Make it up to you or not: understanding the role of substantive versus symbolic CSR activities following product-harm crises

Product-harm crises are a global concern and corporate social responsibility (CSR) activities are applied to withstand such crises and mitigate financial risks. Recent studies have focused on 'when' CSR activities can or cannot mitigate financial penalties following product-harm crises; however, the focus is usually on developed countries, and little attention is given to transitional countries like China. Indeed, CSR activities may vary among countries because the leading forces of and motivations behind CSR activities differ across institutions. In China, a government-dominated market, CSR activities are often state-led and used to access government resources. Some Chinese firms adopt symbolic CSR campaigns (versus substantive CSR activities) to garner such resources, given the low scrutiny of CSR activities and the low costs of CSR claims. Considering the specificity of Chinese CSR, this study explores 'when' CSR activities can or cannot mitigate financial risks following product-harm crises. The results find that substantive CSR activities can buffer the financial penalties due to the crisis, whereas symbolic CSR campaigns burden its financial penalties. Moreover, institutional investors can discount the buffering and burdening effects. These findings offer insights for firms seeking CSR activities to mitigate financial risks in transitional countries.