We have also developed several hypotheses regarding CSR activity-for example, the provision of CSR will depend on R&D spending, advertising intensity, the extent of product differentiation, the
percentage of government sales, consumer in-come, the tightness of the labor market, and the stage of the industry life cycle. Additionally, the likelihood of economies of scale and scope in the provision of CSR implies that large, diversified companies will be more active in this arena. Most important, our model indicates that although firms providing CSR will have higher costs than firms not providing CSR, they will each have the same rate of profit