Frauke Steglich (Kiel Institute)
Firms are increasingly held accountable by consumers for insufficient Corporate Social Responsibility (CSR) investments by suppliers in their Global Value Chains (GVCs). In our model, CSR investments of suppliers in the global South provide product differentiation when selling the final product to consumers in the global North. Production involves a continuum of suppliers and takes place sequentially. With incomplete contracts between firm and suppliers, we find that the most downstream suppliers choose the highest CSR levels. We test this prediction using Indian firm-level panel data, which allows us to observe monetary spending on CSR. We find that firms in more downstream positions in GVCs invest more in CSR.
Philipp Herkenhoff (Johannes Gutenberg-University Mainz) — Sebastian Krautheim (University of Passau, CESifo) — Finn Ole Semrau (IfW & KCG) — Frauke Steglich (IfW & KCG)
Virtuall via Gotomeeting
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