Product-harm Crises And Corporate Social Responsibility(CSR) Responses

Product-harm crises often cause severe consequences to firms,which includes reputation losses,depreciation of brand equity,transfer of customers' brand preference,losses of market shares,etc.Confronted with such a dilemma,firms do all what they could to overcome the crises.The paper mainly examines the instrumental application of corporate social responsibility(CSR)in firms' crisis responses.The treatment group consists of all firms that once encountered product-harm crises from 2011 until 2014,while the control group consists of successfully matched firms in the method of PSM with no experience of product-harm crisis in the same year.The final sample consists of 219 pair of firm-years.Based on the above sample and the method of DID,the paper examines changes of CSR performance after product-harm crises and the possible influence of pressures from capital market or media conscience.Besides,the paper investigates the role of political connections as a protective umbrella.After that,the paper further checks the changes of CSR disclosure after the crises and the effectiveness of capital market pressure and media exposure,as well as political connections.Moreover,it explores the interaction between CSR performance and CSR disclosure.Based on evidences from empirical analysis,I find that:(1)CSR performance gains an increase after the product-harm crisis;(2)With more pressure from capital market or the media exposure,firms are more likely to improve CSR performance;(3)Political relations act as a protective umbrella in the scenario of product-harm crises,which motivates firms without such relations to improve their CSR performance more;(4)With CSR disclosure level also rises after the crisis,there's a complementary effect between the use of CSR disclosure and CSR performance;(5)The more pressure from capital market,the more likely firms will increase CSR disclosure;the more pressure from media exposure,the less possibility of firms' use of CSR disclosure strategy;(6)Firms which suffer from productharm crises are more inclined to increase CSR disclosure if there's no political connections available.In sum,using data of firms once suffered from product-harm crises,the paper finds out the improvements in firms' CSR strategy,which contributes to both the product-harm crisis literature and the CSR's hallo effect literature.Findings of the study also enlighten both managers and firms' external stakeholders.As for regulators and other relative stakeholders,they may accept the positive signal of the improvements in firms' CSR strategy.However,they'd better be careful of the potential utilitarian of those firms' CSR tactics as crisis countermeasures.Moreover,whether firms subject to product-harm crises,the study is conducive for managers to inspect their position of CSR strategy among peers,which contributes to limit their losses or even recover their profits.