2.21 .028
Log Capital 11.722 11.272 2.17 .031
Mexico-Kernel
Age 19.8 19.461 .32 .752
Export 1.679 1.8348 -.33 .742
Log Labor 3.2827 3.261 .29 .770
Log Capital 14.622 14.471 1.14 .256
Mexico-3 neig.
Age 19.8 19.215 .55 .584
Export 1.679 1.3702 .72 .474
Log Labor 3.2827 3.3103 -.37 .714
Log Capital 14.622 14.422 1.52 .129
Mexico-Radius
Age 19.8 18.289 1.51 .132
Export 1.679 1.3664 .72 .475
Log Labor 3.2827 3.1829 1.38 .169
Log Capital 14.622 14.426 1.48 .139
Table A3- Balancing Propensities of Matched Firms- CSR, Total RnD and RnD to Third
Party
RnD/Sales RnD to Third Party/Sales
Variables Mean Mean t-test t t-test Mean Mean t-test t-test
Treated Untreated p>|t| Treated Untreated t p>|t|
Argentina- Kernel
Age 32.107 33.249 -.32 .747 32.537 33.133 -.47 .637
Export 19.652 14.161 1.57 .118 19.182 14.029 1.55 .122
Log Labor 3.52 3.5525 .20 .839 3.5575 3.5267 .23 .820
Log 12.872 12.516 1.80 .074 12.811 12.494 1.62 .106
Capital
Argentina-3neig.
Age 31.537 35.86 -1.02 .309 31.537 35.683 -1.18 .240
Export 19.652 14.185 1.57 .119 19.182 15.061 1.21 .228
Log Labor 3.58 3.6408 -.46 .649 3.5575 3.5867 -.22 .828
Log 12.872 12.417 2.34 .020 12.811 12.466 1.81 .071
Capital
Argentina- Radius
Age 32.107 32.228 -.04 .972 31.537 32.164 -.19 .848
Export 19.652 16.263 .92 .357 19.182 16.327 .81 .418
Log Labor 3.58 3.3988 1.36 .175 3.5575 3.3894 1.27 .206
Log 12.872 12.453 2.11 .036 12.811 12.456 1.82 .069
Capital
Bolivia-Kernel
4
Age 26.517 22.619 .94 .353 31.429 20.613 2.72 .010
Export 11.172 15.673 -.57 .569 14.952 14.365 .06 .951
Log Labor 2.8702 2.8811 -.04 .967 2.9774 2.7189 .86 .394
Log 14.065 14.048 .03 .973 14.16 13.706 1.14 .260
Capital
Bolivia-3 nei.
Age 25.857 21.533 1.22 .226 28.63 19.827 2.61 .012
Export 18.771 18.21 .07 .947 20.63 13.827 .75 .457
Log Labor 2.7766 2.7972 -.08 .934 2.7726 2.6701 .38 .703
Log 14.047 13.882 .37 .716 13.83 13.699 .32 .748
Capital
Bolivia-Radius
Age 27 21.978 1.33 .190 30.5 21.703 2.25 .030
Export 12.938 15.67 -.35 .725 14.273 17.499 -.34 .737
Log Labor 2.824 2.8325 -.03 .973 2.9468 2.8777 .23 .820
Log 13.999 13.978 .04 .967 13.887 13.895 -.02 .989
Capital
Chile-Kernel
Age 26.177 26.543 -.14 .890 26.177 26.543 -.14 .890
Export 3.6935 4.9493 -.82 .415 3.6935 4.9493 -.82 .415
Log Labor 3.9266 3.7938 .81 .419 3.9266 3.7938 .81 .419
Log 19.617 19.235 1.51 .134 19.617 19.235 1.51 .134
Capital
Chile-3. neig
Age 26.267 27.306 -.38 .702 26.177 27.14 -.36 .717
Export 3.75 4.75 -.64 .523 3.6935 4.5968 -.60 .549
Log Labor 3.9443 3.8258 .73 .429 3.9266 3.7988 .80 .424
Log 19.649 19.356 1.17 .244 19.617 19.351 .105 .296
Capital
Chile-Radius
Age 26.267 25.279 .36 .716 26.177 24.914 .48 .632
Export 3.75 4.8031 -.66 .508 3.6935 4.6021 -.59 .555
Log Labor 3.9443 3.7286 1.28 .202 3.9266 3.7071 1.33 .185
Log 19.649 19.205 1.79 .076 19.617 19.185 1.72 .088
Capital
Colombia-Kernel
Age 9.0909 14.546 -1.39 .181 9.0909 14.546 -1.39 .181
Export 6.8182 23.093 -2.01 .058 6.8182 23.093 -2.01 .058
Log Labor 2.5825 3.5264 -1.41 .175 2.5825 3.5264 -1.41 .175
Log 18.964 20.134 -2.82 .010 18.964 20.134 -2.82 .010
Capital
Colombia-3 nei.
Age 9.0909 14.5 -1.38 .184 9.0909 14.5 -1.38 .184
Export 6.8182 23 -2.00 .060 6.8182 23 -2.00 .060
Log Labor 2.5825 3.5191 -1.40 .178 2.5825 3.5191 -1.40 .178
Log 18.964 20.131 -2.82 .011 18.964 20.131 -2.82 .011
Capital
Colombia-Radius
Age 9.0909 14.5 -1.38 .184 9.0909 14.5 -1.38 .184
Export 6.8182 23 -2.00 .060 6.8182 23 -2.00 .060
Log Labor 2.5825 3.5194 -1.40 .178 2.5825 3.5194 -1.40 .178
Log 18.964 20.131 -2.82 .011 18.964 20.131 -2.82 .011
Capital
Ecuador-Kernel
Age 15.48 16.68 -.57 .570 16.44 16.685 -.11 .909
Export 2.24 3.3221 -.86 .395 1.84 3.3238 -1.21 .231
Log Labor 3.37 3.447 -.25 .804 3.3325 3.4455 -.38 .707
Log 12.057 12.742 -1.12 .270 12.044 12.738 -1.15 .258
Capital
Ecuador-3 Nei
Age 15.48 16.667 -.56 .577 16.44 16.667 -.11 .916
Export 2.24 3.3333 -.87 .391 1.84 3.3333 -1.22 .228
Log Labor 3.37 3.442 -.24 .811 3.3325 3.442 -.37 .710
Log 12.057 12.735 -1.11 .275 12.044 12.735 -1.14 .260
Capital
Ecuador- Radius
Age 15.48 16.667 -.56 .577 16.44 16.667 -.11 .916
Export 2.24 3.3333 -.87 .391 1.84 3.3333 -1.22 .228
Log Labor 3.37 3.442 -.24 .811 3.3325 3.442 -.37 .710
Log 12.057 12.735 -1.11 .275 12.044 12.735 -1.14 .260
Capital
Mexico-Kernel
Age 19.8 18.289 1.51 .132 23.253 17.734 2.60 .010
Export 1.679 1.3664 .72 .475 0 0 . .
Log Labor 3.2827 3.1829 1.38 .169 3.7094 4.2687 -3.68 .000
Log 14.622 14.426 1.48 .139 14.379 13.396 4.51 .000
5
Capital
Mexico-3 neig.
Age 19.8 18.289 1.51 .132 23.253 35.667 -3.60 .000
Export 1.679 1.3664 .72 .475 0 0 . .
Log Labor 3.2827 3.1829 1.38 .169 3.7094 3.6322 .43 .668
Log 14.622 14.426 1.48 .139 14.379 14.599 -.78 .434
Capital
Mexico-Radius
Age 19.8 18.289 1.51 .132 23.253 35.667 -3.60 .000
Export 1.679 1.3664 .72 .475 0 0 . .
Log Labor 3.2827 3.1829 1.38 .169 3.7094 3.6322 .43 .668
Log 14.622 14.426 1.48 .139 14.379 14.599 -.78 .434
Capital
CSR & Sales – Kernel - Table A1-A6
6
CSR & Sales per Employee-Tables B1-B6
7
CSR & RnD (Dummy Variable) – Tables C1-C6
8
CSR & RnD (Total RnD to Sales) – Tables D1-D6
9
CSR & RnD (Total RnD to Third Party to Sales) – Kernel- Tables E1-E6
10
Table A4: Propensity Score Histogram Share of Off Support Observations.

Sales Sales per Employee
Country On Off TOT % off On Off TOT % off
Argentina 308 80 388 20.6 308 80 388 20.6
Bolivia 210 16 226 7.1 210 16 226 7.1
Chile 330 64 394 16.2 330 64 394 16.2
Colombia 170 29 199 14.6 170 29 199 14.6
Ecuador 146 94 240 39.2 146 94 240 39.2
11
Mexico 600 123 723 17.0 600 123 723 17.0
Total RnD RnD dummy
Country On Off TOT % off On Off TOT % off
Argentina 137 47 184 25.5 321 70 391 17.9
Bolivia 72 24 96 25.0 214 20 234 8.5
Chile 86 30 116 25.9 384 51 399 12.8
Colombia 13 79 92 85.9 155 44 199 22.1
Ecuador 28 84 112 75.0 135 108 243 44.4

Mexico 97 12 109 11.0 652 87 739 11.8

RnD to 3rd Party to Sales
Country On Off TOT % off
Argentina 141 39 180 21.7
Bolivia 72 23 95 24.2
Chile 89 31 120 25.8
Colombia 13 79 92 85.9
Ecuador 28 87 115 75.7
Mexico 94 10 104 9.6
12
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Corporate Governance: The International Journal of Business in Society

Corporate Social Responsibility and Latin American firm performance

*Related content and download information correct at time of download.

REF: Corporate Social Responsibility and Latin American firm performance

Berliner and Prakash, 2014; and Moratis, 2015)

effects that developing countries' industrialisation is likely to have on their environments

as well as with sustainable development. Empirical research on developed countries has

provides non-consistent results.

CSR as well as the peculiarities of business dynamics in developing countries.

Matching techniques (henceforth PSM) to conduct a consistent assessment of the CSR/firm

performance nexus. 1 In particular, PSM enable us to adjust for observable differences in

adequate ‘like-for-like’ comparison possible.

as financial success. In particular, in order to highlight the peculiarities of business dynamics

in developing countries, as well as to overcome data limitations, we formulate five distinct

socially responsible practices on firm turnover, labour productivity, innovativeness, product

empirical evidence on the impact of CSR on firm performance.

common, followed by those aimed at supporting communities as well as workers. Moreover,

characteristics. In particular, such firms tend to be large, well-established, engaged in

Research and Development, and foreign owned.

compatible with conscious operations in developing countries. However, it should also be

in least developed economies.

and provides a preliminary analysis by considering some descriptive statistics. Finally we

relevant theoretical literature.

2.1 CSR in developing regions: coverage and evidence

nature, and it is often based on case studies.

with financial savings, environmental, social and product improvement.

related to apartheid, colonialism and corruption.

on Pakistan, and Kaufmann et al. (2004) on Thailand.

Research on CSR is mainly focused on developed countries, or on the activities of Western

multinational companies (MNC) in emerging markets (Muller and Kolk, 2008).

financial performance, the latter suggests the opposite.

by providing a better working environment (Turban and Greening, 1997); increasing

et al., 1985; Vance, 1975; Ullmann, 1985).

variables. Firm performance is usually associated with firm financial performance. It is

responsibility, and to a lesser extent environmental responsibility, is likely to have a positive

effect on firm performance.

which is a leading commercial magazine in Taiwan. Firm financial performance, instead, is

sense that it never has a significant and negative effect.

2.3 Broadening the concept of firm performance and testable hypotheses

definition of firm performance as financial success. Thus, in order to take developing

explore five dimensions of firm performance: firm turnover, labour productivity,

innovativeness, product differentiation, and technological transfer. For each dimension, we

the performance of firms in developing countries.

experience an increase in revenues, as prediceted by Jones (1995) or McWilliams and Siegel

(2010). These considerations lead to the following hypothesis:

Hypothesis 1: CSR has a positive impact on firms’ revenues.

Thus, our next hypothesis is:

Hypothesis 2: CSR has a positive impact on firms’ labour productivity.

RnD is motivated by the nature of technological progress in developing countries, which is

be fully clarified in the discussion of Hypothesis (5).

be conceived as new products. Thus, our testable hypothesis is:

Hypothesis 4: CSR has a positive impact on the level of product differentiation.

expenditures to sales ratio. Hence, our last hypothesis is:

measures of firm performance by using observational data (i.e. non-experimental data).

adoption as a function of firms’ characteristics. Formally:

ln y i = β 0 + β 1 ln( X i ) + β 2 CRS i + µ i (1)

process is of fundamental importance in order to adopt the right econometric techniques.

3.2 Propensity Score Matching

conditional on observed baseline covariates. Formally: ei = Pr(Zi = 1|Xi). The propensity

treatment assignment is "strongly ignorable". In particular, Rosenbaum and Rubin (1983a)

demonstrate that if treatment assignment is strongly ignorable, conditioning on the propensity

has a non-zero probability of receiving or non-receiving the treatment. This hypothesis is

and Kopeinig, 2005).

(2003) convincingly argue that the assumption of selection on observables is no more

Amini, C., & Dal Bianco, S. (2017)

Amini, C., & Dal Bianco, S. (2017)

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