Corporate Sustainability in the Wake of the COVID-19 Global Pandemic: Does CSR Enhance Corporate Survival during a Market Crisis?

This study investigates the effect of the COVID-19 global pandemic on the relationship between corporate social responsibility (CSR) and a firm's sustainability. Prior studies on related topics empirically argue that CSR activities are highly likely to positively impact corporate sustainability. If this is true, firms that engage in CSR activities should demonstrate a higher degree of sustainability than their counterparts during the recent COVID-19 global pandemic. Using a sample of 390 Korean listed companies from 2019 to 2020, we find that CSR has no significant relationship with firm value variations as a proxy for sustainability during the COVID-19 global pandemic period. Our findings suggest that firms that engage in more active CSR activities do not appear to mitigate the market risk associated with the COVID-19 global pandemic compared to their counterparts who engage in less active CSR activities. That is, CSR does not provide a significant cushion that alleviates a firm's market risk exposure, as heralded by COVID-19. Unlike previous studies that argue that CSR has positive effects on sustainability, our studies suggest that CSR's impact on sustainability seems to be significantly lowered when uncontrollable market risks occur. It is important to note that this study has methodological limitations in that it was analyzed using proxy variables for CSR and sustainability measurement in Korea. For future studies, it would be insightful to expand the CSR concept to ESG and conduct research using longer-term data in the post-pandemic era.