Workforce diversity has received increasing amounts of attention from academics and practitioners alike. In this article, we examine the empirical association between a firm’s workforce diversity and the degree of religiosity of the firm’s management by investigating their unidirectional and endogenous effects. Employing a large and extensive U.S. sample of firms from the years 1991–2010, we find a positive association between a measure of the firm’s commitment to diversity and the religiosity of the firm’s management after controlling for various firm (...) characteristics. In addition, after controlling for endogeneity with the dynamic panel generalized method of moment, we still find a positive association between the firm’s diversity and management’s religiosity. We interpret these results as supportive of the religious motivation explanation that views the firm as a human community and considers religion as a factor that influences managers to more positively embrace diversity. Our results, however, provide no support for the resource-constraint hypothesis that views the firm as a nexus of contracts and sees managers as aiming to maximize shareholder returns under resource constraints that force them to invest only in projects that have a positive net present value and reject diversity initiatives since these do not have a positive NPV. (shrink)

This paper argues that the notion of value has been overly simplified and narrowed to focus on economic returns. Stakeholder theory provides an appropriate lens for considering a more complex perspective of the value that stakeholders seek as well as new ways to measure it. We develop a four-factor perspective for defining value that includes, but extends beyond, the economic value stakeholders seek. To highlight its distinctiveness, we compare this perspective to three other popular performance perspectives. Recommendations are made regarding (...) performance measurement for both academic researchers and practitioners. The stakeholder perspective on value offered in this paper draws attention to those factors that are most closely associated with building more value for stakeholders, and in so doing, allows academics to better measure it and enhances managerial ability to create it. (shrink)

This article provides a new mechanism in understanding how partner heterogeneity moderates an alliance's ability to advance corporate social responsibility goals. I identified the antecedents for firms to select a more diverse set of partners and explored whether more diverse alliances (especially cross-sector alliances) may facilitate partners to achieve more proactive environmental outcomes. I employ 146 environmental alliances formed in the U.S. between 1990 and 2009 to test the assertions. Results suggest that firms with innovative orientation and alliance experiences tend (...) to choose a more diverse set of partners (especially cross-sector partners); and such partner heterogeneity in turn moderates an alliance's environmental outcomes—compared to inter-firm alliances, cross-sector alliances are more likely to facilitate partners to pursue more proactive environmental strategies. (shrink)

In this paper, we seek to answer two questions: (1) what does boardroom diversity stand for in the strategic management literature? And, (2) is there a significant relationship between boardroom diversity and corporate social performance. We first clarify the boardroom diversity concept, distinguishing between a structural diversity of boards and a demographic diversity in boards, and then we investigate its possible linkage to social performance in a sample of S&P500 firms. We find a significant relationship between diversity in boards and (...) social performance. This relationship is moderated by diversity of boards. Our results also reveal the effects of the specific variables that make up the diversity of boards and diversity in boards constructs. In particular, gender, and age have a significant effect on corporate social performance. Some important measurement issues are raised and discussed. (shrink)

One of the major roadblocks in conducting Environmental Corporate Social Responsibility (ECSR) research is operationalization of the construct. Existing ECSR measurement tools either require primary data gathering or special subscriptions to proprietary databases that have limited replicability. We address this deficiency by developing a transparent ECSR measure, with an explicit coding scheme, that strictly relies on publicly available data. Our ECSR measure tests favorably for internal consistency and inter-rater reliability, as well as convergent and discriminant validity.

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)

Research suggests that international assignment experience enhances awareness of societal stakeholders, influences personal values, and provides rare and valuable resources. Based on these arguments, we hypothesize that CEO international assignment experience will lead to increased corporate social performance (CSP) and will be moderated by the CEO's functional background. Using a sample of 393 CEOs of S&P 500 companies and three independent data sources, we find that CEO international assignment experience is positively related to CSP and is significantly moderated by the (...) CEO's functional background. Specifically, CEOs with international assignment experience and an output functional background (e.g., marketing and sales) are positively associated with greater CSP. (shrink)

Using panel data of 4,244 company years, we examine whether and how corporate social performance affects a firm's capacity to achieve profitable sales in foreign markets. Based on our extension of instrumental stakeholder theory into the international arena, we hypothesized a U-shaped relationship between CSP and multinationality. Results supported our contention that multinational enterprises need to be substantially committed to social performance objectives if they are to recoup the cost of their CSP investments, and improve their capacity to compete in (...) foreign markets. MNEs engaged in intermediate levels of CSP achieve lower levels of multinationality than firms operating at either anchor of the social performance continuum. In addition, this study demonstrates that CSP moderates a well-established relationship in international business literature - the relationship between R&D investment and a firm's multinationality. Implications for research and practice are discussed. (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)

Institutional investors are increasingly focusing on firms that prioritise Corporate Social Responsibility. In the absence of any objective measure of a firm's CSR Performance, their investment choices are largely guided by independent rating indices that rank firms according to their social performance metrics. As a result, firms looking to increase their attractiveness as targets of social investment focus their CSR efforts on increasing the visibility of activities that are recognised by such indices. However, the validity of these indices as accurate (...) measures of firms' actual social performance has repeatedly been called into question. This means that the ability of these indices to measure and report on firms' actual social impact cannot be ascertained with any degree of accuracy. The result is that firms are incentivised to engage in activities that cannot be said to improve social responsibility, and may even ultimately harm society. Thus, another method of measuring CSP must be found that enables firms to measure their true impact on society. We propose a new approach to measuring CSP that is integrated with stakeholder theory. Such an approach provides managers of firms with an interest in engaging in real social development for the purposes of ensuring firm survival with the ability to understand their social obligations, and the ability to measure the resulting benefit to society. (shrink)

The neglect of marginalized stakeholders is a colossal problem in both stakeholder and entrepreneurship streams of literature. To address this problem, we offer a theory of marginalized stakeholder-centric entrepreneurship. We conceptualize how firms can utilize marginalized stakeholder input actualization through which firms should process a variety of ideas, resources, and interactions with marginalized stakeholders and then filter, internalize, and, finally, realize important elements that improve a variety of related socioeconomic, ethical, racial, contextual, political, and identity issues. This input actualization process (...) enables firms to innovate with marginalized stakeholders and develop marginalized stakeholder capabilities. To this end, firms fulfill both their moral and entrepreneurial claims to marginalized stakeholders. (shrink)

Achieving sustainability as a firm outcome is increasingly a concern for CEOs. Attention breadth (executive attention where attention is focused on a variety of areas simultaneously) is an important capability for CEOs to have in order to achieve sustainability performance at the firm level, as sustainability requires attending to multiple areas simultaneously including environmental, social, and governance dimensions as well as financial performance. To further explicate the development of attention breadth, I explore the two socio-cognitive antecedents of attention breadth—career experience (...) and social ties. Additionally, I examine the impact of CEO attention breadth on sustainability performance. A content analysis of letters to shareholders from a sample of Fortune 500 firms together with other archival data show an indirect influence of career experience and social ties on sustainability performance through the mediator of attention breadth. In particular, the number of social ties is shown to have more influence than career experience in determining the level of attention breadth, which I argue and show, ultimately leads to improved sustainability performance represented by a broader and more complex set of firm outcomes. The findings shed light on the antecedents of sustainability performance and expand the understanding of executive attention. (shrink)

This study investigates the connection between corporate social responsibility (CSR) and corporate reputation among the public using fuzzy set qualitative comparative analysis (fsQCA). To examine complex processes underlying the reactions of this influential stakeholder group, hypotheses are drawn from the category diagnosticity approach. Thereby, a psychological model of perceived (im)morality is transferred to the CSR context. In line with these hypotheses, positive/negative CSR activities influence reputation in the expected directions (H1a, b), while the effects of specific configurations of CSR activities (...) reveal an asymmetry suggesting a negativity bias (H2). Further analyses confirm that positive effects require a consistent positive performance regarding prior reputations (H3a) and the aggregated CSR activities of several previous years (H3b, c). Moreover, the relevant patterns vary between industries (H4). The present study thus contributes to CSR research by investigating a powerful but hitherto understudied stakeholder group through a category diagnosticity lens combined with a configurational approach to analysis. (shrink)

ABSTRACT:This study examines whether the empirical evidence on the relationship between corporate social performance (CSP) and corporate financial performance (CFP) differs depending on the publication outlet in which that evidence appears. This moderator meta-analysis, based on a total sample size of 33,878 observations, suggests that published CSP-CFP findings have been shaped by differences in institutional logics in different subdisciplines of organization studies. In economics, finance, and accounting journals, the average correlations were only about half the magnitude of the findings published (...) in Social Issues in Management, Business Ethics, or Business and Society journals (mean corrected correlation coefficientof.22 vs..49, respectively). Specifically, economists did not find null or negative CSP-CFP correlations, and average findings published in general management outlets (=.41) were closer to Social Issues in Management, Business Ethics, and Business and Society results than to findings reported in economics, finance, and accounting journals. (shrink)

Using a sample of 21,030 US firm-year observations that represents more than 3000 individual firms over the 1998–2012 period, we investigate the relationship between Corporate Social Responsibility (CSR) and investment efficiency. We provide strong and robust evidence that high CSR involvement decreases investment inefficiency and consequently increases investment efficiency. This result is consistent with our expectations that high CSR firms enjoy low information asymmetry and high stakeholder solidarity (stakeholder theory). Moreover, our findings suggest that CSR components that are directly related (...) to firms’ primary stakeholders (e.g. employee relations, product characteristics, environment, and diversity) are more relevant in reducing investment inefficiency compared with those related to secondary stakeholders (e.g. human rights and community involvement). Finally, additional results show that the effect of CSR on investment efficiency is more pronounced during the subprime crisis. Taken together, our results highlight the important role that CSR plays in shaping firms’ investment behaviour and efficiency. (shrink)

In this paper, we review the literature on moderators and mediators in the corporate sustainability –corporate financial performance relationship. We provide some clarity on what has been learned so far by taking a contingency perspective on this much-researched relationship. Overall, we find that this research has made some progress in the past. However, we also find this research stream to be characterized by three major shortcomings, namely low degree of novelty, missing investment in theory building, and a lack of research (...) design and measurement options. To address these shortcomings, we suggest avenues for future research. Beyond that we also argue for a stronger emphasis on the strategic perspective of CS. In particular, we propose future research to take a step back and aim for an integration of the CS–CFP relationship into the strategic management literature. (shrink)

This article explores the relationship between stakeholder management and international diversification. We differentiate between strengths and concerns in stakeholder management to demonstrate the differential effects of the two aspects of stakeholder management. Previous research on stakeholder theory often focuses on the importance of stakeholder relations, trying to build a business case of relational capital that results from strong stakeholder management. Such a relational approach, however, overlooks the process of managing stakeholders, a process that allows firms with strengths in stakeholder management (...) to develop an important capability of managing tensions. In this study, we argue that this capability, an inherent part of stakeholder management, can be critical when firms face increased complexity during the process of international diversification. We therefore propose that strengths in stakeholder management are positively related to international diversification, while concerns in stakeholder management are negatively related to international diversification. Using panel data for 169 US multinational firms over a 10‐year period, we find support that strengths in stakeholder management facilitate international diversification. We discuss the contributions of our findings to stakeholder theory and international business research. (shrink)

The aim of this study is to analyse how secondary stakeholders influence managerial decision-making on Corporate Social Responsibility disclosure. Based on stakeholder salience theory, we empirically investigate whether differences in environmental disclosure among companies are systematically related to differences in the level of power, urgency and legitimacy of the environmental non-governmental organisations with which these companies are confronted. Using proprietary archival data for an international sample of 199 large companies, our results suggest that differences in environmental disclosures between companies are (...) mainly associated with differences between their environmental stakeholders’ legitimacy. The effects of power and urgency are of an indirect nature, as they are mediated by legitimacy. This study improves our understanding of CSR disclosure by demonstrating that, next to the well-documented effect of company characteristics, stakeholder characteristics are also important. Besides, it provides scarce empirical evidence that not only primary stakeholders, but also secondary stakeholders are influential with regards to management decision-making. And more specifically, it offers insight into why some stakeholder groups are better able to influence disclosure decisions than other. The results also have important practical implications for managers of both environmental NGOs and large companies. For managers of environmental NGOs the results provide evidence of the most successful tactics for having their environmental information demands satisfied by companies. For company management the results provide insights into the most important stakeholder characteristics, on the basis of which they may develop strategies for proactively disclosing environmental information. (shrink)

This article examines how well the Kinder, Lydenberg, Domini Research & Analytics ratings measure past corporate social performance and predict future corporate social performance in Diversity and Governance categories. The results show that the KLD ratings effectively measure and predict social performance in both categories. The results also suggest that the KLD ratings may identify differences in the quality of management and firm which can affect future social performance and is not entirely explained by past social performance. The findings of (...) this study lend some support for empirical studies relying on the KLD ratings to operationalize corporate social performance. The findings suggest that users of the ratings need to have a clear understanding of what information they are seeking from the KLD ratings in order to maximize the utility of these ratings. (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 paper sheds light on the incongruent findings concerning the relationship between family involvement and firms’ corporate social responsibility. While prior studies have mainly taken the perspective of families’ socioemotional wealth preservation, we approach this relationship from the perspective of behavioral agency theory, highlighting the important role played by CEOs’ family memberships. Specifically, we posit that family firms are more likely to invest in CSR when their CEOs are members of the controlling families. Furthermore, we examine how family firms can (...) employ long-term incentives to encourage non-family CEOs to act in the interests of the controlling families to preserve SEW and thus enhancing family firms’ CSR performance. We tested our hypotheses using hand-collected data of family firms included in the S&P 500 index, in the period of 2003–2010. The empirical findings support our hypotheses that family firms with family members as the CEOs have better CSR performance and family firms tend to provide a high level of long-term incentives to non-family than family CEOs. In addition, long-term incentives strongly motivate CEOs to improve firms’ CSR performance, regardless of their family memberships. (shrink)

The World Bank recently noted: “Social license to operate has traditionally referred to the conduct of firms with regard to the impact on local communities and the environment, but the definition has expanded in recent years to include issues related to worker and human rights”. In this paper, we examine a factor that can influence the kind of work conditions that can facilitate or obstruct a firm’s attempts to achieve the social license to operate. Specifically, we examine the empirical association (...) between a company’s employee practices and the religiosity of its local community by investigating their fixed and endogenous effects. Using a large and extensive U.S. sample, we find a positive association between the “employee friendly” practices of a firm and the religiosity of the local community after controlling for several firm characteristics. In addition, after mitigating endogeneity with the dynamic panel system generalized method of moment and after employing several other econometric tests, we still find a robust positive association between the religiosity of the local community and employee-friendly practices. Since recent research has shown that the firm’s treatment of its stakeholders is a key to achieving an SLO, and since employees constitute a highly significant stakeholder group, we interpret our results as supporting the view that religion is an important influence on the kinds of employee practices that can increase the likelihood that a firm will acquire the SLO. (shrink)

In this article, we empirically assess the impact of corporate ethical identity (CEI) on a firm's financial performance. Drawing on formulations of normative and instrumental stakeholder theory, we argue that firms with a strong ethical identity achieve a greater degree of stakeholder satisfaction (SS), which, in turn, positively influences a firm's financial performance. We analyze two dimensions of the CEI of firms: corporate revealed ethics and corporate applied ethics. Our results indicate that revealed ethics has informational worth and enhances shareholder (...) value, whereas applied ethics has a positive impact through the improvement of SS. However, revealed ethics by itself (i.e. decoupled from ethical initiatives) is not sufficient to boost economic performance. (shrink)

Different proprietary databases have been used extensively in research to assess the environmental performance and environmental risk of companies. This study explores the convergent validity of the environmental ratings of MSCI ESG STATS, Thomson Reuters ASSET4 and Global Engagement Services. The study shows that the ratings have common dimensions, but on aggregate, they do not converge. On the environmental opportunity side, KLD environmental strengths, and ASSET4 and GES environmental performance metrics correlate highly and provide convergent scores for US companies from (...) 2003–2011. On the environmental risk side, KLD environmental concerns converge with the GES environmental industry risk and company emissions from the ASSET4 database. Further analysis confirms that industry-related risks are drivers of company-specific environmental performance. (shrink)

Despite growing evidence of the benefits to a firm of improving corporate social performance (CSP), many firms vary significantly in terms of their CSP activities. This research investigates how the characteristics of the stakeholder landscape influence a firm’s CSP breadth. Using stakeholder theory, we specifically propose that several factors increase the salience and impact of stakeholders’ demands on the firm and that, in response to these factors, a firm’s CSP will have greater breadth. A firm’s CSP breadth is operationalized as (...) the number of different sub-domains of CSR for which a firm has taken positive actions and is captured using a unique dataset from Kinder, Lydenburg, and Domini (KLD). This data set includes positive and negative firm actions across more than 35 different dimensions of socially responsible behavior. Findings based on a longitudinal, multi-industry sample of 447 US firms during the period from 2000 to 2007 demonstrate that firms which: (1) have greater sensitivity to stakeholder needs as a result of the firm’s strategic emphasis on marketing and/or value creation, (2) face greater diversity of stakeholder demands, and (3) encounter a greater degree of scrutiny or risk from stakeholder action have a greater breadth of CSP in response to the stakeholder landscape that they face. (shrink)

This study provides preliminary empirical evidence that shareholder activists target companies because of their size as well as specific stakeholder-related practices. The data show that shareholder activists target companies with shareholder resolutions demanding changes in corporate behaviors for companies producing problematic products and where environmental concerns exist. Furthermore, companies in specific industries are targeted based on poor employee and community-related practices. Activists, that is, are selective in their targeting of companies, choosing the most visible (largest) companies and those whose practices (...) raise specific issues of interest to society. (shrink)

Natural disaster events such as drought affect the broader economy and inflict adverse consequences for firms because of spill-over effects in an integrated economy. Contrary to the expectation that firms would engage in higher levels of corporate tax avoidance strategies when they experience a negative cash flow shock, we document consistent evidence that firms engage in less corporate tax avoidance when their headquarter states experience drought. Reduced tax avoidance is more pronounced among firms with higher CSR performance and among firms (...) operating in states that experience a GDP decline. Collectively, the findings of our study demonstrate prosocial and ethical behavior of U.S. firms when they experience natural disaster events. (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)

Previous research has suggested that corporate social performance is positively related to firms’ attractiveness as employers. The authors propose and test an alternative model whereby job applicants’ familiarity with employers mediates the relationship between corporate social performance and organizational attractiveness. Applicants’familiarity with firms may serve as a signal of firms’suitability as employers, with more familiar firms considered more attractive. Furthermore, a firm’s overall level of corporate social activity (whether “good deeds” or “ misdeeds”) may contribute directly to firm familiarity and (...) indirectly to attractiveness through familiarity. The authors’ results support this model; firm familiarity completely mediates the relationship between corporate social performance and organizational attractiveness. (shrink)

This paper explores an increasingly prevalent element of board-level commitment to sustainability. We propose a theoretical framework under which the existence and associated actions of board-level sustainability committees are motivated by shared value creation, where the interests of a diverse group of stakeholders are satisfied and sufficient profit is achieved. Using hand-collected data, we find that sustainability committees are heterogeneous in focus and vary in their effectiveness. Specifically, we disaggregate the sustainability committee construct based on stakeholder group focus and find (...) that associations between sustainability committees and performance outcomes are stronger when committees focused on a specific stakeholder group are paired with relevant performance outcomes. We generally find that sustainability committees are effective at impacting relevant strengths, but do not mitigate relevant concerns. These results are consistent with the shared value framework, where committees both generate value by pursuing sustainability-related opportunities and protect value by monitoring, but not necessarily mitigating sustainability-related risks. Univariate tests suggest that effective committees are also larger, more independent, and meet more frequently. Finally, we propose a new method to classify industries based on their sensitivity to certain stakeholder groups and find that the effectiveness of committees focused on specific stakeholders is more pronounced in industries that are sensitive to these stakeholders. (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)

This study supports the idea that fields form around issues, and describes the roles of various stakeholders in the structuring, shaping, and legitimating of the emerging field of Corporate Social Responsibility (CSR). A model of the institutional history of the CSR field is outlined, of which a key stage is the appearance of CSR rating agencies as the significant players and Institutional Entrepreneurs of the field. We show to which extent the creation and further development of CSR rating agencies, and (...) the activism of other significant stakeholders of the field (typically portrayed as “standard setters” and “regulatory agents”), contribute to the institutionalization of CSR. With this in mind, among various stakeholders that legitimate the field of CSR, we present the efforts of global and local stakeholders such as the European Union, the United Nations, the International Organization for Standardization, and governments and their interactions. We suggest that the different paths of CSR development and institutionalization in France and in the United States depend on the nature of local and global stakeholders’ involvement in this process and their interactions. (shrink)

Extending the dialogue on corporate social performance as descriptive stakeholder management, we examine differences in CSP activity between family and nonfamily firms. We argue that CSP activity can be explained by the firm’s identity orientation toward stakeholders. Specifically, individualistic, relational, or collectivistic identity orientations can describe a firm’s level of CSP activity toward certain stakeholders. Family firms, we suggest, adopt a more relational orientation toward their stakeholders than nonfamily firms, and thus engage in higher levels of CSP. Further, we invoke (...) collectivistic identity orientation to argue that the higher the level of family or founder involvement within a family firm, the greater the level of CSP toward specific stakeholders. Using social performance rating data from 1991 to 2005, we find that family and nonfamily firms demonstrate notable differences in terms of social initiatives and social concerns. We also find that the level of family and founder involvement is related to the type and frequency of a family firm’s social initiatives and social concerns. (shrink)

In this article, we extend the streams of research on the capital structure of socially responsible firms by investigating the impact of corporate social responsibility on firm debt maturity. Using a large sample of US firms, we provide evidence that high CSR firms significantly reduce their debt maturity. In particular, our results suggest that diversity and community are the dimensions that matter the most in explaining debt maturity. In additional analyses that use a seemingly unrelated regression approach, our results show (...) that CSR decreases the extent to which investments are financed with long-term debt and increases the extent to which investments are financed with short-term debt and shareholders’ equity. Overall, these findings support the view that high CSR firms use debt maturity to manage CSR overinvestment problems and to signal their high quality and their access to the debt market. (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.

The corporate financial performance (CFP)–corporate social performance (CSP) relationship has been investigated many times over the past few decades, yet the notion of CSP has generally been understood to be a single, monolithic aspect of corporate strategy. This article examines the common CFP–CSP understanding in three distinct ways: (1) by extending the evaluation of CSP as a complex, multistakeholder notion; (2) by analyzing CSP's relationship with the firm's financial performance at a given point in time as a lead (independent) variable (...) in the relationship and as a lag (dependent) variable in the relationship; and (3) for both positive and negative stakeholder relationships. The results indicate that the employee emerges as the stakeholder group most strongly linked to CFP, followed by the consumer stakeholder. The natural environment and the community stakeholder group are minimally associated with CFP. General support is found for a CFP–CSP relationship at a given point in time, with some support found for CSP as a lead (independent) variable. When used as a measure of financial performance, return on assets is more often correlated with CSP than is return on equity. These results and their implications are discussed. (shrink)

This article analyses the link between innovation with high social benefits and corporate social performance (CSP) and the role that family firms play in this. This theme is particularly relevant given the large number of firms that are family-owned. Also the implicit potential of innovation to reconcile corporate sustainability aspects with profitability justifies an extended analysis of this link. Governments often support socially beneficial innovation with various policy instruments, with the intention of increasing international competitiveness and simultaneously supporting sustainable development. (...) In parallel, firms pursue corporate social responsibility (CSR) and environmental management activities partly in the hope that this will foster such innovation in their organisation (alongside their main aim of improving CSP). Hence, the main research question of this article is about the association of CSP with innovation with high social benefits and the determinants of the potential moderation of this association. Based on panel data, the article analyses the link between CSP and innovation, and the effect of being a family firm using panel estimation techniques. The results point to a moderating role of family firms on the link between innovation with high social benefits and CSP. The article concludes by assessing the policy implications of this insight. (shrink)

This study examines the impact that research and development (R&D) intensity has on corporate social responsibility (CSR). We base our research on the resource-based view (RBV) theory, which contributes to our analysis of R&D intensity and CSR because this perspective explicitly recognizes the importance of intangible resources. Both R&D and CSR activities can create assets that provide firms with competitive advantage. Furthermore, the employment of such activities can improve the welfare of the community and satisfy stakeholder expectations, which might vary (...) according to their prevailing environment. As expressions of CSR and R&D vary throughout industries, we extend our research by analysing the impact that R&D intensity has on CSR across both manufacturing and non-manufacturing industries. Our results show that R&D intensity positively affects CSR and that this relationship is significant in manufacturing industries, while a non-significant result was obtained in non-manufacturing industries. (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)

We investigate the financing strategies of environmentally responsible firms to understand how they set target capital structures and make incremental financing decisions. Literature shows that firms with better environmental performance have lower risk and better access to financing. However, it is not obvious how these firms choose to finance their investments. Using an extensive data set of U.S. firms, we find that firms with superior environmental performance have significantly lower debt ratios and use mostly short‐term debt for temporary financing needs. (...) In doing so, environmentally responsible firms are able to achieve more tax savings and experience lower costs of financial distress. Our results provide new empirical facts about environmental performance and financing decisions, and they help explain the observed relationship between environmental performance and economic performance. (shrink)

Research examining firm and industry effects on performance has primarily focused on the financial aspects of firm performance. Corporate social performance is a major aspect of firm performance that has been under-examined empirically in the literature to date. Adding to the fundamental debate regarding firm versus industry effects on performance, this study uses data drawn from the Kinder, Lydenberg and Domini Co. database to examine the degree to which CSP is related to firm, industry, and temporal factors. The results of (...) these analyses suggest that CSP tends to change in a linear manner over time; however, the slope of this line varies across firms and industries. These findings are supported by several robustness checks accounting for autocorrelation, alternative measures of industry, different samples commonly used when using KLD data to measure CSP, and alternative measures of CSP when using the KLD database. The authors also directly compare firm, industry, and temporal effects between CSP and financial performance. (shrink)

This study examines whether corporate social responsibility performance is associated with corporate tax avoidance. Employing a matched sample of 434 firm-year observations from the Kinder, Lydenberg, and Domini database over the period 2003–2009, our logit regression results show that the higher the level of CSR performance of a firm, the lower the likelihood of tax avoidance. Our results indicate that more socially responsible firms are likely to display less tax avoidance. Finally, the results from our additional analysis show that the (...) CSR categories community relations and diversity represent particularly important elements of CSR performance that reduce tax avoidance. (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)

This study assessed whether and how government–business partnerships offer a unique platform that targets profound environmental impacts via the promotion of radical eco-innovation. It applied transactional cost and complementary logics to explain the rationale of GBP formation for radical eco-innovation, and further assessed the operation of GBPs from governance, learning, and rulemaking aspects. This study applied propensity score matching technique to empirically test these theoretical associations using 225 observations representing 166 U.S. firms’ participation in 192 environmental alliances between 1985 and (...) 2013. The study results confirmed GBPs’ role in channeling public and private efforts in pursuing transformative environmental change via the adoption of radical eco-innovation goals. Results highlight four critical elements of GBP operation—effective governance, exploration learning, cognitive learning, and rulemaking—that enable participants to embrace these radical environmental solutions. (shrink)

The issue of management’s relations to the environment has received a significant amount of attention in the literature on corporate social responsibility. Yet the influence of religion on managers’ environmental decisions has until now remained unexamined despite its known importance. In this article, we examine the empirical association between religion—primarily Christianity—and the environmental practices a firm’s management undertakes by investigating their OLS, principal component, simultaneous, and endogenous effects. Employing a large and extensive U.S. sample, we find a negative association between (...) the environmental practices initiated by a firm’s managers and the religiosity of the surrounding community, after controlling for various firm and demographic characteristics. In addition, after mitigating endogeneity with the dynamic system generalized method of moment, we still find an inverse association between religiosity and environmental-friendly decisions of management. We interpret these results as providing some support for the “dominion hypothesis” that claims Christian beliefs discourage environmental concern, but not for the “stewardship hypothesis” that implies that Christianity encourages people to “exercise a responsible stewardship over nature.” Nevertheless, additional analysis shows Christian groups differ significantly in how each influences managers’ environmental decisions. (shrink)

To encourage corporations to contribute positively to the environment in which they operate, voluntary self-regulatory codes (SRC) have been enacted and refined over the past 15 years. Two of the most prominent are the United Nations Global Compact and the Global Reporting Initiative. In this paper, we explore the impact of different stakeholders' pressures on the selection of strategic choices to join SRCs. Our results show that corporations react differently to different sets of stakeholder pressures and that the SRC selection (...) depends on the type and intensiveness of the stakeholder pressures as well as the resources at hand to respond to those pressures. Our contribution offers a more specific and finely variegated analysis of firmstakeholder interactions. (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)

Over the past four decades, stakeholder research has united a chorus of voices from different disciplines using different terminology for different audiences all related to a seemingly similar topic: those that affect and are affected by business. By juxtaposing a comprehensive review of the early years of stakeholder research against more recent stakeholder research, we identify areas of common convergence as well as emergent scholarship. We develop an organizing framework consisting of three stakeholder-related themes: who or what is a stakeholder; (...) mechanisms underlying stakeholder relationships; and outcomes-oriented stakeholder research. Future research opportunities include: simultaneously examining multiple stakeholders at multiple levels; multiplier effects along the value chain and across geographies; and net impacts. We conclude by identifying how stakeholder research can “move the needle” on important business issues such as: income inequality and CEO pay; human rights and building community inclusion; disease alleviation; and food security in firms’ continuous quest to create value. (shrink)

This article reviews empirical research of corporate social performance using Kinder, Lydenberg, Domini social ratings data through 2011. The review synthesizes 100 empirical studies, noting consistencies and inconsistencies among studies examining similar constructs. Notable consistencies were that, although accounting measures of financial performance were a positive outcome of CSP, the same was not often true of stock returns. Also, demographics of top management teams increased CSP strengths, but did not reduce concerns, whereas organizational decentralization reduced CSP concerns. Notable inconsistencies were (...) that CEO demographics were not as often related to CSP as were TMT demographics, indicating that managerial discretion may be an important mitigating factor shaping managerial effects on CSP. Also, although CSP for some organizations seemed influenced by institutional pressures, other organizations appeared to be less influenced, perhaps suggesting that some organizations are more able than others to resist institutional pressures. Future research should attempt to probe observed consistencies and inconsistencies, and to test the boundaries of observed relationships, toward a disciplined program of middle-range theory development. (shrink)