From crisis to Stability: How CSR shielded firms during Covid-19 pandemic

From crisis to Stability: How CSR shielded firms during
Covid-19 pandemic

This study examines the relationship between the COVID-19 pandemic and firm risk, as well as
the moderating role of corporate social responsibility (CSR) performance in this relationship.
Using 22,451 firm-year observations from 62 countries between 2018 and 2021, the study finds a
marked increase in firm risk due to the economic disruptions caused by the pandemic. However,
firms with strong CSR performance exhibit greater resilience, highlighting CSR’s critical role in
crisis management and risk mitigation beyond ethical compliance. Additional analysis shows that
the effects of the pandemic and the moderating role of CSR performance vary by country-level
business culture and economic environment. The findings highlight the importance of inte-
grating CSR into corporate strategy to enhance resilience and manage risk during crises. We also
show that stakeholder management serves as an underlying mechanism linking the interaction
between CSR performance and the COVID-19 pandemic to firm risk. The study also advocates for
policy support to strengthen CSR initiatives, offering actionable insights for managers and poli-
cymakers in fostering corporate preparedness for future challenges.