Abstract

We look at the relationship of corporate social responsibility (CSR) and country risk. We conceptualize the relationship first by asking if there is a correlationand then positing the directionality of the relationship. We posit that there is an inverse or negative correlation of implicit CSR with country risk and a positive correlation between explicit CSR and country risk. Understanding this relationship can help firms respond to a variety of external pressures such as those from activist organizations and stockholder disciplining; thus, preventing firms from the need to “bolt” on CSR strategies to existing corporate strategies, as well as to help fulfill social needs within the community, mitigate political risks, and improve firm reputation.