Government‐Initiated Corporate Social Responsibility and R&D Expenditure Stickiness: Evidence From the Targeted Poverty Alleviation Campaign

ABSTRACT In this paper, we examine how firms' participation in government‐initiated corporate social responsibility (CSR) activity affects their research and development (R&D) cost behaviour. Exploiting the targeted poverty alleviation (TPA) campaign in China, we find that government‐initiated CSR participation enhances R&D expenditure stickiness through the funding effect and technology‐supporting effect. These findings are robust across various tests. Further analysis shows a stronger impact among non‐politically connected firms and companies with lower political uncertainty. This paper sheds new light on the outcome of corporate participation in government‐initiated CSR and furnishes novel insights into the effect of CSR on firm innovation.