With the blossoming of research on corporate social performance, the data produced by Kinder, Lydenberg, Domini have become the standard to measure firms’ social and stakeholder actions. However, to date, only a few studies have focused on examining the data directly, and have done so largely in terms of validating the concepts and methods in the data set’s construction. The present study seeks to complement these efforts by contributing knowledge about what the KLD data report on firms’ actions toward primary (...) and secondary stakeholders, and the dimensions of CSP that firms generally engage in, together or sequentially. With data on 3,073 firms over the period 2000-2010, results show that firms expend more resources on garnering strengths in primary stakeholder dimensions, although this trend is sharply deteriorating to the benefit of secondary stakeholders—notably the natural environment. Results also show that firms generally approach CSP with a mixed behavior, with strengths and concerns in the same dimensions, especially as it pertains to secondary stakeholders. These are the same dimensions in which firms show the longer, more intrinsic commitments, suggesting that secondary stakeholder strengths and concerns may be structural in nature. However, there is also evidence of relationships across dimensions, indicating that firms’ involvement in CSP can generate momentum. The rich implications of these findings are discussed. (shrink)

Although high-performance human resource practices do not directly affect corporate social performance strengths, they do positively affect CSP strengths in companies that are highly innovative or have high levels of slack. High-performance human resource management practices also directly and negatively affect CSP concerns. Drawing on the resource-based view and using secondary data from an objective, third-party database, the authors develop and test hypotheses about how high-performance HRM affects a company’s CSP strengths and concerns. Findings suggest that HRM and innovation are (...) important capabilities because they create and enhance other capabilities. (shrink)

In the last two decades, there has been a pronounced growth of CSR rating agencies that assess corporations based on their social and environmental performance. This article investigates the impact of CSR ratings on the behavior of individual corporations. To what extent do corporations adjust their behavior based on how they rank? Our primary finding is that being dropped from a CSR ranking appears to do little to encourage firms to acknowledge and address problems related to their social and environmental (...) performance. Specific rankings appear not to have a widespread effect of influencing firms to acknowledge negative CSR events and publicly present plans and actions to address them. Whether firms are well or poorly ranked, they appear to focus on and publicly discuss their “positive” CSR activities. We discuss the wider significance of these results as well as the overall significance of CSR rankings for a global economy. (shrink)

Although a number of studies have shown that corporate social responsibility (CSR) activities often lead to greater organisational performance in western developed economies, researchers are yet to examine the strategic value of CSR in emerging economies. Using survey data from 280 firms operating in Dubai, this study examines the link between CSR activities and organisational performance. The results show that CSR has a positive relationship with all three measures of organisational performance: financial performance, employee commitment, and corporate reputation. These results (...) reinforce the accumulating body of empirical support for the positive impact of CSR on performance and challenge the dominant assumption that, given the weak institutional framework in emerging economies, CSR activities drain resources and compromise firms’ competitiveness. (shrink)

This article presents an alternative rationale for corporate philanthropy based on managerial values of benevolence and integrity. On the one hand, top managers with benevolence and integrity values are more likely to spread their intrinsic concern for others into the wider society in the form of corporate philanthropy. On the other hand, top managers high in benevolence and integrity are likely to contribute to improved managerial credibility and trusting firm-stakeholder relationships, thereby improving corporate financial performance. Therefore, the article makes the (...) argument that both corporate philanthropy and corporate financial performance can better be interpreted as resulting from managers’ benevolence and integrity values. (shrink)

The goal of this paper is to examine whether business performance is affected by the adoption of practices included under the term Corporate Social Responsibility (CSR). To achieve this goal, we analyse the relation between CSR and certain accounting indicators and examine whether there exist significant differences in performance indicators between European firms that have adopted CSR and others that have not. The effects of compliance with the requirements of CSR were determined on the basis of firms included in the (...) Dow Jones Sustainability Index (DJSI), and specific accounting indicators were applied to measure performance. For the purposes of this study, we selected one group of firms belonging to the DJSI and another comprised of firms quoted on the Dow Jones Global Index (DJGI) but not on the DJSI. The sample was made up of two groups of 55 firms, studied for the period 1998–2004. Empirical analysis supports the conclusion that differences in performance exist between firms that belong to the DJSI and to the DJGI and that these differences are related to CSR practices. We find that a short-term negative impact on performance is produced. (shrink)

This article explores the role of financial markets for sustainable development. More specifically, the authors ask to what extent financial markets foster and facilitate more sustainable business practices. The authors highlight that their current role is rather modest and conclude that, on the old paths, a paradoxical situation exists. On one hand, financial market participants increasingly integrate environmental, social, and governance criteria into their investment decisions, whereas on the other hand, in terms of organizational reality, there seems to be no (...) real shift toward more sustainable business practices. The authors identify two main challenges within the field of sustainable investments that are relevant for entering new avenues that may help overcome this situation. First, a reorientation toward a long-term paradigm for sustainable investments is important. Second, ESG data must become more trustworthy. From a theoretical point of view, the authors finally highlight the potential market consequences when ESG investment criteria are used. (shrink)

The question of what drives corporate social performance has become a vital concern for many managers and researchers of large corporations. This study addresses this question by adopting a multilevel, multistakeholder, and multimethod approach to theorize and estimate the relative influence of macro, meso, and micro factors on CSP. Applying three different methods of variance decomposition analysis to an international sample of 2060 large public companies over a time span of 5 years, our results show that firm-level factors explain the (...) largest proportion of variance in aggregate CSP as well as CSP oriented toward communities, the natural environment, and employees. These results support our hypotheses according to which CSP is not primarily driven by macrolevel or mesolevel factors, except for shareholder-oriented CSP, which is relatively more influenced by country-level factors. As a whole, our findings also point to the value of subdividing CSP into its stakeholder-specific components as this disaggregation allows for a more careful examination of distinct drivers of distinct aspects of CSP. (shrink)

The business case for social responsibility is one of the most widely studied topics in the business and society literature that focuses on large firms. This attention is understandable because large firms have an obligation to shareholders who, as commonly assumed, seek to maximize returns on their investments, in turn, pressing corporate managers to show that firms’ expenditures in social engagement would pay off. Small firms, on the other hand, rarely face such pressures, yet the BCSR logic is increasingly applied (...) to small firms as well. Our primary objective in this paper is to examine whether and how much do small firm owners’ perceptions of BCSR affect the firm’s social engagement. In finding a fine-grained answer to those questions, we consider BCSR as a two-dimensional construct consisting of tangible and intangible benefits, and also integrate the BCSR perspective with the slack resource perspective to offer a motivation-capacity lens to examine firm’s social engagement. Drawing on a multi-industry sample of 478 small firms in the US, we find that while small firm owners’ perceptions about potential tangible benefits of social engagement are not related to the firm’s social engagement, perceptions about potential intangible are positively related. Firm's financial performance is also positively related to its social engagement, but there is no interaction between potential benefits and financial performance. This study contributes to an improved understanding about small firms’ social engagement, which still remains an understudied area. Our results are in line with studies which argue that firms’ social engagement is a response to institutional factors. (shrink)

The goal of this paper was to investigate whether and how a firm that engages in different kinds of corporate social performance can create a favorable corporate reputation among its stakeholders, and as a result achieve a good financial performance. Building on stakeholder theory, we distinguish two types of reputation—reputation among public stakeholders and reputation among financial stakeholders. We argue that CSP activities affect these two reputations differently. In addition, we empirically test the relationship among different types of CSP, reputation (...) among public and financial stakeholders, and financial performance. Our results suggest that Carroll’s four types of CSP affect financial performance differently, and their effects are mediated by reputation among public and financial stakeholders. Our findings provide guidelines for managers on choosing to emphasize certain CSP aspects in their communication, depending on the specific stakeholder group they are targeting. (shrink)

This study adds two new perspectives to the long-running debate regarding the linkage between corporate social performance (CSP) and corporate financial performance (CFP): First, we add the aspect of issue materiality and suggest research to put more emphasis on the question of how individual CSP issues can be assumed to systematically influence the business environment from a theoretical point of view. Second, we highlight the measurement level of the underlying data screens as an important determinant of the actual effects of (...) CSP on CFP. Focusing on climate change, we developed a set of questions that cover a firm’s carbon emissions and carbon management strategies. These questions were included in a questionnaire sent out annually to the 2,500 largest companies by market cap within the Dow Jones Global Index by an independent Swiss-based asset management firm. Our results show that when using carbon emissions as an outcome-based measurement, corporate environmental performance pays off. Conversely, when using carbon management as a process-based measurement, we find a negative relationship between corporate environmental performance and CFP. (shrink)

Firms face a great deal of pressure to engage in the heightened debate about climate change policies and practices. Building on the corporate political strategy literature, the authors evaluate how firms choose to influence those policies when faced with pressure from shareholders and activists. The authors triangulate firms’ choice of corporate political activity (CPA) with their environmental performance to draw out whether performance affects the firm’s choice of engagement level in CPA. The authors find that firms in the S&P 500 (...) use a form of constituency-building (CB) more often than a financial-incentive (FI) tactic and that environmental performance moderates this choice. To date, there is little research connecting corporate political activity and climate change policies and performance. This research is intended to contribute to this literature gap. (shrink)

With a meta-analysis of 85 studies and 190 experiments, the authors test the relationship between socially responsible investing and financial performance to determine whether including corporate social responsibility and ethical concerns in portfolio management is more profitable than conventional investment policies. The study also analyses the influence of researcher methodologies with respect to several dimensions of SRI on the effects identified. The results indicate that the consideration of corporate social responsibility in stock market portfolios is neither a weakness nor a (...) strength compared with conventional investments; the heterogeneous results in prior studies largely reflect the SRI dimensions under study. (shrink)

Responsible Care is a voluntary code of conduct developed, enforced, and monitored by the Chemical Manufacturers Association. Voluntary codes could be designed and enforced by regulators, nonprofit groups, industry associations, and individual firms. They could vary in their scope, focusing on firms around the globe, in a given region, within a country, or in a given industry. This article focuses on Responsible Care’s self-regulatory services that pertain to establishing, monitoring, and enforcing industry-wide environmental, health, and safety standards. Employing insights from (...) the club theory, stakeholder theory, institutionalist theory, and the corporate social performance perspective, it examines the demand and supply sides of voluntary codes. Finally, it discusses theoretical implications and the key challenges faced by Responsible Care in the future. (shrink)

The authors studied the impact of social-ethical investing on firms targeted during the South African boycott. Findings indicate that the average percentage of institutional ownership of the stocks of the firms with equity interests in South Africa increased at a significantly greater rate than the rest of the market following the end of sanctions. Using event study methodology, the authors find that these stocks significantly outperform the market in this period. This study provides evidence of the stockmark et impact of (...) social-ethical investing and of a positive relationship between corporate social performance and corporate financial performance as measured in stockmarket returns. (shrink)

This study examines the relation between firms' corporate philanthropic giving and their performance in three other social domains - employee relations, environmental issues, and product safety. Based on a sample of 384 U.S. companies and using data pooled from 1998 through 2000, we find that worse performers in the other social areas are both more likely to make charitable contributions and that the extent of their giving is larger than for better performers. Analyses of each separate area of social performance, (...) however, indicate that the relation between giving and negative social performance only holds for the environmental issues and product safety areas. We find no significant association between corporate philanthropy and employee relations concerns. In general, these findings suggest that corporate philanthropy may be more a tool of legitimization than a measure of corporate social responsibility. (shrink)

The conceptual literature increasingly portrays corporate philanthropy (CP) as an old-fashioned and ineffective operationalization of a firm’s corporate social responsibility. In contrast, empirical research indicates that corporations of all sizes, and both in developed and emerging economies, actively practice CP. This disadvantaged status of the concept, and research, on CP, complicates the advancement of our knowledge about the topic. In a systematic review of the literature containing 122 journal articles on CP, we show that this business practice is loaded with (...) unique characteristics, strengths, and weaknesses, and both conceptual and practical challenges that require renewed attention. We identify six interrelated but distinctive research themes in the literature: concept, motives, determinants, practices, business outcomes, and social outcomes. Dividing the literature on CP into six research themes creates an insightful comprehensive map of this intellectual terrain. Moreover, we distinguish among the level at which CP is analyzed: individual, organizational, institutional, or any combination of these levels. The review reveals significant gaps in the knowledge on CP. Most importantly we find that the conceptualization is limited, the research is mostly quantitative, the effects of CP on society are severely under-researched, and there is a lack of multilevel analyses. A detailed future research agenda is offered, including specific suggestions for research designs and measurements. (shrink)

ABSTRACT:Globally, family firms are the dominant organizational form. Family involvement in business and unique family dynamics impacts organizational strategy and performance. However, family control of business has rarely been adopted as a discriminating variable in the organizations and the natural environment (ONE) research field. Drawing on the theory of planned behavior we develop a conceptual framework of the drivers of proactive environmental strategy (PES) in family firms. We argue that family involvement in business influences the attitudes, subjective norms, and perceived (...) behavioral control of a firm’s dominant coalition. Together these factors determine the extent of the dominant coalition’s intentions to undertake PES. Further, family firms with lower levels of relationship conflict within the controlling family will be more successful in translating the dominant coalition’s intentions to allocate resources for the pursuit of PES. Research implications of the theory are discussed. (shrink)

On March 12, 2009, a Sikorsky S-92A helicopter travelling to two offshore oil installations crashed into the sea about 55 km away from the coastal city of St. John’s in Newfoundland and Labrador, Canada. It sank quickly with the loss of 17 lives. There was one survivor. The article examines the circumstances of the crash to assess the effectiveness of an instrumental, business case for safety and, by extension, for corporate social responsibility. The article fills a gap in the business (...) and the management literature by adopting a qualitative, case study methodology to complement earlier, predominantly quantitative research. The study analyzes a comprehensive set of documentary data available from the offshore regulator’s public inquiry website, including many days of verbatim testimony from the industry, the union, regulators, investigators, the lone survivor and families of the deceased, in addition to written submissions and expert reports. Investigatory reports from the Transportation Safety Board of Canada and the NL Inquiry were analyzed, as were regulatory documents and media coverage. Although offshore safety has improved since the Ocean Ranger disaster in 1982, the empirical evidence in this case study adds to our understanding of how reliance on a voluntary, instrumental business case for CSR in the absence of a normative concept of CSR is likely to fail, largely because of the existence of a powerful tension between oil exploration and production and investment in safety. (shrink)

Review of extant research on the corporate environmental performance (CEP) and corporate financial performance (CFP) link generally demonstrates a positive relationship. However, some arguments and empirical results have demonstrated otherwise. As a result, researchers have called for a contingency approach to this research stream, which moves beyond the basic question “does it pay to be green?” and instead asks “when does it pay to be green?” In answering this call, we provide a meta-analytic review of CEP–CFP literature in which we (...) identify potential moderators to the CEP–CFP relationship including environmental performance type (e.g., reactive vs. proactive performance), firm characteristics (e.g., large vs. small firms), and methodological issues (e.g., self-report measures). By analyzing these contingencies, this study attempts to provide a basis on which to draw conclusions regarding some inconsistencies and debates in the CEP–CFP research. Some of the results of the moderator analysis suggest that small firms benefit from environmental performance as much or more than large firms, US firms seem to benefit more than international counterparts, and environmental performance seems to have the strongest influence on market-measures of financial performance. (shrink)

In this research, we shed new light on the empirical link between corporate social performance (CSP) and corporate financial performance (CFP) via the application of empirical models and methods new to the CSP–CFP literature. Applying advanced financial models to a uniquely constructed panel dataset, we demonstrate that a significant overall CSP–CFP relationship exists and that this relationship is, in part, conditioned on firms’ industry-specific context. To accommodate the estimation of time-invariant industry and industry-interaction effects, we estimate linear mixed models in (...) our test of the CSP–CFP relationship. Our results show both a significant overall CSP effect as well as significant industry effects between CSP and CFP. In conflict with expectations, the unweighted average effect of CSP on CFP is negative. Our industry analysis, however, shows that in over 17% of the industries in our sample, the effect of CSP on CFP for socially responsible firms is positive. We also examine the multidimensional nature of the CSP construct in an industry context by exploring the CSP dimension–industry nexus and identify dimensions of social performance that are associated with either better or worse financial performance. Our results confirm the existence of disparate CSP dimension–industry effects on CFP, thus our results provide important and actionable information to decision makers considering whether and how to commit corporate resources to social performance. (shrink)

ABSTRACT:Globally, family firms are the dominant organizational form. Family involvement in business and unique family dynamics impacts organizational strategy and performance. However, family control of business has rarely been adopted as a discriminating variable in the organizations and the natural environment (ONE) research field. Drawing on the theory of planned behavior we develop a conceptual framework of the drivers of proactive environmental strategy (PES) in family firms. We argue that family involvement in business influences the attitudes, subjective norms, and perceived (...) behavioral control of a firm’s dominant coalition. Together these factors determine the extent of the dominant coalition’s intentions to undertake PES. Further, family firms with lower levels of relationship conflict within the controlling family will be more successful in translating the dominant coalition’s intentions to allocate resources for the pursuit of PES. Research implications of the theory are discussed. (shrink)

In this article, we examine the empirical association between firm value and CSR engagement for firms in sinful industries, such as tobacco, gambling, and alcohol, as well as industries involved with emerging environmental, social, or ethical issues, i.e., weapon, oil, cement, and biotech. We develop and test three hypotheses, the window-dressing hypothesis, the value-enhancement hypothesis, and the value-irrelevance hypothesis. Using an extesive US sample from 1995 to 2009, we find that CSR engagement of firms in controversial industries positively affects firm (...) value after controlling for various firm characteristics. To address the potential endogeneity problem, we further estimate a system of equations and change regression and continue to find a positive relation between CSR engagement and firm value. Our findings support the value-enhancement hypothesis and are consistent with the premise that the top management of US firms in controversial industries, in general, considers social responsibility important even though their products are harmful to human being, society, or environment. (shrink)

Recent perspectives on community investments suggest that they are opportunities for firms to create value for shareholders and other stakeholders. However, many corporate managers are still influenced by a widely held belief that such investments erode profits and are therefore unjustifiable from an agency perspective. In this paper, we refine and test theory regarding countervailing forces that influence community-based firm performance. We hypothesize that high levels of available slack will be associated with higher community-based performance, but that this relationship will (...) be moderated by three important governance variables: board independence, investment fund ownership, and CEO ownership. We find support for our hypotheses in longitudinal study of a large sample of U.S. corporations. (shrink)

One of the older questions in the debate about Corporate Social Responsibility (CSR) is whether it is worthwhile for organizations to pay attention to societal demands. This debate was emotionally, normatively, and ideologically loaded. Up to the present, this question has been an important trigger for empirical research in CSR. However, the answer to the question has apparently not been found yet, at least that is what many researchers state. This apparent ambivalence in CSR consequences invites a literature study that (...) can clarify the debate and allow for the drawing of conclusions. The results of the literature study performed here reveal that there is indeed clear empirical evidence for a positive correlation between corporate social and financial performance. Voices that state the opposite refer to outdated material. Since the beginnings of the CSR debate, societies have changed. We can therefore clearly state that, for the present Western society, "Good Ethics is Good Business.". (shrink)

In academic research, many attempts have been undertaken to legitimize corporate community involvement by showing a business case for it. However, much less attention has been devoted to building understanding about the actual dynamics and challenges of managing CCI in the business context. As an alternative to existing predominantly static and top-down approaches, this paper introduces a social movement framework for analyzing CCI management. Based on the analysis of qualitative case study data, we argue that the active role of employees (...) pressuring for CCI policies and practices, as well as the organization audience responses to their efforts, are at the core of the challenges involved in managing CCI. These challenges also pose limits to how far CCI can be extended to a “business as usual” activity. (shrink)

“Ethical investing” is interpreted in the following paper to be the use of non-financial normative criteria by investors in the choice ofsecurities for their portfolios.Ethical investors may aim at fulfilling duties they feel they have, possibly including increasing the amount of good in society through theconsequences of their buying and selling behavior. The main duties are those of not-profiting from bad corporate behavior and of punishing bad (or rewarding good) firms. The main consequence desired is that managers manage corporations in (...) a more ethical manner. But ethical investors (as opposed to some other kinds of investors who are also interested in normative issues) also aim at receiving returns based on the market risk of their investments.If the aim of managers is to maximize shareholder wealth, then ethical investors can fulfill their duties or achieve their desired consequences only if their trading activities affect shareholder wealth, i.e., share price. A theoretical argument is presented to show that this trading activity will not affect share price or return. In addition, reference is made to results of empirical studies which show that ethical stocks yield market returns, i.e., that the share price of ethical firms is unaffected by the actions of ethical investors.If the trading activity of ethical investors fails to affect share price and return, then these investors fail to fulfill any of their goals or to achieve their ends. (shrink)

To date, the value of corporate social responsibility (CSR) activities has primarily been measured through the company’s reputation, with little attention given to exploring whether there are internal influences between CSR and other management practices. We argue that the efficacy of CSR extends beyond a company’s reputation for managing social and environmental concerns; in particular, it can influence other business practices such as risk management. Our results suggest that (a) overall, firms with better CSR performance are more likely to adopt (...) integrated risk management practices and (b) CSR activities that target both primary stakeholders and secondary stakeholders are equally important in facilitating the adoption of such risk management practices. Theoretically, we contribute to the CSR literature by providing a possible mechanism for risk reduction and insurance-like effects of CSR. Practically, we provide managerial implications demonstrating that the efficacy of CSR should not be viewed in isolation of other business practices. (shrink)

This perspectives article seeks to comment and reflect on my 1999 BAS article titled “Corporate Social Responsibility: Evolution of a Definitional Construct,” and subsequent writings addressing these same topics. First, perspectives on the 1950-1999 period are offered. Second, reflections on the 2000-2020 period are presented. Finally, thoughts about the future and the new normal for CSR are set forth. Hopefully, the observations presented will stimulate further thinking on this important concept. And, it will be interesting to all of us to (...) see where the dust settles when the pandemic ends and organizations have had a chance to re-imagine or reset their missions, goals, and processes with respect to CSR. (shrink)

The corporate ethics literature has considerably focused on whether giving results in getting. However, the relationship between corporate philanthropy and performance and the underlying mechanisms remain unclear. Drawing on signaling and cue consistency theories, we develop and test a model that specifies whether, how, and when corporate philanthropy benefits relative competitive performance from a micro-process perspective. Using a Chinese sample of 1623 employees, 145 CEOs, and 145 human resources managers, we found that corporate philanthropy could positively influence relative competitive performance (...) through the internal processes—organization-level citizenship behaviors of employees. Moreover, work–life balance practices strengthen the aforementioned mediation. In particular, when a firm performs high levels of work–life balance practices, corporate philanthropy tends to promote more citizenship behaviors in the entire organization, thereby enhancing the relative competitive performance of the firm. By contrast, when organizations perform low levels of work–life balance practices, the aforementioned mediation becomes nonsignificant. The theoretical and practical implications of these findings are discussed. (shrink)

This study explores why and how firms respond to social demands through philanthropic giving in the context of a severe natural disaster. Drawing on Marquis and Qian's organizational response model to government signals, we integrate resource dependence theory and institutional theory to build a two-step model of organizational response to social needs, in situations of disaster relief. We argue that firms depending more on the government for support are more likely to donate in disaster relief, while firms who receive more (...) scrutiny from the government and the general public and firms having more slack resources are likely to donate more. Evidence from Chinese listed companies' donations to the 2008 Sichuan earthquake largely supports our predictions. This study provides a more precise understanding of the corporate philanthropic decision process, decoupling the drivers of philanthropic giving, and those determining the amount given. Theoretical and practical implications are suggested. (shrink)

We link the corporate governance literature in financial economics to the agency cost perspective of corporate social responsibility to derive theoretical predictions about the relationship between corporate governance and the existence of executive compensation incentives for CSR. We test our predictions using novel executive compensation contract data, and find that firms with more shareholder-friendly corporate governance are more likely to provide compensation to executives linked to firm social performance outcomes. Also, providing executives with direct incentives for CSR is an effective (...) tool to increase firm social performance. The findings provide evidence identifying corporate governance as a determinant of managerial incentives for social performance, and suggest that CSR activities are more likely to be beneficial to shareholders, as opposed to an agency cost. (shrink)

The empirical relationship between a firm’s social performance and its financial performance is still not well established in the literature. Despite more than 30 years of research and more than 100 empirical studies on the issue, the results are still mixed. We argue that the heterogeneous results found in previous studies are not due exclusively to problems related with the measurement instruments or the samples used. Instead, we posit that a more fundamental problem related with the endogeneity of social strategic (...) decisions could be driving most of the empirical findings. We show that, using a panel data of 658 firms from 1991 to 2005, how some of the results found in previous research change, and some are even reversed when endogeneity is properly taken into account. (shrink)

This paper explores the nature of the relationship between corporate social responsibility (CSR) and competitiveness. We start with the commonly held view that firm competitiveness is defined by the market. That is, the question of what are the critical competitiveness factors is answered by looking at how companies and financial analysts describe and evaluate a firm. To analyze this, we review the current state of the art on the relationship between CSR and competitiveness. Second, CSR criteria used by financial analysts (...) is identified and compared with company valuation methods. Third, the results of a multi-stakeholder dialogue on CSR and competitiveness of the European financial sector are presented. As a conclusion, we argue that CSR and competitiveness relate through a learning and innovation cycle, where corporate values, policies and practices are permanently defined and re-defined. Thus, we propose that learning takes place as CSR is embedded in business processes, and that once it has been integrated, in turn, it generates innovative practices, and finally, competitiveness. At the end of the paper, we propose that CSR in practice consists of managing inherent paradoxes generated by the tension between CSR and business policies. (shrink)

In this article, we examine the relationship of the multinational firm’s market environment, stakeholders, resources, and values to the development of strategic social planning and strategic social positioning. Using a sample of multinational enterprises in Mexico, we examine the relationship of these different ways of conducting social strategy to the creation of value by the firm. The market conditions of munificence and dynamism, and the resource for continuous innovation are found to be related to strategic social positioning. The social responsibility (...) orientation of the firm is related to strategic social planning. Positioning is related to value creation for the multinational firm, but planning is not. We discuss the implications of these findings for research and practice. (shrink)

The relationship of corporate social responsibility to risk management has been treated sporadically in the business society literature. Using real options theory, I develop the notion of corporate social responsibility as a real option its implications for risk management. Real options theory allows for a strategic view of corporate social responsibility. Specifically, real options theory suggests that corporate social responsibility should be negatively related to the firm’s ex ante downside business risk.

Literature on corporate social responsibility has tended to treat economic benefits to the firm as unintentional spillovers that result from laudable CSR behavior. Empirical studies of the relationship between CSR and corporate financial performance have reported mixed findings. This article shifts the conceptual and empirical focus to investigate the conditions under which intentional profit-seeking through corporate social action projects can create economic value for the firm. The article uses resource-dependency theory and the resource-based view to define the firm’s external and (...) internal environments respectively. From that perspective, the article looks at how corporate social action creates economic value through strategic social planning and strategic social positioning. A survey instrument was developed and applied to 110 large Spanish firms. In that sample, munificence and continuous innovation positively affect social positioning, while nongovernmental organization salience and social responsibility orientation positively affect social planning. Both social positioning and social planning in turn contribute to corporate ability to create value. The article concludes with a discussion of the research and managerial implications of these findings. (shrink)

Do firms respond to changes in economic growth by altering their corporate social responsibility programs? If they do respond, are their responses simply neglect of areas associated with corporate social performance or do they also cut back on positive programs such as profit sharing, public/private housing programs, or charitable contributions? In this paper, we argue that because CSP-related actions and programs tend to be discretionary, they are likely to receive less attention during tough economic times, a result of cost-cutting efforts. (...) However, the various CSP performance areas vary in terms of their resource requirements and their influence on financial performance, which suggests that firms may respond differently depending on area. Consequently, in addition to examining CSP concerns separately from positive actions and programs, we also examine the influence of economic growth across the five areas of diversity, employee relations, the environment, product quality/safety, and the community. Based on data from 837 firms over 15 years, our results suggest that firms neglect some areas associated with CSP during economic downturns, resulting in increased concerns about community and employee relations, product safety/quality, and the environment. However, this relationship does not apply to positive actions and programs. Instead, firms tend to increase their positive CSP programs in areas such as diversity, employee relations, and the environment during periods of slow economic growth and reduce them when the economy picks up. We offer potential explanations for our findings and discuss their importance to research on CSP. (shrink)

Theory and research on corporate social responsibility (CSR) have been concerned primarily with identifying stakeholders, categorizing types of CSR initiatives, and linking corporate social performance to firm performance. In this conceptual article, the authors assess strategic CSR initiatives, inquiring into the conditions that might give rise to a sustainable competitive advantage in social performance. In what circumstances does a firm's CSR initiative create a first-mover advantage, and when should a firm prefer an early- or late-adopter position? Using the resource-based view (...) and the asymmetries approach of first-mover advantages, the authors propose that for a CSR initiative to lead to a sustainable first-mover advantage, it must be central to the firm's mission, provide firm-specific benefits, and be made visible to external audiences. These strategic attributes generate internal sustainability and must be complemented to ensure external defensibility by a firm's ability to assess its environment, manage its stakeholders, and deal with social issues. (shrink)

This study investigates the financial effects of additions to and deletions from the most well-known social stock index: the MSCI KLD 400. Our study makes use of the unique setting that index reconstitution provides and allows us to bypass possible issues of endogeneity that commonly plague empirical studies of the link between corporate social and financial performance. By examining not only short-term returns but also trading activity, earnings per share, and long-term performance of stocks that are involved in these events, (...) we bring forward evidence of a ‘social index effect’ where unethical transgressions are penalized more heavily than responsibility is rewarded. We find that the addition of a stock to the index does not lead to material changes in its market price, whereas deletions are accompanied by negative cumulative abnormal returns. Trading volumes for deleted stocks are significantly increased on the event date, while the operational performances of the respective firms deteriorate after their deletion from the social index. (shrink)

The United Nations Global Compact has generated a lively debate among academics, activists, and policy practitioners. Given the scope and ambition of this program, and the prestige of the United Nations associated with it, its supporters believe it will fundamentally reshape how businesses practice corporate social responsibility. Its critics view it as a flawed program because it does not impose verifiable obligations and does not compel its participants to adhere to their program obligations. We present an approach to study CSR (...) programs grounded in rational-choice institutionalist theory, building on previous work viewing CSR programs as clubs which can produce reputational benefits for members as well as positive societal externalities, provided that they incorporate institutional mechanisms to prevent member shirking. This perspective puts the focus squarely on the institutional rules of the UNGC and their impacts on member behavior. While we conclude that the UNGC has not yet demonstrated a capacity to generate across-the-board improvements in CSR performance beyond what member firms would have done otherwise, we are hopeful that its sponsors and leaders can undertake worthwhile changes in program design to align member incentives with program objectives. (shrink)

Several researchers have suggested that a talented, quality workforce will become a more important source of competitive advantage for firms in the future. Drawing on social identity theory and signaling theory, the authors hypothesize that firms can use their corporate social performance (CSP) activities to attract job applicants. Specifically, signaling theory suggests that a firm’s CSP sends signals to prospective job applicants about what it would be like to work for a firm. Social identity theory suggests that job applicants have (...) higher self-images whenworking for socially responsive firms over their less responsive counterparts. The authors conducted an experiment in which they manipulated CSP and found that prospective job applicants are more likely to pursue jobs from socially responsible firms than from firms with poor social performance reputations. The implications of these findings for academicians and practitioners alike are discussed. (shrink)

Rowley and Berman (2000) are tackling the right questions in their article. Three critical questions, in essence, are asked: What is corporate social performance (CSP)? What does it mean (i.e., CSP measures)? And, where does the future lie with CSP? In answering these questions, they are creating a CSP research agenda for the 21st Century. While agreeing, to a large extent, with their new set of questions, this paper questions their rationale for what is currently wrong with CSP and focuses (...) on extending future research directions. Specifically, this paper suggests that existing research in related disciplines can help accelerate our understanding of CSP. Marketing (i.e., customer-organization relations) and human relations (i.e., employee-organization relations) literatures, for example, already critically examine the conditions under which various organizational practices, policies, and procedures flourish. These boundary spanning functions provide newinsights that can lead to a broader, richer, and more systematic understanding of the complex CSP construct. (shrink)

Building on earlier work on the relationship between corporate social performance (CSP) and a firm’s financial performance, this integrative empirical study supports the theoretical argument that the higher a firm’s CSP the lower its financial risk. Specifically, the relationship between CSP and risk appears to be one of reciprocal causality, because prior CSP is negatively related to subsequent financial risk, and prior financial risk is negatively related to subsequent CSP. Additionally, CSP is more strongly correlated with measures of market risk (...) than measures of accounting risk. Of all CSP measures, reputation for social responsibility appears to be the most important one in terms of its risk implications. (shrink)

This study replicates Paul, Zalka, Downes, Perry, and Friday’s scale to measure U.S. consumer sensitivity to corporate social performance (CSP) in another sample—namely, that of Dutch consumers. In addition, theories on the effects of sociodemographic variables on environmental concern have been applied to investigate the influence of individual consumer characteristics on the sensitivity to CSP. It was found that the Consumer Sensitivity Scale to CSP is a reliable one, and it also seems applicable to West European countries. For Dutch consumers, (...) CSP serves more as a hygiene factor—it should be at a minimum acceptable level (a bottom line)—than as a motivator to buy a product. Having a left-wing political orientation, a higher level of education, being female, and being older are consumer characteristics that all have a positive influence on sensitivity to CSP. Surprisingly, household income did not influence this. (shrink)

The contribution of this work is a classification of corporate social action underlying the Social Ratings Data compiled by Kinder Lydenburg Domini Analytics, Inc. We compare extant typologies of corporate social action to the results of our exploratory factor analysis. Our findings indicate four distinct latent constructs that bear resemblance to concepts discussed in prior literature. Akey finding of our research is that positive and negative social action are both empirically and conceptually distinct constructs and should not be combined in (...) future research. Additionally, we recommend that some prior research results be reconsidered to determine whether these newly derived measures might clarify some previous findings. (shrink)

Drawing on stakeholder theory and the concept of enlightened self-interest, we argue that firms that actively engage in corporate philanthropic giving also tend to demonstrate greater concern for investors’ interests by providing more transparent financial information and avoiding corporate misconduct. Moreover, the relationships between corporate giving, financial information transparency, and corporate misconduct vary significantly according to the firm’s ownership type, which affects the fundamental motivations for corporate philanthropy. In a sample of Chinese publicly listed firms from the 2003–2009 period, we (...) find a positive relationship between corporate giving and financial transparency, and note that the relationship is stronger for non-state-owned enterprises. We also find a significantly negative association between corporate giving and corporate misconduct for non-SOEs, but not for SOEs. Taken together, these findings suggest that responsibility to both stakeholders and shareholders is a vital part of building trust and reputations in China’s non-SOE sector. (shrink)

Corporate management is torn between either focusing solely on the interests of stockholders or taking into account the interests of a wide spectrum of stakeholders. Of course, there need be no conflict where taking the wider view is also consistent with maximising stockholder wealth. In this paper, we examine the extent to which a conflict actually exists by examining the relationship between a company's positive and negative corporate social responsibility activities and equity performance. In general, we find little evidence to (...) suggest that managers taking a wider stakeholder perspective will jeopardise the interest of its stockholders. However, our findings do suggest that the market is not only influenced by the independent CSR activities, but also the totality of these activities and that the facets that they value do vary over time. It seems that most recently, the market has valued most firms that satisfied minimum requirements in the areas of diversity and environmental protection but were most proactive in the area of employee-relations. (shrink)