This paper investigates the impact of industry peers' corporate social responsibility (CSR) performance on focal firms' CSR performance using US-listed firms from 2000 to 2015. The study finds a strong positive peer effect, where a one standard deviation increase in peer CSR leads to approximately a 10.15% standard deviation increase in focal firms' CSR. This effect is amplified when peer firms are geographically closer, are in the SP500 index, and are larger than the focal firms. Conversely, industry leadership, strong earnings capacity, international business, and fewer analyst followings weaken the peer effect. While following peers improves firm value, it negatively impacts product market share and earnings performance. The authors conclude that firms should strategically invest in CSR rather than blindly mimicking peers.

Chunhua Chen, Dequan Jiang, Weiping Li