Applied Economics

ISSN: 0003-6846 (Print) 1466-4283 (Online) Journal homepage: http://www.tandfonline.com/loi/raec20

Are corporate social responsibility and advertising

complements or substitutes in producing firm
reputation?

Patrick Lloyd-Smith & Henry An

To cite this article: Patrick Lloyd-Smith & Henry An (2018): Are corporate social responsibility and
advertising complements or substitutes in producing firm reputation?, Applied Economics, DOI:
10.1080/00036846.2018.1540858

To link to this article: https://doi.org/10.1080/00036846.2018.1540858

Published online: 03 Nov 2018.

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APPLIED ECONOMICS, 2018
https://doi.org/10.1080/00036846.2018.1540858

Are corporate social responsibility and advertising complements or substitutes

in producing firm reputation?
Patrick Lloyd-Smitha and Henry Anb
a
Department of Agricultural and Resource Economics, Global Institute for Water Security, University of Saskatchewan, Saskatoon, Canada;
b
Department of Resource Economics & Environmental Sociology, University of Alberta, Edmonton, Canada

ABSTRACT KEYWORDS
A firm’s reputation is one of the critical drivers of success, and two of the key levers firms use to Advertising; social
influence their perceived reputation are corporate social responsibility (CSR) and advertising. The responsibility; reputation;
relationship between CSR and advertising is important because whether they are complements production functions;
or substitutes has different implications for how firms use these activities. Using a unique panel elasticities
dataset of US-listed companies between 2005 and 2014, we estimate flexible production func-
JEL CLASSIFICATION
tions to identify whether CSR and advertising act as complements or substitutes in the produc- D24; D21; M14
tion of firm reputation. A secondary motivation of this paper is to examine whether the use of
different stakeholder ratings of firm reputation matters. We find evidence consistent with
advertising and CSR being substitutes toward the production of firm reputation. Our results
also show that advertising, own-firm CSR activities, and industry-level CSR spillovers contribute
positively to firm reputation. Lastly, we find that the effects of CSR and advertising vary across the
stakeholder groups (general public, business executives, or CSR experts) used in the analysis.

I. Introduction not clear how CSR activities and advertising relate

to one another in the production of firm reputa-
Corporate reputation and other intangible assets
tion. Firms with high levels of CSR may want to
are increasingly being recognized as key drivers of
advertise more heavily to signal to consumers
firm profitability and success (Roberts and
their ‘goodwill’ credentials and increase their over-
Dowling 2002). However, firms are not passive
all reputation. In this interpretation, CSR activities
recipients of their public profile; rather, they play
and advertising are complementary activities.
an active role in producing and managing their
Alternatively, perhaps firms with low levels of
reputation. Two of the key levers firms use to
CSR could increase their advertising levels to com-
influence their perceived reputation are corporate
pensate for their lack of goodwill, in which case
social responsibility (CSR) and advertising.
these two inputs should be viewed as substitutes.
Activities that fall under the general rubric of
The relationship between CSR and advertising is
CSR such as implementing projects that reduce
important because whether they are complements
carbon dioxide emissions or making donations to
or substitutes has different implications for how
community groups have become more important
firms should use these activities to improve their
as consumers, employees, and other stakeholders
reputation. In addition, it may have an impact on
have placed more attention on the social activities
how regulators view the effectiveness of CSR to
of firms.1 Advertising is also an important channel
improve the social and environmental perfor-
that firms use to influence their public profile, and
mance of companies.
has infiltrated all aspects of consumers’ lives
In this paper, we address this gap and empiri-
through various media formats. While there is
cally investigate the effect of advertising and CSR
substantial evidence that suggests CSR and adver-
on the production of firm reputation. A secondary
tising both affect a firm’s reputation, a priori, it is

CONTACT Patrick Lloyd-Smith patrick.lloydsmith@usask.ca Department of Agricultural and Resource Economics, University of Saskatchewan,
101-121 Research Drive, S7N 0X4, Saskatoon, Saskatchewan, Canada
1
For example, in a recent survey of US consumers, 77 per cent of consumers state that it is important for a company to be socially responsible and 70 per
cent are willing to pay more for a $100 product from a responsible company (Landor Associates 2010).
© 2018 Informa UK Limited, trading as Taylor & Francis Group
2 P. LLOYD-SMITH AND H. AN
motivation of this paper is to examine whether the
use of different stakeholder ratings of firm reputa-
tion matters. The existing literature almost exclu-
sively uses executive ratings of firm reputation as
the key reputation variable even though firms are
likely more interested in shaping their reputations
in the eyes of the general public. To these ends,
our empirical analysis is based on a panel dataset
of US-listed companies between 2005 and 2014,
and uses corporate reputation measures from
three different surveys, various CSR metrics and
advertising expenditures amounts, and other firm-
level controls collected from several sources. We
combine multiple sources of data for our key
variables of interest to ensure the robustness and
validity of the results. We estimate several produc-
tion models that deal with potential endogeneity
concerns and are flexible regarding the degree of
substitutability. The analysis shows that advertis-
ing, own-firm CSR, and industry-level CSR are
generally positively correlated with reputation.
We find evidence consistent with advertising and
CSR-related activities being substitutes toward the
production of firm reputation. For the reputation
of firms held by the general public, the elasticity of
substitution between advertising and CSR ranges
between 1.2 and 3.5. We also find that the extent
to which advertising and CSR are substitutes
depends on which reputation measure (i.e., public,
executives or experts) is used in the analysis.
A strong reputation improves firm profitability
in several ways. Customers make purchasing deci-
sions based on the reputation of a company (Costa
and Vasconcelos 2010); suppliers are more com-
mitted to relationships with highly reputable firms
(Bennett and Gabriel 2001); and employees have
lower turnover or accept lower wages in exchange
for working for a reputable company (Helm 2013).
On a more strategic level, the seemingly intangible
nature of reputation makes it more difficult for
competing firms to replicate, which may also lead
to sustained firm returns (Drejer 2000; Roberts
and Dowling 2002). Increasingly, firms are turn-
ing to two key activities to influence their reputa-
tion: advertising and activities geared toward
improving their CSR performance.
Firms spend significant amounts of money on
CSR, with many large companies spending in excess
of $100 million per year on CSR-related activities
(Singer and Tonello 2012). There are a multitude of
reasons firms engage in CSR: to attract investors, to
win over customers, to acquire social licence or
promote community goodwill, to gain employee
and supplier loyalty, to improve relationships with
regulators, and to improve the bottom line (Portney
2008). Most of these reasons relate – at least indir-
ectly – to the reputation of the firm. Thus, it is not
surprising that, in a survey of company managers,
the most commonly stated business benefit from
CSR is to ‘have a better brand and reputation’
(Economist 2008). CSR, however, is not the only
strategy available.
Firms in the United States spent approximately
$170 billion on advertising in 2013 (EMarketer
2013). Similar to CSR activities, firms have many
reasons for spending money on advertising, such
as to increase sales, to allow firms to charge a higher
price, to project a certain image, and to increase
brand loyalty. Bagwell (2007) considers three alter-
native views economists use to interpret advertising.
Advertising can be persuasive by altering consu-
mers’ tastes and creating illusory product differen-
tiation and brand loyalty; informative by responding
to potential imperfect consumer information on
product; and complementary to the advertised pro-
duct by increasing the ‘social prestige’ of consuming
a particular good or service. At least implicitly, all
three views allow a role for reputation building as an
objective of advertising.
This paper contributes to the literature in three
distinct ways by overcoming some of the limita-
tions of earlier work. The first contribution of this
study is an investigation of the role of CSR and
advertising on firm reputation using an approach
that allows for more complex nonlinear relation-
ships. Specifically, we estimate a flexible produc-
tion function and calculate Morishima elasticities
of substitution. The studies to date implicitly
adopt a linear production function of reputation
and may only include a simple interaction term
between advertising and CSR. These studies infer
the relationship between two inputs based on the
sign of the coefficient of the interaction term:
positive coefficients indicate complements and
negative coefficients indicate substitutes.
The second contribution of this paper is the inves-
tigation of potential spillover effects to a firm from
the average level of CSR performance in its industry.

Melo and Garrido-Morgado (2012) find that indus-
try-level effects are important determinants of firm
reputation, but do not assess whether industry aver-
age CSR levels impact firm reputation. Consumers
may have a difficult time differentiating between the
CSR activities of specific firms and the broader level
of CSR performance at the industry level. Industry-
level CSR performance may also impact firm repu-
tation and these spillover effects may be positive or
negative. For example, suppose a firm has a low level
of CSR performance in an industry with generally
high levels of CSR. The spillover effects would be
positive if stakeholders assess CSR levels at the
industry level and pay less attention to amount of
own-firm CSR activities. Alternatively, stakeholders
may view the company with low levels of CSR as a
laggard relative to its industry peers and the spillover
effects may be negative.
The third contribution of this paper is the con-
sideration of different target audiences. If firms use
different signals for different target audiences, then
it is important to consider these different audiences.
For instance, if firms behave strategically to shape
how consumers perceive them, then it would be
more appropriate to consider consumer reputation
rankings of firms. One of the limitations of the
existing literature is the reliance on a limited set of
data, and almost all of the empirical papers use the
same reputation rankings from Fortune magazine’s
‘Most Admired Companies’ list, the same CSR mea-
sures from KLD (Kinder, Lydenberg and Domini),
and the same advertising data from COMPUSTAT.
Each of these data sources and metrics have their
limitations (Wartick 2002). In terms of reputation,
the Fortune reputation ranking data is collected
from a select group of business executives and thus
has been criticized as representing only a narrow
segment of potential stakeholders (Wartick 2002).
In this paper, we consider two additional reputation
ranking data sources, including one from a survey of
the general public who are most likely the target of
most of the advertising efforts as well as a survey
of CSR experts who are most familiar with the CSR
activities of specific companies.
The remainder of this paper is structured as
follows. In Section 2, we briefly review the relevant
academic literature. Section 3 describes the various
data sources used in the analysis in more detail, and
Section 4 outlines the empirical strategy. Section 5
APPLIED ECONOMICS 3
presents the results and Section 6 concludes with a
summary and a brief discussion of the limitations
of the study.
II. Literature review
The relevant literature on advertising, CSR and
reputation is empirical. These studies generally
use information on a number of firms over time
and can be divided into two broad categories
depending on whether they focus on the financial
performance of firms, the strategic reasons for
CSR, or directly modelling firm reputation.
The first set of studies assesses the impact of
CSR, advertising and reputation on a dependent
variable that measures either firm value or perfor-
mance. In terms of CSR and firm value, results are
generally mixed with many studies finding a nega-
tive relationship suggesting that the costs of CSR
may outweigh the benefits (Melo and Garrido-
Morgado 2012). One notable exception is Chen
and Lee (2017) who find that CSR has a positive
impact on corporate value (specifically Tobin’s Q),
but the extent to which it does so depends on the
level of corporate value. Servaes and Tamayo
(2013) find that CSR and firm value are positively
related for firms with high levels of advertising but
generally negative or insignificant for firms with
low levels of advertising. This suggests that CSR
and advertising may be complements in produ-
cing firm value above some threshold level of
advertising, and substitutes below that threshold.
They also find that the positive impacts of CSR
only hold for firms with good prior reputations as
corporate citizens. A recent study by Cavaco and
Crifo (2014) focuses only on the impact of CSR on
firm performance but provides a unique perspec-
tive on the complicated effects of different types of
CSR behaviour. They investigate the role of CSR
on firm financial performance by focusing on the
relationship between different types of CSR
behaviour. Specifically, they examine complemen-
tarities between environmental, social and busi-
ness CSR components, and find that responsible
behaviour towards employees and customers/sup-
pliers have complementary effects while responsi-
ble behaviour towards customers/suppliers and
the environment behave as substitutes toward
firm performance.
4 P. LLOYD-SMITH AND H. AN
The second type of studies attempts to directly
model the drivers of firm reputation. Our review
of the literature has found seven empirical studies
that have used a reputation measure as the depen-
dent variable in modelling (McGuire, Sundgreen,
and Schneewis (1988); Fombrun and Shanley
(1990); Srivastava et al. (1997); Turban and
Greening (1997); Stanwick and Stanwick (1998);
Black, Carnes, and Richardson (2000); Melo and
Garrido-Morgado (2012)). All of these studies use
the same reputation rankings from Fortune maga-
zine’s ‘Most Admired Companies’ list. Melo and
Garrido-Morgado (2012) conduct an empirical
analysis of US-listed companies that assessed
whether CSR is a key driver of corporate reputa-
tion. They find that CSR performance measured
using KLD data has a positive impact on firm
reputation and these effects are heterogeneous
across industries. Furthermore, they find that
advertising levels do not impact reputation. This
second result may be an artefact of their data as
advertising is largely targeted to the consumer
market while the reputation ratings used in the
study are from a survey of business executives.
III. Data
In this study, we focus on U.S.-listed companies
during the period 2005 to 2014. Using various
sources, we combine four main types of data: repu-
tation, CSR, advertising, and controls.2 To the best
of our knowledge, this is the first study in which
these disparate data sources have been merged
together and used concurrently in an empirical
analysis. The exact number of firms and years cov-
ered depends on the subset of variables used in the
different models. We briefly review each of these
variables in turn and the appendix provides addi-
tional information on the variable construction.
Table 1 provides the summary statistics.
Reputation variables
A firm’s reputation is most commonly measured
through surveys of stakeholders where respondents
2
These data sources were merged using unique firm identifiers such as the International Securities Identification Number (ISIN) number, CUSIP code, and/or
the firm name. Information on accessing the data used in this study is provided in the appendix.
3
For a more in-depth review of the conceptual and empirical issues regarding reputation research, please see Lange, Lee, and Dai (2011).
are either asked to provide an absolute or industry-
relative firm ranking on a rating scale (Wartick
2002).3 We consider three sets of reputation vari-
ables that elicit firm rankings from different stake-
holder groups – the general public, business
executives, and CSR experts. The first reputation
variable, denoted PUBLIC, is derived from the
RepTrak survey, an annual survey of the general
public in the U.S. conducted by the Reputation
Institute. The RepTrak Pulse metric provides an
overall assessment of the company’s reputation.
The RepTrak survey covers 150 of the largest firms
each year and data were collected for 2006 to 2014.
The second set of reputation data focuses on busi-
ness executives and is collected from Fortune maga-
zine’s list of ‘America’s Most Admired Companies’.
As noted earlier, almost all of the previous studies on
CSR and reputation use this dataset. Fortune maga-
zine administers an annual survey to executives,
directors, and analysts and asks them to rate com-
panies on nine criteria relating to reputation relative
to other companies in their industry. This reputation
variable, denoted by EXECUTIVE, was collected for
the years 2008 to 2013 and, on average, around 450
companies per year are rated. The third set of repu-
tation data is taken from Newsweek’s Green
Rankings data set. This reputation variable, denoted
by EXPERT, is based on an opinion survey of CSR
professionals, academics, and other environmental
experts. The survey of CSR EXPERTS was only
conducted in 2009 and 2010 and a total of 500
firms were rated in each year.
We can expect the impacts of advertising and
CSR to differ across the reputation measures due to
both the different dimensions of reputation
assessed by the specific questions of each survey
as well as the different stakeholders surveyed. The
presence of both of these differences complicates
the interpretation of any results. In general, the
reputation questions used in each survey are speci-
fically targeted to each stakeholder group. For
example, the RepTrak survey asks about reputation
dimensions that the general public care about, the
Fortune survey of executives has a more financial
focus, and the Newsweek survey of CSR experts
 APPLIED ECONOMICS 5

Table 1. Summary statistics.

Variables Time period Firms per Year Observations Mean Std. Dev. Units/Scale
Reputation Variables
PUBLIC 2006–2014 37–1531 1,151 66.35 9.09 Scale 0–100
EXECUTIVES 2008–2013 393–497 2,598 6.01 1.03 Scale 0–10
CSR EXPERTS 2009–2010 500 1,000 70.52 10.55 Scale 0–100
Advertising Variables
COMPUSTAT ADS 2005–2013 1,829–3,408 27,425 1.19 4.03 Percentage2
Ad$pender ADS 2008–2013 1,829–3,408 18,434 0.39 2.61 Percentage2
CSR Variables
ASSET4 CSR 2005–2013 417–1,007 6,843 44.01 28.43 Scale 0–100
KLD CSR 2005–2012 2,285–2,968 23,142 0.21 0.45 Score 0–5
KLD CSI 2005–2012 2,285–2,968 23,142 0.35 0.34 Score 0–5
Controls Variables
AT (Total assets) 2005–2013 2,714–3,408 28,257 17,571 125,105 $ Millions
RISK 2005–2013 2,705–3,397 28,156 0.21 1.21 Percentage3
EMP (# of employees) 2005–2013 2,668–3,327 27,655 15.37 56.96 Thousands
ROA (Return on assets) 2005–2013 2,713–3,406 28,238 4.16 9.39 Percentage4
MTB (Market-to-book ratio) 2005–2013 2,647–3,281 27,446 2.65 35.27 Ratio6
Notes:1 The number of firms per year is between 147 and 153 for all years except for 2006 (37 firms) and 2007 (71 firms).2 The ADS variables are calculated as
the advertising expenditures divided by total assets of the firm.3 The RISK variable is calculated as the total long term debt of the firm divided by total
assets.4 ROA is calculated as net income divided by total assets.5 MTB is calculated as the market value of equity divided by the book value of equity.

focuses more on environmental performance and
commitment. In terms of stakeholders, the general
public is the target of most advertising and thus we
expect advertising to have the greatest impact on
the PUBLIC reputation variable. Because of this
targeting, we also expect the elasticity of substitu-
tion between advertising and CSR to be highest for
the PUBLIC reputation variable. Furthermore, the
general public may have a difficult time discerning
between own-firm and industry-level CSR activ-
ities. Therefore, we expect the spillover effects
from industry-level CSR to be the greatest here.
Business executives may focus more on the finan-
cial aspects of firm performance and be less influ-
enced by advertising and CSR activities. Therefore,
we expect that CSR and advertising will have the
smallest effect on EXECUTIVE. Lastly, CSR experts
are likely most capable of focusing on own-firm
CSR levels and be less influenced by advertising
and industry-level CSR activities. Therefore, we
expect own-firm CSR to have a positive and sig-
nificant effect on EXPERT, while industry spillover
effects are likely to be minimal.
Corporate social responsibility (CSR)
CSR is a multidimensional and difficult activity to
measure (Melo and Garrido-Morgado 2012). In our
review of the literature, the majority of the studies
4
Exceptions include Fombrun and Shanley (1990) who use the amount a firm donates to charity as its CSR measure using data from the Taft database; and
Stanwick and Stanwick (1998) who use data on environmental performance from the toxic release inventory in the United States.
5
Ideally, we would collect data on the expenditures each firm spends on CSR activities but this data is not available and thus we use third-party ratings of
CSR.
that investigate CSR performance among firms use
data from KLD.4 The main reasons the KLD mea-
sure of CSR is widely used is that it was one of the
earliest standardized CSR metrics, dating back to
1991, and includes a large number of firms. Recent
studies have suggested that there may be advantages
to considering different sources of data. Chatterji,
Levine, and Toffel. (2009) conduct an empirical
analysis to assess the external validity of KLD ratings
and raise some important issues regarding the sim-
plifying aggregation assumptions used in construct-
ing these metrics. Furthermore, Chatterji et al.
(2014) find a surprising lack of convergence
amongst various CSR metrics and recommend the
use of multiple ratings schemes in empirical studies.
There are many different CSR metrics that rate
and compare companies across these different
aspects of CSR and in this study we use CSR mea-
sures from two different organizations primarily
to assess the robustness of the results.5 The first
CSR measure we consider is an aggregate metric of
environmental and social performance of a com-
pany obtained from the Thomson Reuters
Datastream database. This measure uses the
ASSET4 ESG framework and rates over 1,200 com-
panies in North America each year on 250 key
performance indicators. We exclude corporate
governance and economic performance because
there is debate on whether these indicators should
6 P. LLOYD-SMITH AND H. AN

be part of CSR as they focus on shareholders rather Advertising

than stakeholders (Servaes and Tamayo 2013).6
For the advertising data, we use information from
The second CSR measure is taken from the KLD
two sources. First, the COMPUSTAT accounting
database which dates back to 1991. In large part
database provides self-reported firm expenditures
due to its longevity, the KLD database is the most
on advertising by North American firms. The
frequently cited source of CSR performance in the
advertising expenses variable from COMPUSTAT
academic literature. We follow Kotchen and Moon
includes the cost of advertising media (i.e., radio,
(2012) and construct a CSR index of strengths as
television and print) and promotional expenses
the sum of all strength indicators across all cate-
but excludes selling and marketing expenses.
gories and a similar method is used to construct a
Most of the existing literature uses this advertising
separate corporate social irresponsibility (CSI)
data from the COMPUSTAT database.8 Data is
index of concerns. In these aggregate CSR and
available for the years 2005 to 2013. Three poten-
CSI indices, we follow Servaes and Tamayo
tial concerns with using the COMPUSTAT adver-
(2013) and exclude the corporate governance and
tising variable are that firms self report their
product categories.7
advertising expenses and thus may have different
It is difficult to know if these different CSR
interpretations of what counts as advertising
variables will have varying impacts on reputation
expenses versus other types of expenses, a large
and their relationship with advertising. Thus, the
portion (around 40%) of firms do not report any
main purpose of using various CSR measures is to
advertising expenditures, as firms do not need to
test the robustness of our results. These robustness
report expenditures that are immaterial (defined
checks are especially important given the finding
as less than USD $5 million), and the data
by Chatterji et al. (2014) regarding the lack of
includes expenditures outside the United States.9
convergence amongst various CSR metrics.
To address these concerns, we also use data
However, one key difference between the mea-
from the Ad$pender maintained by Kantar
sures is that the ASSET4 data use an aggregate
Media. The company monitors US expenditure
net CSR metric while the KLD data differentiate
information for over 3 million brands across 18
between CSR and CSI. Consequently, the KLD
media types (e.g., television, newspaper, internet,
data allow us to assess the relationship between
etc.) and the information can be aggregated at the
advertising and CSR, between advertising and CSI,
firm level. Although data is provided on both the
as well as between CSR and CSI. This difference
units of advertising and the amount spent on
may be important as firms may use advertising
the different media types, we use aggregate adver-
with CSR and CSI differently.
tising expenditures in our analysis instead of num-
Lastly, we are also interested in whether there
ber of units because it is difficult to aggregate
are any positive or negative spillover benefits from
units of advertising across different media sources
industry-level CSR improvements. Specifically, we
in a meaningful way.10 We set advertising expen-
are interested in how an increase in the CSR levels
ditures to zero for firms with missing data. Data is
of other firms in the same industry impact the
available for the years 2008 to 2013.
reputation of a given firm. Thus, we create a
As is common in the literature, for both adver-
industry-level CSR variable, INDCSR, which is
tising variables we compute advertising intensity
unique for each firm. This variable captures the
as advertising expenditures divided by total assets
average level of CSR of all other firms in the same
of the firm. Almost all previous empirical studies
industry as the firm.
6
As a robustness check, we also include corporate governance in the CSR measure and re-estimate the models. These results are presented in Table A-3 in
the online appendix and the results are similar to the findings using only environmental and social performance metrics.
7
In a robustness check, we also include the corporate governance and product categories in the CSR and CSI indices and the results are qualitatively similar
to those presented in the paper. These results are presented in Table A-4 of the online appendix.
8
A notable exception is Barrage, Chyn, and Hastings (2014).
9
Consistent with the prior literature, we set advertising expenditures to zero if they are missing in the database (Fee, Hadlock, and Pierce 2009; Servaes and
Tamayo 2013).
10
For example, one spot ad during prime time television is quite different from one internet advertisement. Using total expenditures on all media sources is
more appropriate because the quality of advertisements such as the number of customers reached is reflected in its cost.
 APPLIED ECONOMICS 7

use the COMPUSTAT advertising data source debt to total assets (RISK) and include this metric
because it is already linked with other firm control in the analysis. Another important control variable
variables and because access to the Ad$pender to include is past financial performance to remove
database is more limited. Table 1 shows that the the financial ‘halo effect’ on reputation (Brown
COMPUSTAT advertising intensity level is and Perry 1994). We include both return on assets
around 3 times higher than the Ad$pender levels. (ROA) and market-to-book ratio (MTB) as control
The main reason for this difference is that the Ad variables to account for any financial halo effect
$pender amounts only include what the firm on reputation.
spends on buying the actual advertising spots in In the pooled ordinary least squares (OLS) mod-
the various media, while the COMPUSTAT els, we include industry-level dummies to capture
amounts also include all marketing and promo- industry effects. We use the same industry break-
tional expenses, including what the firm spends on down as Kotchen and Moon (2012), which builds
developing the advertisements. The correlation on earlier work by Waddock and Graves (1997).11
coefficient between these two advertising variable
is 0.59 which suggests that there are material dif-
ferences between these two variables that may IV. Empirical approach
affect our results. The Ad$pender advertising The empirical strategy is grounded in production
data may be preferred to the COMPUSTAT data economics, and contributes to the existing literature
because it is collected by an independent firm that by estimating the contribution of advertising and CSR
applies the same methodology regarding what to firm reputation and – more importantly – investi-
constitutes advertising while the COMPUSTAT gating the relationship between advertising and CSR
data is self-reported by each company, and com- in the production of firm reputation. We use the
panies do not have to report annual advertising richness of our dataset – which we compiled using
expenses if they are under $5 million. However, several disparate sources – to examine whether the
the COMPUSTAT data have better coverage both effects of advertising and CSR on firm reputation vary
in terms of breadth (number of firms per year) with the group forming the reputation (i.e., PUBLIC
and depth (the number of years). We use model vs. EXECUTIVE vs. EXPERT). Our use of multiple
specifications with each variable to assess the data sources also allows us to consider different mea-
robustness of the results. sures of advertising and CSR to investigate the robust-
ness of our results. We use lagged-one year input
levels to address the possibility of reverse causality
Controls
and fixed-effects models to address endogeneity con-
In terms of control variables, we use insights from cerns due to omitted (time-invariant) variable bias.12
the literature on the important factors to include We specify the production function for reputa-
in the analysis and the accounting data from the tion of firm i as:
COMPUSTAT database. The majority of reputa-
REPit ¼ f ðADSit1 ; CSRit1 ; INDCSRit1 ; Xit1 Þ
tion and CSR research use measures of the size of
the company as key control variables. We use both (1)
the total assets of a company (AT) as well as the where REPit is firm i‘s reputation at time t,
number of employees (EMP). A measure of risk is ADSit1 is advertising level at time t  1, CSRit1
another control variable that is often included in is the firm’s own CSR level, INDCSRit1 is the
reputation and CSR models (Melo and Garrido- average CSR level for all other firms in firm i‘s
Morgado 2012). We calculate the ratio of total industry, and Xit1 is a vector of control variables.
11
The specific industry categories are Mining & Construction (SIC codes: 1000–1799), Food, Textiles, & Apparel (2000–2399) Paper & Publishing (2400–2799),
Chemicals & Pharmaceuticals (2800–2899), Refining, Rubber, Plastic (2900–3199), Heavy Manufacturing (3200–3569), Computers & Precision Products
(3570–3699), Auto & Aerospace (3700–3799), Transportation Services (4000–4789), Telephone & Utilities (4800–4991), Wholesale & Retail (5000–5999),
Bank & Financial Services (6000–6799), Other Services (7000–8999), and Non-classifiable Establishments (9000–9999).
12
The timing of the RepTrak survey also alleviates concerns about omitted variable bias from not including contemporaneous advertising and CSR. The
RepTrak survey is administered in January and February of each year and the results are generally released in April. Consequently, the advertising and CSR
activities during the year of the survey release should only have a minimal effect on the reputation measures, if at all.
8 P. LLOYD-SMITH AND H. AN

The next important choice in the analysis is the where the notation is the same as Eq. (1) and Tt
specification of the explicit functional form of Eq. (1) are year fixed-effects, Di are firm fixed-effects, and
to be estimated. A pure translog function is inap- νit is the error term.14 The semi-translog produc-
propriate because the advertising intensity variable tion function specification is used with the
has a substantial portion of observations with zero ASSET4 data.
input levels. Knowing that simply adding a small The FE quadratic production function used in
number or one to this variable would bias our esti- estimation with KLD data is
mates of the elasticity of substitution, we decide to
include the advertising variable in levels without tak- 1
REPit ¼ α0 þ β1 ADSit1 þ β11 ðADSit1 ADSit1 Þ
ing the natural logarithm. A semi-translog function is 2
selected for the ASSET4 CSR variables because of the 1
þ β2 CSRit1 þ β22 ðCSRit1 CSRit1 Þ
absence of zeros, but a simple quadratic functional 2
form is chosen for the KLD CSR and CSI measures 1
þ β3 ln CSIit1 þ β33 ðCSIit1 CSIit1 Þ
because these variables contain firms with zero scores. 2
Two of the benefits of using a translog function þ β12 ADSit1 CSRit1 þ β13 ADSit1 CSIit1
instead of a quadratic function are that the translog þ β23 ln CSRit1 ln CSIit1 þ γ ln Xit1
is a second-order approximation to the unknown X
T1 X
N1
production function, Eq. (1), and working with the þ Tt þ Di þ νit ;
natural logarithms of data reduces the impact of t¼1 i¼1

outliers.
where CSI is the index of corporate social irre-
For each model specification, we estimate two
sponsibility of a firm (Kotchen and Moon 2012).
types of models. First, we estimate a basic pooled
For all of these models, we are primarily
OLS model using industry fixed-effects. Second,
interested in deriving two traditional produc-
we estimate models with firm fixed-effects (FE)
tion metrics. First, we calculate elasticities of
to capture unobserved time-invariant own-firm
output (Ei ) to assess the magnitude and direc-
effects.13 Both sets of models include year fixed
tion of the relationship between the inputs and
effects and standard errors are adjusted for hetero-
reputation. For the semi-translog function, the
scedasticity and the correlation of data from the
first derivatives of the semi-translog function
same firm using clustered standard errors.
with respect to the logged inputs yields the
The FE semi-translog production function to be
output elasticities (CSR and INDCSR) and the
estimated can be represented as
first derivatives with respect to the non-logged
1
inputs multiplied by the input level yields the
ln REPit ¼ α0 þ β1 ADSit1 þ β11 ðADSit1 ADSit1 Þ output elasticities for the non-logged input
2
1 (ADS). We calculate the output elasticities
þ β2 ln CSRit1 þ β22 ðln CSRit1 ln CSRit1 Þ using the model coefficients and the mean
2
þ β3 ln INDCSRit1 values of the variables.
1
Second, we calculate elasticities of substitu-
þ β33 ðln INDCSRit1 ln INDCSRit1 Þ tion between the various inputs to determine
2
whether inputs are substitutes or complements
þ β12 ADSit1 ln CSRit1
using a flexible measure, the Morishima elasti-
þ β23 ln CSRit1 ln INDCSRit1 city of substitution (σ M
ij ). Inputs are considered
X
T 1 X
N 1
complements if σ ij < 0 and substitutes if
M
þ γ ln Xit1 þ Tt þ Di þ νit ;
t¼1 i¼1 σM
ij > 0. On a theoretical level, the Morishima

13
While the FE model is preferred due to its ability to control for unobserved firm-specific confounders that are time-invariant, we present both sets of results
because the inter-temporal variation of firm reputation is limited. For example, the ratio of the variance in reputation due to the fixed-effects to the total
variance in reputation (i.e. intra-class correlation coefficient) is around 0.8 in the various model specifications.
14
Note that we do not include an interaction term between advertising and industry-level CSR to reduce the number of parameters to be estimated. Ignoring
the interaction terms implicitly implies a unit elasticity between these inputs.
 APPLIED ECONOMICS 9

elasticity of substitution is generally considered semi-translog model are difficult to directly interpret
a more accurate measure of the degree of sub- because of the many higher order and interaction
stitution between inputs than Allen elasticities terms, and many of the coefficients are insignificant.
(Blackorby and Russell 1989). Furthermore, a However, we can note that the industry fixed-effects
key empirical benefit of using the Morishima are significant in the pooled OLS models suggesting
elasticity of substitution is that it does not that the specific industry of the firm has an impor-
impose symmetry in the degree of substitution tant impact on public reputation. Furthermore, firm
between two inputs.15 fixed-effects are significant and there is a noticeable
Following Chambers (1988), the Morishima difference in the adjusted R2 statistic suggesting that
elasticity of substitution can be represented as controlling for time invariant firm-specific omitted
    variables is important.
fj
Fij  fj Fjj 
σM
ij ¼ 
xi jFj xj jFj
 
where Fij  is the i,j cofactor and jF j is the determi- Elasticity of output
nant of F, the Hessian matrix of the production
function.16 As with the output elasticities, we calculate Table 3 presents the output elasticities for the
the elasticities of substitution at the sample means. three input variables and the first four model
specifications. Examining the ASSET4 CSR mea-
sure results first (top panel), own-firm CSR activ-
ities has a positive and significant impact on firm
V. Results
reputation in both the pooled OLS and FE models.
We estimate a total of 6 production function spe- Specifically, increasing own-firm CSR activity
cifications using both pooled OLS and FE models. levels by 1 per cent is associated with a 0.06 (FE)
Models 1 to 4 all use the PUBLIC reputation to 0.07 (Pooled OLS) per cent increase in firm
metric from the Reputation Institute as the depen- reputation held by the general public. However,
dent variable, but differ in their use of the CSR industry-level CSR activities are generally positive.
measure and the advertising metric.17 The first Interestingly, in Model 1 with COMPUSTAT
two models use the COMPUSTAT advertising advertising data, an increase in industry-level
data with the ASSET4 CSR measure (Model 1) CSR activities leads to a larger increase in firm
and the KLD CSR measures (Model 2). Models 3 reputation than an increase in a firm’s own CSR
and 4 use the same CSR measures as the first two activities. This finding can be interpreted as sug-
models, but use the Ad$pender advertising data. gesting that there are positive reputation spillover
The last two models use the ASSET4 CSR data and benefits from industry-level CSR activities for
the COMPUSTAT advertising data, but differ in firms in the same industry.19 Advertising intensity
their reputation variable. Model 5 uses the is positive and significant except for the FE speci-
EXECUTIVE reputation ranking from Fortune fication of Model 1.
magazine and Model 6 uses the EXPERT reputa- The second panel in Table 3 presents the output
tion rating from Newsweek. elasticities using the models with the KLD CSR
Table 2 presents the pooled OLS and FE model and CSI variables. In comparison to the previous
results using the two different CSR measures, the models, the novel result in this context is that
PUBLIC reputation variable and the COMPUSTAT while own-firm CSR is positive and significant
advertising data.18 The specific coefficients of a across all models, own-firm CSI has a negative
15
For example, input i may be more easily substitutable for input j and thus σM ij >σ ji . The Allen elasticity of substitution measure imposes that σ ij ¼ σ ji .
M
dy
16
In the case of a semi-translog production function, the first and second partials of the production function y ¼ f ðxÞ are fi ¼ dx i
¼ i xqi , fij ¼ xiyxj ðβij þ i j Þ,
and fii ¼ xy2 ðβii þ i ði  1ÞÞ.
i
17
We also conducted the analysis not including the first two years of the general public reputation data with a low number of observations (37 in 2006 and
71 in 2007) as a robustness check. These results are provided in Table A-3 of the online appendix.
18
Table A-1 and Table A-2 in the online appendix present the comparable set of models using EXECUTIVE and EXPERT as the dependent reputation variables.
19
The ASSET 4 CSR variable measures relative performance and thus in the absence of any actual spillover effects, we would expect the industry-level CSR
coefficient to be negative by construction. The finding that the coefficient is positive reinforces the idea that the spillover benefits to reputation are
positive.
10 P. LLOYD-SMITH AND H. AN

Table 2. Production models with public reputation and various CSR measures.
Model 1: ASSET4 CSR Model 2: KLD CSR
Pooled OLS FE Pooled OLS FE
Dep. Variable ln(Rep) Rep
ADS 0.0017 −0.0199 0.788* −0.0968
(0.0419) (0.0297) (0.475) (0.219)
ADS2 −0.0019 0.0010* −0.0910 0.0299
(0.0012) (0.00047) (0.0667) (0.0168)
ln(CSR) −0.165 −0.192
(0.339) (0.188)
ln(CSR)2 0.0249 0.0806**
(0.0376) (0.0344)
ln(INDCSR) 1.006 2.124**
(1.001) (0.881)
ln(INDCSR)2 −0.270 −0.505**
(0.229) (0.199)
ADS*ln(CSR) 0.0039 0.0037
(0.010) (0.0066)
ln(CSR)*ln(INDCSR) 0.0334 −0.0252
(0.0753) (0.0261)
CSR 2.690** 1.301***
(1.332) (0.277)
CSR2 −1.167** −0.541***
(0.529) (0.141)
CSI −1.982 −1.911***
(1.630) (0.338)
CSI2 −1.217 0.779**
(1.296) (0.318)
ADS*CSR −0.0108 −0.0047
(0.122) (0.0258)
ADS*CSI 0.367 0.247***
(0.328) (0.0670)
CSR*CSI 0.764 0.225
(0.599) (0.190)
RISK −0.107* 0.0158 −8.851** 4.022*
(0.0638) (0.0275) (3.892) (1.855)
ln(AT) −0.0267 0.0474*** −1.685** 2.831**
(0.0165) (0.0113) (0.818) (0.951)
ln(EMP) −0.0107 −0.0519*** 0.278 −3.384***
(0.0164) (0.0140) (0.754) (0.884)
ROA 0.0001 0.0005 0.0352 0.0470**
(0.0011) (0.0004) (0.0559) (0.0196)
ln(MTB) 0.0233** 0.0171 1.417** 0.769**
(0.0099) (0.0106) (0.594) (0.377)
Constant 2.847 −0.0402 96.06*** 47.31***
(2.320) (2.036) (7.740) (7.193)
Year Fixed Effects Yes Yes Yes Yes
(F-stat) 2.06* 6.38*** 7.41*** 10.02***
Industry Fixed Effects Yes No Yes No
(F-stat) 7.77*** 15.60***
Firm Fixed Effects No Yes No Yes
(F-stat) 23.16*** 22.48***
N 941 941 914 914
adj. R2 0.439 0.848 0.458 0.858
 
Notes: Standard errors in parentheses are clustered at the industry level for the pooled OLS models and at the firm level for the FE models. p<0:10,
p<0:05,  p<0:01. Models 1 and 2 use the PUBLIC reputation data and the COMPUSTAT advertising data.

and significant impact on the firm reputation for
most model specifications. Furthermore, a one
percentage increase in own-firm CSR levels has a
larger impact on reputation than an equal increase
in own-firm CSI levels.
One of the reasons for the differences in results
using the different advertising and CSR variables is
that the samples change. For example, the Ad$pen-
der data begins in 2008 while the COMPUSTAT
advertising data includes early years back to 2005.
The changing sample makes direct comparison
between the different models difficult, but the over-
all results are consistent across model specifications.
Elasticity of factor substitution
Table 4 presents the Morishima elasticity of substi-
tution estimates between the various sets of inputs
 APPLIED ECONOMICS 11

Table 3. Elasticity of output for public reputation and various CSR measures.
Advertising Measure
COMPUSTAT Ad$pender
Pooled OLS FE Pooled OLS FE
ASSET4 CSR Model 1 Model 3
EADS 0.027*** −0.006 0.019* 0.016**
(0.0096) (0.0064) (0.0100) (0.0050)
ECSR 0.074** 0.063*** 0.071** 0.042**
(0.0286) (0.0136) (0.0314) (0.0162)
EINDCSR 0.110*** 0.101** 0.044 0.024
(0.0447) (0.0330) (0.0800) (0.0260)
N 941 941 734 734
KLD CSR Model 2 Model 4
EADS 0.020 −0.006 0.003 0.010*
(0.0124) (0.0065) (0.0129) (0.0042)
ECSR 0.063** 0.029*** 0.064* 0.028***
(0.0266) (0.0052) (0.0326) (0.0051)
ECSI −0.021** −0.012*** −0.027*** −0.008
(0.0104) (0.0014) (0.0099) (0.0050)
N 914 914 689 689
  
Notes: Standard errors in parentheses are calculated using the Delta method. p<0:10, p<0:05, p<0:01. Elasticities of Output are calculated at the
mean values of the variables. Models 1–4 use the PUBLIC reputation data.

Table 4. Elasticity of substitution for public reputation and various CSR measures.
COMPUSTAT Ad$pender
Pooled OLS FE Pooled OLS FE
ASSET4 CSR Model 1 Model 3
σM
csr;ads
0.994*** 0.591 0.355* 1.457**
(0.355) (0.600) (0.190) (0.449)
σM
ads;csr
1.012** 1.210*** −0.115** 1.434**
(0.390) (0.263) (0.0507) (0.553)
σM
csr;indcsr
0.446** 0.514** −1.968 0.127
(0.176) (0.168) (3.550) (0.139)
σM
indcsr;csr
0.545** 0.387*** −1.480** 0.490**
(0.210) (0.084) (0.654) (0.189)
N 941 941 734 734
KLD CSR Model 2 Model 4
σM
csr;ads
4.070** 0.609 0.759 1.496***
(1.724) (3.657) (0.707) (0.275)
σM
ads;csr
2.884** 3.504*** 3.055** 2.277***
(1.277) (0.500) (1.461) (0.351)
σM
csi;ads
0.066** 0.787 0.959 1.539***
(0.028) (4.725) (0.894) (0.283)
σM
ads;csi
−1.646 −3.228** −1.069* −0.015
(1.364) (0.959) (0.584) (0.010)
σM
csr;csi
−3.043 −0.365** 0.758* 0.649
(2.522) (0.109) (0.414) (0.418)
σM
csi;csr
0.541** −0.545*** 0.372** 0.241***
(0.240) (0.078) (0.178) (0.037)
N 914 914 689 689
Notes: Standard errors in parentheses are calculated using the Delta method.  p<0:10,  p<0:05,  p<0:01. All elasticities of substitution are calculated at
the mean values of the variables. Models 1–4 use the PUBLIC reputation data.

and a t-test of whether the elasticities of substitution
are significantly different from zero. Examining the
relationship between advertising and own-firm CSR,
the large share of positive estimated elasticities sug-
gest that these two inputs are substitutes, with the
exception of the pooled OLS model using the
ASSET4 CSR variable and the Ad$pender data.
The empirical evidence does not support that these
two inputs are complements. Considering only the
results of the fixed effects models, we estimate an
elasticity of substitution between own-firm CSR and
advertising to be between 1.2 and 3.5.
The results for a firm’s own CSR activities
and industry-level CSR activities using the
COMPUSTAT advertising data suggest these two
inputs are substitutes with elasticity of substitution
12 P. LLOYD-SMITH AND H. AN

estimates between 0 and 0.4., while the results using
the Ad$pender data are more mixed. The KLD CSI
results suggest that advertising is a substitute for CSR,
but advertising is a complement for CSI. Finally, the
relationship between CSR and CSI is mixed with
Model 2 suggesting these two inputs are complements
with elasticity estimates of −0.4 to −0.6 while Model 4
indicates they are substitutes with elasticity estimates
ranging from 0 to 0.2.
Comparison of reputation measures
We now turn to assess how the impact of CSR and
advertising impacts the reputation of a company as
rated by stakeholder groups other than the general
public by presenting results using the business execu-
tives and CSR expert’s reputation measures. As noted
earlier, interpreting the results is complicated by the
fact that differences across reputation measures are
due to both the structure of the reputation questions
and the specific stakeholders that were surveyed.
Table A-2 in the online appendix provides the esti-
mated semi-translog production models for Models 5
and 6. All the financial control variables are significant
for Model 5, which uses the business executive repu-
tation measures. For example, total assets (AT), return
on assets (ROA), and market-to-book ratio (MTB) are
all positive and significant while RISK is negative and
significant. These variables do not appear to impact
the reputation held by CSR experts in Model 6, which
makes intuitive sense because the CSR expert survey
asks specifically about firm environmental perfor-
mance and commitment.
Turning to the metrics of interest, Table 5 pro-
vides the output and substitution elasticities for
Models 5 and 6, along with Model 1 for context.20
Model 5 uses the business executives reputation
variable and finds that while there the significant
and positive impacts of increasing own-firm CSR
and industry-level CSR performance disappear
once firm fixed effects are controlled for. Not sur-
prisingly, the Morishima elasticities of substitution
results follow a similar pattern and the FE specifica-
tion yields insignificant estimates. Model 6 uses the
CSR expert’s reputation measure as the dependent
variable. The results suggest that a 1 per cent
improvement in CSR performance leads to a 0.07
(FE) to 0.11 (Pooled OLS) per cent increase in repu-
tation. These results also show that CSR experts are
generally less affected by advertising and industry-
level CSR improvements compared to the general
public. Comparing the Model 5 and Model 6 results
to the general public models, we can note that the
general public is most influenced by advertising and
industry-level CSR levels. The reputation ratings by
CSR experts are most affected by own-firm CSR

Table 5. Elasticity estimates using various reputation variables.

Model 1: PUBLIC Model 5: EXECUTIVES Model 6: CSR EXPERTS
Pooled OLS FE Pooled OLS FE Pooled OLS FE
Output Elasticities
EADS 0.027*** −0.006 −0.005 −0.001 0.019*** 0.006
(0.0096) (0.0064) (0.0060) (0.0056) (0.0041) (0.0058)
ECSR 0.074** 0.063*** 0.046*** 0.008 0.108*** 0.067***
(0.0286) (0.0136) (0.0164) (0.0090) (0.0159) (0.0250)
EINDCSR 0.113** 0.101** 0.145* 0.052 −0.150 −0.055
(0.0447) (0.0330) (0.0736) (0.0600) (0.137) (0.113)
Morishima Elasticities
σM
csr;ads
0.994*** 0.591 0.985 1.065 1.226*** 0.940
(0.355) (0.600) (1.147) (10.320) (0.273) (0.885)
σM
ads;csr
1.012** 1.210*** 1.010*** −0.494 1.637*** 0.929***
(0.390) (0.263) (0.361) (0.533) (0.241) (0.345)
σM
csr;indcsr
0.446** 0.514** 1.776* 0.222 0.077 −0.008
(0.176) (0.168) (0.903) (1.257) (0.0703) (0.0172)
σM
indcsr;csr
0.545** 0.387*** 1.843*** 0.278 0.254*** 0.071***
(0.210) (0.0840) (0.658) (0.299) (0.0374) (0.026)
N 941 941 1,827 1,827 881 881
Notes: Standard errors in parentheses are calculated using the Delta method.  p<0:10,  p<0:05,  p<0:01. Elasticities are calculated at the mean values
of the variables. Models 1, 5, and 6 use the ASSET4 CSR data and the COMPUSTAT advertising data.

20
We also estimate a model using the EXECUTIVE reputation variable, COMPUSTAT advertising data, and the KLD CSR/CSI variables for comparison with the
existing literature. While not presented in this paper, the output and substitution elasticities for this model are statistically insignificant using the fixed
effects specification, which corroborates the findings in Table 5. These results are presented in Table A-4.

levels and are not as easily swayed by firm advertis-
ing and industry-level CSR levels.
VI. Conclusion
Firms invest large amounts of money in advertis-
ing and CSR to improve poor reputations or to
maintain strong reputations. However, there has
been scant research on how these two inputs
interact with one another in the production of
firm reputation. Moreover, most of the existing
literature has focused on executives’ ratings of
reputation even though this may not be the target
demographic of interest from the point of view of
the firm. In this paper, we address these two con-
cerns and find that advertising and CSR are sub-
stitutes, with a proportionate increase in CSR
having a larger (positive) effect on firm reputation
than advertising. An interesting result we find is
that the public perception of firm reputation is
more responsive to both CSR and advertising
than the business executive perception. Another
novel result we find is that the public perception
of firm reputation is positively influenced by the
level of industry-level CSR activities suggesting
that firms benefit from positive reputation spil-
lovers from the CSR activities of their competitors.
The results of this study have several implica-
tions. First, the strategy behind the optimal use
of advertising and CSR depends on the target
group that the firm hopes to influence.
Executives and CSR experts respond differently
than the public, with executives’ perceptions of
firm reputation being fairly resistant to changes
in advertising or CSR. Since most of the existing
literature has used Fortune magazine’s executive
reputation ratings, this suggests that most pub-
lished estimates of the effect of advertising or
CSR on firm reputation likely underestimate
their effects on public ratings. Firms that use
these figures to guide their reputation-manage-
ment strategy are likely under-investing in
advertising and CSR. Second, the substitutable
nature of advertising and CSR suggests that
firms may not have to engage in both activities.
However, due to the different metrics used for
advertising and CSR activities and the lack of
cost information, it is not straight forward to
figure out which activity offers the greatest
APPLIED ECONOMICS 13
return on investment. Finally, an over-reliance
on CSR by regulators to improve the social and
environmental performance of firms may be
hampered by two factors. First, because advertis-
ing and CSR activities are substitutes, firms may
be able to participate in ‘greenwashing’ and use
higher levels of advertising to compensate for
lower levels of CSR. Second, the difficulty the
general public has in differentiating between
own-firm and industry-level CSR activities may
allow firms to freeride on the CSR investments
of its industry competitors.
The current paper stimulates several fruitful
areas for future work. First, developing a theore-
tical model that explains the mechanism through
which advertising and CSR interact to generate
firm reputation may provide additional insights
on this key relationship. Second, the dynamic
effects of CSR and advertising could be investi-
gated using the dynamic investment model of
Clark, Doraszelski, and Draganska (2009).
Finally, our analysis is limited by the aggregate
nature of the reputation, advertising and CSR
data. Exploring industry-level heterogeneity
would allow us to consider if specific industries
have greater substitution possibilities between
advertising and CSR relative to others and if cer-
tain industries use these two inputs as comple-
ments. Furthermore, investigating how the
different sub-components of the various CSR
metrics affect reputation may allow us to identify
which subset of activities have the largest effect on
reputation, and how the nature of the relationship
differs across these sub-activities.
Disclosure statement
No potential conflict of interest was reported by the authors.
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