This paper shows that di¤erence in equity holding structure leads to heterogeneous firm preference for investing in social capital (CSR). In our theoretical model managerial and customer preferences jointly influence CSR investments. We show that if managerial preference is high, social investments of firms are higher, independent of customer preference. We test our theoretical predications using data from Indian firms. We show that firms with concentrated shareholding invest more in CSR. Firms with dispersed shareholding increase social investments if they export to the United States and the European Union, but they decrease these expenses in reaction to antidumping penalties.