Corporate Social Responsibility as Economic Intervention: Welfare Effects, Incentives and Market Distortions
Gyang Francis Dalyop – Department of Economics, Karl Kumm University Vom, Plateau State, Nigeria
Samuel Omboke Nyabute – School of Business, Economics and Tourism, Kenyatta University
Dorcas Melza Musabi – KCA University
Tongpan Godwill Gu’ar – Department of General Studies, Plateau State Polytechnic, Barkin-Ladi, Nigeria.
Abstract: This paper investigated the welfare impact and corporate incentives & market distortions from CSR on 4 multinational companies across 4 countries from 2012 to 2024. In particular, the study examines the moderation effects of institutional quality and regulatory environment between the CSR and welfare and market distortions. Using a Panel Threshold Regression (PTR) approach, the study analyses secondary data obtained from corporate sustainability reports, annual financial statements, the World Bank’s World Development Indicators and Worldwide Governance Indicators. The results indicated that there is a positive and significant effect of CSR incentives on CSR engagement, suggesting that the CSR engagement can be stimulated by corporate incentives in a weak institutional regime. The power of the corporate incentive, however, is reduced with higher institutional quality. Further, the welfare threshold results revealed that CSR has ainsignificant positive impact on welfare when it involves severely weak institutional settings and a strong positive effect on welfare under stronger institutional settings, suggesting that good institutional governance improves the developmental effectiveness of CSR interventions. On the other hand, even though the institutional framework is relatively weak, CSR had a significant impact on market distortions, suggesting that CSR can strengthen the corporate influence and regulatory power in a comparatively weak institutional setting. The study concludes that CSR can only provide a sustainable development outcome if it is backed by effective governance systems, regulatory accountability and effective institutional coordination.
