This article analyses whether benefits arising for human resource management from environmental management activities drive environmental management system implementation. Focusing on employee satisfaction and recruitment/retention, it tests this for German manufacturing firms in 2001 and 2006 and incorporates a rare longitudinal element into the analysis. It confirms positive associations of the benefit levels for both variables with environmental management system implementation on a large scale. Also it provides evidence that increasing levels of environmental management system implementation result from higher economic (...) benefits in the human resource domain. In doing so the article supplies needed quantitative evidence on important aspects of how sustainability relates to human resource management. (shrink)

Recent scandals involving executive leadership have significantly contributed to the topic of corporate social responsibility (CSR) becoming one of the most important concerns of the management literature in the twenty-first century. The antithesis of CSR is embodied in executive corruption and malfeasance. Unfortunately such things are all too frequent. We view the degree of centrality of leadership, and the primary power motivation of leaders, as key factors that influence the engagement in corruptive leader behavior and consequent corporate social ir-responsibility (CSIR) (...) in organizations. Shared and self-leadership, on the other hand, we introduce as alternatives to traditional top-down centralized views of leadership that can establish needed checks and balances capable of reducing corruptive tendencies. We offer a conceptual model along with several propositions to help guide future research and practice. (shrink)

In the past few years, investors from different European countries have become increasingly interested in the new opportunities that socially responsible investing can offer. Empirical research into this subject has often assumed as ‘given’ the meaning attributed to the terms ‘ethical’ or ‘socially responsible’, thus concentrating more on other elements. This paper, through the analysis of the characteristics of ethical funds traded in Italy, investigates the possible contents that the terms ‘ethical’ and/or ‘socially responsible’ can assume in practice, with particular (...) attention to the underlying values and to how these values are integrated into the selection process. This analysis brings to light the impressive variety of ethical funds traded in Italy. In particular, it reveals the ‘Italian model’, whose distinguishing characteristics seem to be the following: recentness of issue, options for charitable donations, almost exclusive use of screening strategies, use of ‘best in class’ and ‘minimum tolerance quota’ indications, preference for ethical indices, application of commissions no higher than the national average, presence of ethical committees and the utilization of consulting or rating agencies. (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 out-dated 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)

Over recent years, there has been a focus in corporate activity upon the concept of corporate social responsibility (CSR) and one of its central platforms, the notion of sustainability, and particularly sustainable development. We argue in this article that the use of such a term has the effect of obfuscating the real situation regarding the effect of corporate activity upon the external environment and the consequent implications for the future. One of the effects of persuading that corporate activity is sustainable (...) is that the cost of capital for the firm is reduced as investors are misled into thinking that the level of risk involved in their investment is lower than it actually is. We analyse the effects of this misrepresentation and argue for a fuller debate about sustainability. (shrink)

Researchers and practitioners have devoted considerable attention to firms'' policies regarding discretionary disclosures. Prior studies argue that firms increase demand for their debt and equity issues and, thus, lower their cost of capital, by providing more informative disclosures. However, empirical research has generally not been able to document significant benefits from increased disclosure.This paper proposes an alternative explanation – firms disclose because it is the socially responsible thing to do. We argue that companies have incentives to engage in stakeholder management (...) by undertaking socially responsible activities and that providing extensive and informative disclosures is one such practice.We examine the relationship between firms'' disclosures and measures of social responsibility. We use ratings provided by the Council on Economic Priorities as proxies for the degree of social responsibility adopted by the sample firms. Disclosure rankings provided by the annual Association for Investment Management and Research Corporate Information Committee Reports (AIMR Reports) are used to measure disclosure level.Our results indicate that there is a positive relationship between disclosure level and corporate social responsibility. That is, firms that engage in socially responsive activities provide more informative and/or extensive disclosures than do companies that are less focused on advancing social goals. In addition, we find that socially responsible firms are more likely to provide this increased disclosure through better investor relations practices. These results support our contention that increased disclosure is a form of socially responsible behavior. (shrink)

This paper offers the first large-scale empirical study of organizational virtue as perceived by both internal and external stakeholders and of the links between these virtues and organizational outcomes such as identification, satisfaction, and distinctiveness. It takes a strategic approach to virtue ethics, one that differs from a more traditional Aristotelian concept of virtue and from Alasdair MacIntyre’s manner of distinguishing between internal and external goods. The literature review compares three different perspectives on the empirical study of organizational virtues, taken (...) by virtue theorists, POS scholars, and strategy scholars. The main study describes an empirical research undertaking that involved the analysis of 2548 usable questionnaires administered to employees and customers of seven organizations in the U.K. A structural equation model was used to test the linkages of the six dimensions of organizational virtue to satisfaction, identification, and distinctiveness. All the links were significant, with the strongest between virtue and identification. For employees, identification was driven most significantly by integrity, whereas customers’ identification was principally influenced by empathy. The empirical finding also sounds an alarm bell to the global firms who focus on creating a differentiated image based on CSR in the hope that it will lead to satisfaction. The results lead to a discussion of how companies might build favorable stakeholder perceptions of key dimensions of virtue that most shape their identification and differentiation in the marketplace. (shrink)

This paper examines the impact of the recent financial crisis on the relation between a firm’s risk and social performance using a sample of non-financial U.S. firms covering the period 1991–2012. We find that the relation between SP and risk is significantly different in the crisis period compared to the pre-crisis period. SP reduces volatility during the financial crisis. The risk reduction potential of SP is mainly due to the strengths component of SP. Since the relation of risk is stronger (...) with SP strengths than SP concerns, this implies an asymmetric relation between these SP components and a firm’s risk. Specifically, strengths act as a risk reduction tool during an adverse economic environment. (shrink)

This article sets out to undertake a thorough, point-by-point examination of the theory postulated by Campbell (2007), in which an attempt is made to specify the conditions under which corporations may or may not act in socially responsible ways. In order to ensure the overall reliability of our study, and to attempt to provide a new understanding of, and greater insights into, whether corporate social responsibility (CSR) is affected by financial and institutional variables, we empirically investigate a total of 520 (...) financial firms in 34 countries, between the years 2003 and 2005. Our empirical findings are: (i) finns with larger size are more CSR minded, and the financial performance and CSR are not related; (ii) finns would actually act in more socially responsible ways to enhance their competitive advantages when the market competitiveness is more intense; (iii) financial firms in countries with stronger levels of legal enforcement tend to engage in more CSR activities; however, interestingly and rather strikingly, those finns in countries with stronger shareholder rights tend to engage in less CSR activities; and (iv) self-regulation within the financial industry has a significantly positive effect on CSR, with firms being found to act in more socially responsible ways in those countries which have more cooperative employer-employee relations, higher quality management schools, and a better macroeconomic environment. (shrink)

A growing number of studies have investigated the various dimensions of corporate social responsibility (CSR) in the literature. However, relatively few studies have considered its impacts on employees. The purpose of this study is to analyze how CSR affects the organizational commitment of employees based on the social identity theory (SIT). The proposed model was tested on a sample of 269 business professionals working in Turkey. The findings of the study revealed that CSR to social and non-social stakeholders, employees, and (...) customers were the significant predictors of organizational commitment. However, there was no link between CSR to government and the commitment level of employees. (shrink)

In this empirical study, we present two new models that are corporate ethics based. The first model numerically quantifies the corporate value index (CV-Index) based on a set of predefined parameters and the second model estimates the market-to-book values of equity in relation to the CV-Index as well as other parameters. These models were applied to Canadian companies listed on the Toronto Stock Exchange (TSX). Through our analysis, we found statistically significant evidence that corporate values (CV-Index) positively correlated with firm (...) performance. The results are even more significant for firms with low market-to-book values. Our empirical findings suggest that corporate ethics is vital for management, employees, shareholders, stakeholders, and the community at large. In addition, we have tested and confirmed five hypotheses that are used to illustrate corporate ethics behavior and performance. (shrink)

This article revolves around the debate surrounding the lack of a coherent definition for corporate social responsibility (CSR). I make use of Jacques Derrida’s theorizing on contested meaning to argue that CSR’s ambiguity is actually necessary in light of its functional role as a “supplement” to corporate profit-seeking. As a discourse that refuses to conclusively resolve the tension between profit-seeking and prosociality, CSR expresses an important critical perspective which demands that firms act responsibly, while retaining the overall corporate frame of (...) shareholder supremacy. CSR does this by ambivalently affirming both profit-seeking and prosociality, a necessary contradiction. Attempts to reduce CSR’s ambiguity can thus only succeed by undermining its viability as a normative discourse that captures how certain elements of society understand how firms should act. The analysis suggests that greater scholarly attention is needed with regard to the material discursive environments within which discourses such as CSR are deployed. A discursive approach to research could thus benefit future practitioners, who have to act according to fluid standards of responsibility that cannot be authoritatively defined, but which can be better understood than they are at present. (shrink)

Since the 1970s, many Anglo-American studies have investigated the theme of corporate social responsibility (CSR) and its costs and benefits. Most studies have tried to test, largely in samples of multiple industries, the relationship between corporate social performance (CSP) and corporate financial performance (CFP). These analyses, however, have produced conflicting results and any attempt to give a generalized and coherent conclusion has proved inadequate. This article examines the ways CSP can be proxied and investigates the possible relationship between CSP (measured (...) by ethical rating) and CFP (measured by market and accounting ratios) in the banking sector using correlation methodology. It emerges that there is no statistically significant link between CSP and CFP. (shrink)

This study examines whether corporate social responsibility (CSR) towards primary stakeholders influences the financial and the non-financial performance (NFP) of Indian firms. Perceptual data on CSR and NFP were collected from 150 senior-level Indian managers including CEOs through questionnaire survey.Hard data on financial performance (FP) of the companies were obtained from secondary sources. A questionnaire for assessing CSR was developed with respect to six stakeholder groups - employees, customers, investors, community, natural environment, and suppliers. A composite measure of CSR was (...) obtained by aggregating the six dimensions. Findings indicate that stock-listed firms show responsible business practices and better FP than the non-stock-listed firms. Controlling confounding effects of stock-listing, ownership, and firm size, a favorable perception of managers towards CSR is found to be associated with increase in FP and NFP of firms.Such findings hold good when CSR is assessed for the six stakeholder groups in aggregate and for each stakeholder group in segregate. Findings suggest that responsible business practices towards primary stakeholders can be profitable and beneficial to Indian firms. (shrink)

The choice of new technology in a resource-based industry has far-reaching implications for its ethical performance. The kraft pulping industry uses considerable amounts of wood as raw material, and regulatory agencies have been tightening their control limits for effluent, solid waste and air emissions. The technological solutions required to reduce the environmental impact of the industry are shown to have the potential of causing social hardship for the mill's employees, the affected communities, lenders, and owners. In some instances, the technological (...) solutions give rise to new environmental challenges. Forestry practices are influencing the public's perception of the kraft pulping industry, its ethical and environmental performance, its profitability, and the properties of its product, which may increase wood requirements. New forestry practices have the potential to reduce the forest land area required to sustain the kraft pulp production at a given level but ethical problems associated with genetic manipulation, phenodiversity, and biodiversity are identified. This paper analyzes the interface between environmental protection, ethics, and choice of technology. (shrink)

Accountability for corporate social responsibility (CSR) and its societal challenges is undetermined, and it is unclear whether business or society should carry these responsibilities. Despite severe criticism from some, many organizations continue to invest in and promote CSR. The purpose of this multiple-case study was to increase the understanding of the phenomenon from the perspective of a purposeful sample of participants who contribute to CSR execution and who were representatives of the 10 organizations identified as active promoters. The participant corporations (...) (case studies), in Europe and North America, were mainly in the telecommunications industry. Study data came from 11 face-to-face, semistructured interviews with chief executive officers (CEOs) and other CSR key participants, a review of corporate archival records, and a review of other sources regarding the effective implementation of CSR in these organizations. The conceptual framework consisted of Carroll’s constructs of CSR based on economic, legal, social, and discretionary elements. The constant comparative method was used to analyze the interview data and identify factors leading corporations to continue to engage in CSR. These factors were economic, social impact, legal compliance, or good reputation, sponsored by transformational or adaptive leaderships and endorsed by visionary CEOs. The findings may enlighten and motivate other organizations to engage in CSR programs and connect stakeholders’ contribution to a broadened positive social change. (shrink)

This paper examines the relationship between corporate social responsibility and financial performance for Islamic banks in the Gulf Cooperation Council region over the period 2000–2014 by generating CSR-related data through disclosure analysis of the annual reports of the sampled banks. The findings of this study indicate that there is a significant positive relationship between CSR disclosure and the financial performance of Islamic banks in the GCC countries. The results also show a positive relationship between CSR disclosure and the future financial (...) performance of GCC Islamic banks, potentially indicating that current CSR activities carried out by Islamic banks in the GCC could have a long-term impact on their financial performance. Furthermore, despite demonstrating a significant positive relationship between the composite measure of the CSR disclosure index and financial performance, the findings show no statistically significant relationship between the individual dimensions of the CSR disclosure index and the current financial performance measure except for ‘mission and vision’ and ‘products and services’. Similarly, the empirical results detect a positive significant association only between ‘mission and vision’ dimension and future financial performance of the examined banks. (shrink)

This study aimed to analyze the explanatory contribution of social responsibility and organizational justice on commitment through the setting up of a theoretical model in order to better understand the relationships that are established between these constructs. The empirical study was developed in a public higher education institution with a sample of 233 employees, professors and staff. The proposed model was estimated using a structural equation model. It was possible to observe a relationship between interactional justice perceptions and social responsibility (...) and there contribute to the explanation of organizational affective commitment. At the same time, it was possible to observe a relationship between distributive justice and social responsibility of employees. (shrink)

Although agreement on the positive sign of the relationship between corporate social and financial performance is observed in the literature, the mechanisms that constitute this relationship are not yet well-known. We address this issue by extending management’s stakeholder theory by adding insights from psychology’s prospect decision theory and sociology’s resource dependence theory. Empirically, we analyze an extensive panel dataset, including information on disaggregated measures of social performance for the S&P 500 in the 1997–2002 period. In so doing, we enrich the (...) extant literature by focusing on stakeholder heterogeneity, perceptional framing, and disaggregated measures of corporate social performance. (shrink)

Many researchers believe the tremendous industrial development over the past two centuries is unsustainable because it has led to unintended ecological deterioration. Despite the ever-growing attention sustainable supply-chain management has received, most SSCM research and models look at the consequences, rather than the antecedents or motives of such responsible practices. The few studies that explore corporate motives have remained largely qualitative, and large-scale empirical analyses are scarce. Drawing on multiple theories and combining supply-chain and business ethics literature, we purport that (...) instrumental, relational, and moral motives are behind a firm’s engagement in SSCM practices. Specifically, we examine the links between corporate motives, SSCM practices, and firm performance. Using a sample of 259 supply-chain firms in Germany, we empirically test five hypothesized relationships. Our results reveal that relational and moral motives are key drivers, and that firms exhibiting high levels of moral obligations tend to outperform those primarily driven by amoral considerations. Findings of this study contribute to multiple literatures espousing sustainability management and can help policy makers, stakeholder groups, and scholars develop more robust strategies for encouraging firms to practice SSCM. (shrink)

Managers’ commitment to contribute to sustainable development holds the key to their long-term business success and may be a source of competitive advantage. The managerial perception of business ethics is influenced by the level of moral development and personal characteristics of managers. These perceptions are also shaped by forces existing in the environment of the firm, including available resources, societal expectations, sector, and regulations. The resource-based perspective can thus contribute to the analysis of ethical issues offering important insights on how (...) they can influence the environmental strategy of the firm. The findings of this study show that firm resources have a strong influence on business managers’ ethical attitudes. In addition, the application of resource-based rationales to ethical issues can be justified in the following several ways: it influences a managerial perception of natural environment as a competitive opportunity, it requires investments of financial and human resources, flexibility and speed in the adaptation to environmental changes, and it creates new resource-based opportunities through changes in prevention pollution technology, policy process, and market forces. (shrink)

Firms engage in corporate social responsibility (CSR) because they consider that some kind of competitive advantage accrues to them. We contend that resource-based perspectives (RBP) are useful to understand why firms engage in CSR activities and disclosure. From a resource-based perspective CSR is seen as providing internal or external benefits, or both. Investments in socially responsible activities may have internal benefits by helping a firm to develop new resources and capabilities which are related namely to know-how and corporate culture. In (...) effect, investing in social responsibility activities and disclosure has important consequences on the creation or depletion of fundamental intangible resources, namely those associated with employees. The external benefits of CSR are related to its effect on corporate reputation. Corporate reputation can be understood as a fundamental intangible resource which can be created or depleted as a consequence of the decisions to engage or not in social responsibility activities and disclosure. Firms with good social responsibility reputation may improve relations with external actors. They may also attract better employees or increase current employees’ motivation, morale, commitment and loyalty to the firm. This article contributes to the understanding of why CSR may be seen as having strategic value for firms and how RBP can be used in such endeavour. (shrink)

This article studies the idea of Corporate Social Performance (CSP) from a critical perspective using empirical elements derived from analysis of year 2000 ARESE data. ARESE is the French first mover social rating agency providing quantified data about the Social Performance of French companies. The paper starts out by reviewing leading CSP models and discussing problems inherent to the measurement of this construct before going on to present and analyse ARESE data - whose suitability for existing models will be discussed.

This paper addresses the question of the existence of corporate philanthropy. It proposes a framework for analysing corporate philanthropy along the dimensions of business/society interest and primary/secondary stakeholder focus. The framework is then applied in order to understand business involvement with the arts in the U.K. A unique dataset of 60 texts which describe different firms' involvement with the Arts is analysed using formal content analysis to uncover the motivations for business involvement. Cluster analysis is then used in order to (...) identify motivational groupings. Two broad types of involvement are identified – advertisers and legitimators. Only in one case of the 60 is there the potential to observe pure altruism. The contribution of this paper is twofold. First, it provides a clear framework to understand the motivations for corporate giving and applies this using empirical data. Secondly, this research finds little evidence, if at all, of corporate philanthropy in the context of firms giving to the Arts in the U.K. (shrink)

For four decades, research on the role and responsibilities of business in society has centered on the business case for corporate social responsibility (CSR) and an increasing number of studies on the corporate social performance (CSP)—corporate financial performance (CFP) link emerged leading to controversial results. Heeding the call for a deeper understanding of the mechanisms linking certain CSR efforts to certain performance outcomes, this study provides a stakeholder-based organizing framework rooted in an extensive review of existing literature on the link (...) between CSP and CFP. In so doing, we aim at guiding research and practice toward less simplistic understandings of the CSP–CFP connection, thus advancing the debate over the consequences of voluntary integrating CSR into business operations and into relationships with stakeholders. By disentangling specific drivers and outcomes of the CSP–CFP link, we underline the importance of setting clear boundaries and specifying levels of analysis to generate comparable results. (shrink)

Perceptions of a firm’s stance on corporate social responsibility (CSR) are influenced by its corporate marketing efforts including branding, reputation building, and communications. The current research examines CSR from the consumer’s perspective, focusing on antecedents and consequences of perceived CSR. The findings strongly support the fact that particular cues, namely perceived financial performance and perceived quality of ethics statements, influence perceived CSR which in turn impacts perceptions of corporate reputation, consumer trust, and loyalty. Both consumer trust and loyalty were also (...) found to reduce the perceived risk that consumers experience in buying and using products. From these significant findings, we draw several conclusions and implications, including the importance of enhancing firm focus toward its ethical commitment and long-term reputation. (shrink)

Although agreement on the positive sign of the relationship between corporate social and financial performance is observed in the literature, the mechanisms that constitute this relationship are not yet well-known. We address this issue by extending management’s stakeholder theory by adding insights from psychology’s prospect decision theory and sociology’s resource dependence theory. Empirically, we analyze an extensive panel dataset, including information on disaggregated measures of social performance for the S&P 500 in the 1997–2002 period. In so doing, we enrich the (...) extant literature by focusing on stakeholder heterogeneity, perceptional framing, and disaggregated measures of corporate social performance. (shrink)

Companies that have joined the United Nations Global Compact are required to submit a Communication on Progress, which is an environmental, social, and governance report, to the UNGC every year. If they fail to do so, they are marked and listed as non-communicating on the UNGC website. Using the event study methodology, this study shows that a company that fails to report to the UNGC is penalized in the financial markets with an average cumulative abnormal return of −1.6% over a (...) period of 5 trading days around the event. Although a major critique against the UNGC is that the initiative’s voluntary nature and its lack of external monitoring and sanction mechanisms render it ineffective in terms of the business participants’ implementation of the UNGC principles into their operations, this result suggests that investors may be able to pressure UNGC business participants to increase their compliance with the UNGC requirements and to “walk the talk.”. (shrink)

What drives Chinese MNEs’ global CSR integration and local CSR responsiveness? Drawing on institutional theory, we argue that both antecedents reflecting globally isomorphic patterns of adaptation and antecedents mirroring the distinct characteristics of China’s institutional context are relevant. We support our argument using fuzzy-set qualitative comparative analysis on a sample of 29 of China’s globally most influential companies. We find that state influence and global CSR associations affect global CSR integration, whereas presence in the West and internationalization through mergers and (...) acquisitions predict local CSR responsiveness. Our study thus suggests that home-country characteristics are an important co-determinant of the CSR approaches of emerging-market MNEs. We further find that multicultural experience in top management teams is associated with both global CSR integration and local CSR responsiveness, supporting notions of transnational CSR. (shrink)

For much of the 20th century, brewers owned the majority of British public houses. In 1989, the Monopoly and Mergers Commission brought about the dissolution of the brewers' estates, and two types of pub‐owning companies emerged. One employed managers, and the other leased their outlets to individual operators. In the present climate of opposition to excessive drinking, their approach to retailing is being brought into question, with public demands for a responsible approach. This article examines the different responses of the (...) major firms within the industry. (shrink)

This paper explores links between different ethical motivations and kinds of corporate social responsibility activities to distinguish between different types of business cases with regard to sustainability. The design of CSR and corporate sustainability can be based on different ethical foundations and motivations. This paper draws on the framework of Roberts which distinguishes four different ethical management versions of CSR. The first two ethical motivations are driven either by a reactionary concern for the short-term financial interests of the business, or (...) reputational, driven by a narcissistic concern to protect the firm’s image. The third responsible motivation works from the inside-out and seeks to embed social and environmental concerns within the firm’s performance management systems, and the fourth, a collaborative motivation, works to bring the outside in and seeks to go beyond the boundaries of the firm to create a dialogue with those who are vulnerable to the unintended consequences of corporate conduct. Management activities based on these different ethical motivations to CSR and sustainability result in different operational activities for corporations working towards sustainability and thus have very different effects on how the company’s economic performance is influenced. Assuming that corporate managers are concerned about creating business cases for their companies to survive and prosper in the long term, this paper raises the question of how different ethical motivations for designing CSR and corporate sustainability relate to the creation of different business cases. The paper concludes by distinguishing four different kinds of business cases with regard to sustainability: reactionary and reputational business cases of sustainability, and responsible and collaborative business cases for sustainability. (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)

This article investigates the role of commonly specified control variables in moderating the relationship between corporate social performance (CSP) and corporate financial performance (CFP). In addition, there are separate measures for positive (strengths) social actions, and for negative (concerns) social actions. The results support the positive relationship between CSP and CFP. The best model, as determined using factorial analysis of variance, is one which has the following control variables: size, industry, risk, and research and development expenditures. In examining the CSP/CFP (...) relationship, researchers must control for these variables, in order to properly specify the model. (shrink)

The question of how an individual firm's social and environmental performance impacts its firm risk has not been examined in any empirical UK research. Does a company that strives to attain good environmental performance decrease its market risk or is environmental performance just a disadvantageous cost that increases such risk levels for these firms? Answers to this question have important implications for the management of companies and the investment decisions of individuals and institutions. The purpose of this paper is to (...) examine the relationship between corporate environmental performance and firm risk in the British context. Using the largest dataset assembled so far, with community and environmental responsibility (CER) rankings for all rated UK companies between 1994 and 2006, we show that a company's environmental performance is inversely related to its systematic financial risk. However, an increase of 1.0 in the CER score is associated with only a 0.028 reduction in its β. (shrink)

This study examines the relationships between a company''s emphasis on discretionary social responsibility, environment, and firm performance. It tests the proposition that environmental munificence and dynamism moderate the relationship between discretionary social responsibility and financial performance. Social responsibility was measured with a three-item scale in a sample of 62 firms using a questionnaire. Environmental munificence and dynamism were measured using archival sources as was financial performance (return on assets and return on sales). The results of moderated regression analyses and subgroup (...) analyses found a significant moderating effect of environment on the social responsibility-firm performance relationship. Discretionary social responsibility contributes to firm performance in environments that are dynamic and munificent. (shrink)

While it is widely assumed that greater diversity in corporate governance will enhance a firm’s corporate social performance, this study considers an alternative thesis which relates managerial control to corporate philanthropy. The study empirically evaluates both board diversity and managerial control of the board as possible predictors of corporate philanthropy. The demonstration of a positive relationship between managerial control and corporate philanthropy contributes to our understanding that corporate social performance results from a complex set of economic and social motives. Possible (...) future research and managerial implications are discussed. (shrink)

As a philosopher, whose theory about economics and business is systematically connected to a moral and political philosophy, Aristotle provides a rich conceptual framework to reflect upon personal wellbeing, the wealth of households, and the welfare of the state. Even though Aristotle has mainly been portrayed as an enemy of business, interest in his teachings has been on the rise among management scholars. Several articles have examined Aristotle's position with regard to current managerial approaches such as total quality management, knowledge (...) management, crisis management, and networking. Even though Aristotle is a constant reference point for business ethics scholars, only rarely have there been attempts to see what consequences his thinking would have for reorienting business philosophy and organizational strategy. In this study, we wiD outline how Aristotle's theory of household management can be applied to the management of modern corporations. We argue that conceptions of chrematistike and oikonomia provide a basis to discuss the relationship between business and society and to draw important conclusions for business management. (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)

The question of how an individual firm's social and environmental performance impacts its firm risk has not been examined in any empirical UK research. Does a company that strives to attain good environmental performance decrease its market risk or is environmental performance just a disadvantageous cost that increases such risk levels for these firms? Answers to this question have important implications for the management of companies and the investment decisions of individuals and institutions. The purpose of this paper is to (...) examine the relationship between corporate environmental performance and firm risk in the British context. Using the largest dataset assembled so far, with community and environmental responsibility (CER) rankings for all rated UK companies between 1994 and 2006, we show that a company's environmental performance is inversely related to its systematic financial risk. However, an increase of 1.0 in the CER score is associated with only a 0.028 reduction in its β. (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 authors explore the relation between the way different family firms are named, and the shareholder value impact of these firms’ new product introductions. Using an event study of 1,294 product introduction announcements of 107 publicly listed U.S. family firms, the authors find that the presence of the founding family’s name as part of a family firm’s name acts as a valuable firm resource, increasing the abnormal stock returns surrounding the firm’s new product introductions. Superior returns to family-named firms’ new (...) product introductions are partially mediated by these firms’ history of ethical product-related behavior: family-named firms, particularly those with corporate branding, and those wherein a founding family member holds the CEO or chairman position, are more likely to exhibit a history of avoiding such product-related controversies as product safety issues, and deceptive advertising. The authors highlight the managerial and theoretical contributions of this research. (shrink)

This study provides empirical evidence on how corporate sustainability performance (CSP), as proxied by membership of the Dow Jones sustainability index, is reflected in the market value of equity. Using a theoretical framework combining institutional perspectives, stake-holder theory, and resource-based perspectives, we develop a set of hypotheses that relate the market value of equity to CSP. For a sample of North American firms, our preliminary results show that CSP has significant explanatory power for stock prices over the traditional summary accounting (...) measures such as earnings and book value of equity. However, further analyses suggest that we should not focus on corporate sustainability itself. Our findings suggest that what investors really do is to penalize large profitable firms with low level of CSP. Firms with incentives to develop a high level of CSP not engaging on such strategy are, thus, penalized by the market. (shrink)

The comparison of corporate social performance with corporate financial performance has been a popular field of study over the past 25 years. The results, while broadly conclusive of a positive relationship, are not entirely consistent. In addition, most of the previous studies have concentrated on large-scale cross-industry studies and often with a single variable for corporate social performance, in order to produce statistically significant results. This weakens the richness of understanding that might be obtained from a single industry study with (...) multiple social variables, which would also allow investigation of inter-relationships between individual and sub-sets of social performance measures and between individual and sub-sets of social performance and financial performance measures. There have also been criticisms that the results lack a rigorous theoretical basis, and the paper demonstrates clearly how stakeholder theory must form the basis for this area of research. Following a review of the literature this paper presents the initial findings from a study of the U.K. Supermarket industry which suggest that contemporaneous social and financial performance are negatively related, while prior-period financial performance is positively related with subsequent social performance. Positive relationships between both age and size of the company with social performance are also found. (shrink)

This article furthers the argument for a stakeholder theory that integrates into managerial decision-making the relationship between business organizations and the natural environment. The authors review the literature on stakeholder theory and the debate over whom or what should count as a stakeholder. The authors also critique and expand the stakeholder identification and salience model developed by Mitchell and Wood (1997) by reconceptualizing the stakeholder attributes of power, legitimacy, and urgency, as well as by developing a fourth stakeholder attribute: proximity. (...) In this way, the authors provide a stronger basis for arguing for the salience of the natural environment as the primary and primordial stakeholder of the firm. (shrink)

To many, recent allegations of accounting fraud (or earnings management; EM) at Enron, coupled with similar ones at many other corporations, are a strong indication of a serious decay in business ethics. In academics, this raises the concern between EM and corporate social responsibility (CSR). Since it has neither been documented, nor globally tested whether CSR mitigates or increases the extent of EM, three kinds of EM are studied: earnings smoothing, earnings aggressiveness, and earnings losses and decreases avoidance. The extents (...) to which financial characteristics and institutional variables have an impact on the extent to which companies conduct EM are also tested. Our study investigates whether the CSR-related features of 1,653 corporations in 46 countries had a positive or negative effect on the quality of their publicly released financial information during the 1993-2002 period. There is no question that with a greater commitment to CSR, the extent of earnings smoothing is mitigated, that of earnings losses and decreases avoidance is reduced, but the extent of earnings aggressiveness is increased. (shrink)

The executives of listed firms play an important role in the fulfillment of corporate social responsibility. Based on behavioral consistency theory, this study examines the association of CSR performance among multiple firms for the same executive served at different times. By tracking the movement of executives across Chinese listed firms over the period 2010–2019, we find that there is a significantly positive association between the predecessor and the successor firm’s CSR performance for the same executive, implying that an individual’s value (...) and preference for CSR maintain consistency within a certain period of time. We also find that a longer employment gap and lower internal control effectiveness will damage the association of CSR performance between the predecessor and the successor firm. Our results are robust to testing in subsamples and controlling the endogeneity problems. Our conclusion provides a new perspective to understand the influence mechanism of CSR performance in the context of inter-firm executive mobility and provides empirical evidence for listed firms to improve their decision-making in hiring and evaluating executives. (shrink)

For much of the 20th century, brewers owned the majority of British public houses. In 1989, the Monopoly and Mergers Commission brought about the dissolution of the brewers' estates, and two types of pub‐owning companies emerged. One employed managers, and the other leased their outlets to individual operators. In the present climate of opposition to excessive drinking, their approach to retailing is being brought into question, with public demands for a responsible approach. This article examines the different responses of the (...) major firms within the industry. (shrink)

Firms are spending billions annually in the name of corporate social responsibility (CSR). Whilst markets are increasingly willing to reward good and responsible firms, they lack the instruments to measure corporate social performance (CSP). To convince investors and other stakeholders, firms invest heavily in building a reputation for good corporate behaviour. This article argues that reputations for CSP are often unrepresentative of true CSP and investigates how differences in 'perceived' and 'actual' – as measured by the Fortune and KLD databases, (...) respectively – can partly be explained by firm characteristics. Amongst other things, it finds that overrated firms are more likely to be relatively big, profitable, operating in non-polluting but competitive industries and with no history of wrong doings to their primary stakeholders. They will also typically spend a lot of effort satisfying the claims of their secondary stakeholders. Above all, the results emphasise the need for researchers to recognise that the databases measure different phenomenon and are not interchangeable. (shrink)