Does Optimizing the Urban Business Environment Enhance Corporate Social Responsibility Performance? Evidence from Chinese Listed Firms

Improving the business environment where a firm operates is vital for fostering economic growth and significantly influences corporate decision-making. This study examines whether and how such optimizations would affect corporate social responsibility (CSR) performance. We find robust evidence that an improved urban business environment significantly enhances CSR performance, with notable effects observed across government services, financial services, market environment, public services, innovation environment, human resources, and the legal environment. This positive impact is attributed to reduced transaction costs and increased industry competition, and is more pronounced in state-owned firms, firms situated in central and western regions, and firms with higher political affiliation. Our findings emphasize the importance of enhancing urban business environment in order to encourage firms’ socially responsible behaviors.