Is corporate social responsibility a matter of trust? A cross-country investigation

This study examines how social trust influences corporate social responsibility (CSR) across countries. We find a positive relationship between CSR engagement and societal trust. We also document the economic mechanisms explaining how trust affects CSR activities. Our findings are robust to alternative CSR measures, sub-sample analyses, and country-level estimations. Furthermore, the results from difference-in-difference methods and an instrumental variables (IVs) approach imply that our findings are robust in accounting for endogeneity. Overall, our findings suggest that a higher level of trust reduces the likelihood of harmful misunderstandings while facilitating greater stakeholder cooperation, thereby increasing CSR activities.