A Link between Corporate Social Responsibility and Risk

Corporate social responsibility (CSR) has become an essential business strategy, adopted worldwide. Most leading restaurant companies have also followed this corporate trend by actively participating in socially responsible activities. However, although considerable research has examined impacts of CSR in the restaurant context, little has been explored regarding a link between CSR and a firm’s various risks. The purpose of this study, therefore, is to investigate the relationship between a firm’s investment in CSR and three important risk measures: total, systematic, and unsystematic risk in the U.S. restaurant context. Results indicate a significantly negative effect of CSR only on the unsystematic risk, but not other two risks, of the restaurant firms. Based on these findings, this study provides practical as well as theoretical implications.