Local connectedness and corporate social responsibility

Abstract I examine the relationship between social connectedness and corporate prosocial behavior, as measured by corporate social responsibility (CSR). Using a novel connectedness measure, I empirically investigate the effect of local connectedness on CSR for a large sample of U.S. firms. I show that firms in areas with stronger connectedness have higher CSR levels. The local connectedness effect on CSR remains robust after addressing endogeneity concerns and robustness checks. My findings suggest that the link between social connectedness and individual prosocial behavior, highlighted in social science literature, exists for corporations, and local connectedness is an important predictor of CSR.